Björn Borg AB (publ)

good morning and welcome to our q4 2024 presentation and with that also the closure of 2024 and looking back you know for us it's been a great year so when we were here the last time announcing our q3 and also of course just prior to that we updated our long-term financial goals and we clearly told the world that we are now ready to start growing and looking at what has happened since that is exactly what we have done We have identified a number of growth initiatives, of which two are strong categories in footwear and sports apparel, and those are doing an exceptionally strong development currently, which is absolutely great, of course. We've also said that we want to grow more in Germany, and that's been our number one growth market, and here we see also good progress. together with, of course, all the other categories, all the other markets, continuing to slowly, of course, add to our top-line growth. But looking at 2024, I think clearly the highlights are divided into two things. One, an ongoing, very, very strong development for our sports apparel collection. Looking back, I think now we have 10 or 11 quarters in a row with double-digit sports apparel growth, but also of course, integrating footwear. So a year ago, our licensed partner went bankrupt and it more or less just landed in our lap. thanks to an incredible team in stockholm and out in the markets we managed to capture and take care of the chaos that all of a sudden just appeared and now looking at that i think the way that we handle it is our biggest success for 2024. we did it still managing to increase our profit full year. And of course we did it and also continued then to grow our footwear. And for footwear, we believe that this is by far our number one growth opportunity. This we can do a lot, lot better. Some of the highlights in the quarter is that we're growing 90% almost to 235. Looking at all the channels, we saw a very, very strong development for our wholesale division. So that's, again, the stadium, the XXL. Very, very good momentum. At the same time, our e-commerce continued to grow at 10%, a bit lower than what we're used to, much thanks to that we're reducing our discounts. So we want to sell more products to full price. And, of course, we can do that because the brand is getting stronger and stronger. but with that said you know 10 growth is still strong but of course not the high 20 that we've been used to looking at the other years looking for full year we're still growing you know almost twice the space of what we did in q4 retail stores of course as you already know i've been talking about this for many many quarters we want to close down our full price stores we want to keep our outlet stores and instead we want to invest that money into online growth but also then building branded space with leading retailers and one of those examples was a shopping shop at ulster house in hamburg due to that of course retail will continue to decline looking at the comp store so stores versus stores that was open we still see an increase As I said, you know, the product groups are developing nicely. All of them are growing very, very good in Q4. And of course, the full year victories, of course, footwear, but also, of course, a very, very strong sports apparel growth. And here we see that, you know, after many, many, many, many years of just focusing on moving the brand from only being underwear into becoming sports apparel and sports fashion is really now working. So good, good opportunity, good momentum. And I'm really, really proud over all the work that we've done so far. Gross margin in the quarter is declining a bit, down to 53.3 versus last year. It's partly due to currency, but not so much, actually. Most of it relates to integrating footwear. So, of course, as you can imagine, you have a partner that goes bankrupt. You need to retrieve products in harbors, in boats, sold in by someone else to customers that you potentially have not called. And, of course, in all of that work, In order for them to still take those products that are most of the time, of course, also very late, we had to give one-off discounts. And that has been impacting us for the last probably six or perhaps even nine months in terms of gross margin dilution versus how it was last year. Looking at our operating profit, then we in the quarter are decreasing again, thanks to, on one hand, of course, the footwear margin, also investment into the team, and also us continuing to invest into the brand to make it even stronger. Both those investments, of course, is essential to enable us to continue to grow. Looking at full year, still, of course, our profit is higher than last year. long-term vision is exactly the same so we're not changing here you know we're here to build a sports fashion brand for those who wants to feel active and attractive and the whole idea again is to build that sports brand that inspires you that you should move you should train not to become an athlete not to take part in any competitions you can do that too if you want but actually to live longer to be a bit happier And we believe that even in a world that is, well, a bit shaky, that's exactly what the consumers are looking for and also exactly what they need. You know, take control of what you can take control over. And one thing, of course, by doing a bit of exercise every day, moving a bit, that day will be a better day for you. Looking at