Release Date: May 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Bjorn Borg AB (FRA:6BB) reported record sales for Q1 2025, marking the second-best quarter in the company's history.

• The company's sports apparel segment grew by 13%, with e-commerce sales in this category up more than 40%, indicating strong market share gains.

• The integration of the footwear segment is progressing well, with a remarkable 208% growth, showcasing significant potential.

• The company's own e-commerce platform grew by 26%, outperforming peers and contributing to increased profitability.

• Bjorn Borg AB (FRA:6BB) is experiencing strong growth in several markets, including the Netherlands, Belgium, Denmark, and Sweden, with notable success in Germany despite challenges with Salando.

Negative Points

• The gross profit margin declined due to currency fluctuations, product mix, and lower margins in the footwear segment.

• The men's underwear category, the company's largest, saw a 12% decline due to delayed deliveries.

• Retail store performance is declining, with closures of full-price stores and a focus on outlet channels.

• Distributors are experiencing a decline, with high inventories and cautious sentiment due to global uncertainties.

• The company's net debt increased to 120 million, primarily due to higher footwear inventories and changes in inventory management.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with BOM:532700.

Q: Is the growth in physical wholesale mainly due to easier comparisons on the shoe level, or does it reflect a positive stance from partners? A: Unidentified_1: It's a mix of both. The 208% growth in footwear significantly impacts channel development, with the largest share coming from wholesale. Even excluding footwear, other categories show promising growth, despite a short-term decline in underwear due to delivery issues. Overall, wholesale is recovering well.

Q: How would you describe the current state of the Swedish consumer market? Is there optimism or caution for the rest of the year? A: Unidentified_1: Consumers remain cautious. The year started optimistically with more disposable income due to interest and tax reductions. However, events in the US have emotionally impacted consumers. Despite this, our e-commerce data shows consumers are still shopping, with higher conversion rates and stable basket sizes. Our mid-premium brand and message resonate well, encouraging consumers to stay active even in tough times.

Q: Can you elaborate on the factors impacting the gross margin, particularly in the footwear segment? A: Unidentified_1: Neither of us is satisfied with the gross margin development. The decline is partly due to currency effects and the footwear segment, which has a lower margin. Our previous licensed partner didn't invest in future product quality, affecting margins. Our priority is to improve footwear quality, which may require price adjustments over time. The goal is to eventually achieve higher starting margins similar to other categories.