We have taken a more cautious stance on our near- and mid-term revenue estimates due to weaker consumer sentiment and a less supportive macro environment, particularly in continental Europe. Despite these downward revisions, we believe that the current valuation offers an attractive risk/reward profile, as the share price has fallen by around 15% since our last update. As a result, we raise our recommendation to Buy (prev. Accumulate) but lower our target price to SEK 66 per share (prev. 69 per share), mainly due to lower estimates.

Moderate growth expected in Q3’26

We forecast Björn Borg's Q3 revenue to grow by 1.5% year-on-year in local currencies, mainly driven by the company's own e-commerce segment. In the Wholesale channel, we expect a normalization following significant timing effects in Q2’26. However, growth will likely remain constrained by a lower order book, as retail buyers became more cautious when placing pre-orders during a period of weak consumer confidence. That said, the company has likely managed to partly offset this through re-orders. In terms of product category, we expect revenue growth to come mainly from sports apparel, while footwear is likely to continue its decline, partly due to weakness in the Netherlands and Belgium, where the company is working to improve distribution.

In terms of profitability, we expect the gross margin to normalize somewhat compared to the levels seen in Q2 as the lower-margin Wholesale segment accounts for a significantly larger share of total sales during the peak season. Nevertheless, the continued growth of the higher-margin own e-commerce segment should still provide a positive mix effect year-on-year. We expect OPEX to grow in Q3, driven by increased marketing investments as the company continues to drive brand awareness in growth markets such as Germany. As a result, we expect Q3 EBIT to increase slightly y/y to 48 MSEK, corresponding to a good margin of around 15.5%.

Long-term game plan intact despite short-term headwinds

Due to the renewed weakness in consumer sentiment and a less supportive macro environment outside the Nordics, we have tempered our revenue expectations for the coming years. We now expect Björn Borg to show modest revenue growth for the full year 2026. This is mainly due to slow volume growth in the Wholesale segment, reflecting lower pre-orders from resellers amid uncertain consumer sentiment. Growth is also hampered by changing order patterns among large key accounts and slow footwear development in the Netherlands and Belgium. However, in the mid- to long-term, we expect an average annual growth rate of around 6%, driven mainly by successful expansion in its core categories of sports apparel and, once the distribution setup is in place, also footwear, while maintaining steady growth in the more mature underwear segment. We expect the EBIT margin to remain around 12% in the coming years. While sales growth should provide operating leverage, continued expansion in the German market and the company's own e-commerce channels will likely bring additional costs.

We find Björn Borg’s current valuation levels attractive

Since our last update, the share price is down 15%, which we believe is driven by generally weak sentiment toward consumer stocks rather than changes in underlying fundamentals. In our view, Björn Borg’s forward-looking multiples are low (2026/2027 P/E 13-14x and EV/EBIT 10-11x) relative to its earnings and return on capital potential. We see the combination of earnings growth and dividend yield as the main driver for the stock’s total expected return (~15-20%), which is well above our required return. Therefore, we believe the company’s interesting long-term investment story can be accessed with a good risk/reward ratio at the current valuation.