then the brand heat, and of course we know that one of the things that makes us completely unique is of course the brand. And our job here is to fuel that brand with as much value as we can. And here we can see that the brand is getting stronger and stronger. And of course we measure that every week in all of our markets by asking end consumers. And some of the highlights this quarter has been around her. So both, you know, purchase intent in Sweden and Holland is increasing dramatically. and aided awareness in him in Germany is also increasing. So, of course, in Germany, as I said, one of our focus markets, the deal here is really to build a brand that people recognize. So, of course, it's going to be a long road before we are as strong as we are in Sweden and the Netherlands. But the work has really started, and we see promising signs of the brand actually getting stronger and stronger every quarter here as well. Underwear Hymn, we're maintaining a very strong position. The trick here is to move into a new arena where the potential is bigger, but without, of course, losing the category ownership in underwear for Hymn. And we're managing to do that. So not only does the brand in around underwear become stronger, but also, of course, the revenue. So we've never sold more underwear than what we did last year. So I think that's a very, very strong sign that the... whole idea of moving into a bigger arena building a different brand still enables you to continue to drive high growth in your core category apparel and person intent is also slowly increasing meaning of course that we're getting more and more traction within consumers in all of our markets simply wanting to buy our stuff The top line again, so of course, looking at the quarter, record quarter, we've never done it anymore. And of course, we're far, far above our second best quarter. So 19% growth, absolutely incredible. Yes, one part of that is due to footwear, but we should remember here that we also did footwear in Sweden and online, for example, last year. so there's no non-comparable impacts here the only thing that we did was we added sales in europe that we didn't have last year so here of course we have a bit of an upside but overall the major growth actually is driven from footwear but also in the markets where we already had footwear which of course showcased that when we take it in-house when we take control we can have a fantastic momentum Also, of course, sports apparel is driving the growth here, but a record quarter and also with that a record full year. So we're super, super proud of the top line development and very happy then to tell all of you that we are well above the financial trust that we communicated to you guys in August. So 19% growth in the quarter, 14% growth full year. Absolutely fantastic. It's spread across most of the markets. I think Sweden has done a fantastic job in Q4, but full year we see a strong growth across the board. Looking at the different channels, you know, wholesale, as I said, did, you know, something incredible in Q4. So very, very strong momentum. Ecom continued to have a strong growth. Retail declining a bit. However, of course, comp store development is still plus 5%. And last, then distributors. So a smaller and smaller part of our business is still, you know, growing, which of course is good. And not showcasing that we have a very good momentum in all of the different markets. But again, you know, small part of the business and not our focus. We simply again believe that where we can make the biggest difference is where we talk directly to consumers and where we can take ownership of the full sort of supply chain creation to a customer buying our product. Look at that online development. So this is something we start tracking back in 2018 and we continue to do so. We see that a big share of our business is done through online. However, what we've seen probably the last year and a half and has really been accelerating during Q4 is an increased traction in physical stores. amongst our wholesale partners. So very, very strong development. We see that a lot of consumers are shopping at the shop floor, not online. And we believe that one of our strengths is that we can manage, you know, different channels and different way of going to market within what we're doing here. So both OwnEcom, of course, both strong corporation with strong e-tailers such as Boost and Zalando, but also, of course, a very strong partnership with customers that had a mixed go-to-market with both own e-com and physical stores. And that has been working really, really good in the quarter. And of course, we should continue focusing on that. Again, of course, with a record quarter, everything is looking good from a sales perspective. Looking at our categories, underwear is plus 14%, so absolutely fantastic. Also strong full-year growth numbers. Apparel, 44%, bags, 30%, and footwear, then plus 57%, of which our own e-commerce is driving a very, very strong growth momentum, almost 100% growth since last year. So very, very proud of that. So with that said, of course, again, bottom line, struggling a bit, but I just wanted to remember that full year, of course, we're still making more money than last year, despite, of course, doing a lot of stuff that will drive growth for the future. But again, who better to run this through than our fantastic CFO, Jens. So welcome on stage, Jens, and you just fire away.

