Björn Borg operates in the fashion industry and focuses on the design, manufacture and distribution of sportswear and underwear. The company's products are aimed at private individuals looking for comfortable and stylish clothing. The business is global with a main presence in the Nordic region and Europe. Björn Borg was founded in 1984 and is headquartered in Solna.
Björn Borg’s Q1 results came in above our expectations, and we view the share price reaction following the report as justified. While we have raised our short-term estimates following the Q1 beat, our mid- to long-term estimates remain largely unchanged. In our view, given the ongoing uncertainty in the operating environment and lack of clear evidence that the company can successfully scale its footwear segment, we believe the stock is already fairly priced for its expected earnings growth (2026e P/E: 17x). As a result, we reiterate our Reduce recommendation and target price of SEK 67 per share.
Björn Borg's Q1 revenue growth was better than our expectations, which in combination with increased gross margins resulted in a strong earnings beat. In our view, we view positivley on that sports apparel category contniues to show double-digit growth, however, there were yet no clear signs of an overall turnaround in the footwear category, which we belive will be key for the company to accelerate its revenue growth going forward.
Björn Borg has announced a three-year strategic partnership with the Swedish department store Åhléns and the Belgian department store Inno to develop and sell new lifestyle categories. The company estimates that the agreement, which includes existing business, will have a total retail value of 200–300 MSEK over the three-year term. In our view, the partnership is a logical step in Björn Borg’s strategy to broaden its brand presence and product offering, although the immediate financial impact is limited as the first launches are not scheduled until fall 2026. In addition, we have already factored in relatively high sales growth of around 6-8% for the coming years, and given the early phase of the partnership, we are not making any changes to our estimates at this stage, though the partnership could support our current estimates if successful.
Björn Borg delivered strong Q4 earnings, due to solid sales volumes and good cost control. In our view, the outlook for next year is positive, and combined with a strong finish to last year, this has led us to raise our earnings estimates for the coming years. With our updated estimates, the company’s earnings multiples for this year are at the lower end of our acceptable valuation range, with a P/E ratio of around 15x and EV/EBIT of 12x. As a result, we raise our recommendation to Accumulate (prev. Reduce) and increase our target price to SEK 67 per share (prev. SEK 57 per share), mainly due to increased estimates.
Björn Borg delivered Q4 revenue that was in line with our estimates, with the sports apparel category continuing to outperform. The clear positive highlight in the report was the profitability that significantly exceeded our expectations, driven by solid cost control. In our view, for the company to achieve higher growth in line with its targets, it needs to lift the shoe category as well, which has so far underperformed.