Thank you, Henrik. Thanks for that. And good morning from myself as well. And what a Friday it is. I was just thinking this morning that how lucky am I to work at Beyond Boy? I work with colleagues such as Jessica and Kim. You're simply amazing. You make everything possible. Polina, Anna, simply superstars. I cannot wait to get back to work. See you guys soon. Anyway, so bottom line, we talked about the gross margin already, slight decline towards the end of the year due to the investments that Henrik just mentioned. So there's marketing investment to build the brand going forward. There are some investments due to the footwear integration. However, we do see some uplift in the footwear area that we have communicated earlier. So we estimate the gross margin in the footwear area to go up after the initial investments are done, let's say. In terms of the profitability, so EBITDA, as Henrik also mentioned, 102 million stronger than last year, even though the Q4 itself isolated was slightly shy of last year due to the investments just mentioned. Super proud of delivering a full year profit that is higher than last year with everything that we've done during the year. So that's fantastic. Same story on the bottom line in the net income, where we see a slight decline due to some sort of FX conversions of the cash pool, you could say. Nevertheless, super strong year in terms of profitability if you look at the full year with everything that's been going on throughout 2024. If we take a look at the balance sheet, so the equity through assets is slightly declining, but still on a strong level, around 50% where we've been all the time. So that's super strong. Remember, we had quite a high dividend during 2024, and the board will present to the AGM that comes up in May the same dividend of three crowns. per share so that we'll see if the agm accepts that obviously but that's a strong message ascent in terms of the net depth that goes a bit up and down towards end of the year but we are fairly close to being on a let's say a cash position that we were last year but nine million in net debt is quite low we're coming from a much higher debt situation so Even here, I think we see a strong position when it comes to the balance sheet. Finally, another KPI that we measure is the working capital, which obviously has quite a big impact on our business, and we want it internally to be stable around 20%. in relation of rolling 12-month gross sales. And that's where we've been for the last couple of years. So keeping the inventory mainly in the accounts receivable payables in good control, you could say, is quite a good sign for a healthy company, at least if you ask me. So with that message, I think you should close this Friday.

Yes, yes, yes. So let's wrap it up. I'm sure that Yalmar has a couple of questions as well. But just to summarize everything then. So record sales in the quarter, record sales for the full year. Thanks predominantly to one thing, and that is that we have a fantastic and a very, very strong team. Sales is not the only record we broke last year. Actually, also our internal anonymous engagement service showed record level. So it's a very, very strong team that you are investing in. And of course, a great team will accomplish great things. The brand is continuing to become stronger. Secondly, of course, we have very strong momentum in all of our channels. And last, of course, our carriers are really, really growing. And I think we've showcased since we've changed our financial targets that we are now into growth mode. And we strongly believe that we can continue to grow more than double digit. And at the same time, of course, maintain good profit levels. a strong dividend and again of course just looking at today probably a dividend yield of you know around five percent which i think is a very strong sign for the future so as you see and as you feel we're fired up we're ready to get this going been here you know many many many quarters but it's a lot of things now that is falling into place despite of course the world around us being a bit challenging but as we've always said we're still small market going down still means that we could take market shares. And looking at 2024, in Sweden, we took market shares in all of our categories. And of course, that's the intention to continue doing so. So with that said, you know, have a fantastic Friday. Don't leave us just yet. I know that Hjalmar is just, you know, eager to ask me some questions as well. So Hjalmar, I want you just to fire away.

Oh, yes, thank you. Let's go into the Q&A. I guess let's start off at the gross margin. I mean, you spoke some of it and that you expect some contribution then from the shoe segment looking ahead. Could you provide us with some sort of timeframe on this? Is this early 2025 that you expect margins to reach some sort of steady state in the shoe business, or is it more like a long-term prospect, I mean, 2026, 2027, and so on?

I think the margin development when it comes to our categories is a bit tied into how the selling in is working. So of course, if we look at the autumn-winter 25, that business was sold in and we just placed that purchase. So of course, it's a bit of a lag when it comes to margin improvements. However, of course, we did a lot of initiatives already last year that will improve the margin. And if you would look at footwear isolated, actually last year's footwear margin were a lot better than the year before. However, of course, taking a bigger share of the business means that it's impacting the overall margin, and that's why it's dragging down. So we're on a good trend, and we can expect, of course, our margin to continue to increase during 2025, already fairly soon. All other things the same, of course. We know that the channel split is impacting, so, of course, high share of e-com is dragging up the gross margin. At the same time, we're closing down retail stores. That's going to drag down the margin. We know that depending on which category we sell in, the money will look differently. We still have the highest margin in underwear, but we truly believe then that on footwear, it should be able to have a similar margin as sports apparel, and actually a bit higher if you look at leisure footwear. Of course, spending many, many years at Adidas, one of our high margin products was leisure footwear and sneakers for Adidas, not the sports apparel. So we strongly believe that looking at our portfolio categories, we should be able to increase the margin. So it gets close to what we said in the past of 55%, quarter by quarter.

Yeah. And speaking then of the sales channels, of course, the own e-commerce grows strongly for the full year. But you also mentioned a trend where customers are engaging more into physical stores. Should we interpret this that you expect maybe stronger growth than in the stores looking ahead? Or is this more of a general trend that you're seeing in the market for the customer overall?

You know, it goes a bit up. And I think for us, it's important to be where the consumers are. I think that's sort of the starting point. It changes a bit. We can look at Q4, a very high share of our turnover actually done in physical stores. So we simply need to be there. We strongly believe still, of course, that we need to invest into our own online so we can continue to grow. But again, we're still fairly small. Rolling 12, we're doing roughly 200 million on our own e-com. So we can continue to probably quadruple that. without, of course, being impacted on general market trends. But I think for us, it's very important just to follow what's happening, making sure that we are always relevant and that we are where the consumers are. And it's very, very clear that a high share of you still then wants to shop product at the shop floor, feel and meet people and talk to people. So then we need to be there as well. But there's also, of course, a very strong demand of being in online platforms. such as Boost or Zalando, but also, of course, Bjornborg.com. So for us, I think the strength is that we can handle all of those channels. We are like a true multi-channel company where the entire team has been working with all of these channels for many, many, many years. So we know wholesale, we know D2C, we can drive our own retail stores and everything in between. So I think that's a very strong sign of having a good set of competence to handle a changing world.

Yeah. Yeah. And speaking of the shoe segment, naturally strong growth during this year. And you spoke a lot of it. But what are the key challenges looking ahead? We're speaking about sourcing, design, sales. Which ones would you like to highlight and what are you focusing on to maybe like sort of maintain this growth that we've seen?

Yeah, of course. You know, nothing is easy anymore, even though it potentially looks like that, you know, from from the outside. rolling 12 you know apparel is uh heading towards 300 million yes standing alone and that's without sort of swimwear and loungewear so really only sports apparel so that's like a small proper you know sports brand just alone footwear last year did 97 million footwear category is as big as sports apparel. So first of all, of course, you know, the ceiling is very, very high. You know, there's incredible potential ahead of us. But of course, in order to do that, you need to do great products and you need to make sure you fuel the brand with a lot of strong value. So you as a consumer really want to buy our stuff. And I think we have a plan for both. And of course, we know that life is not going to play out the way we want. So it could well be challenges with supply chain, you know, with customers and everything in between. I believe that we have a very strong team in place. And also, I think we've showcased that we are very persistent. So of course, that potentially has been reasons back in the days to abandon the whole sports apparel push. But of course, now looking back, I'm just very, very proud that we never gave it up, even though it was super, super tough. And the same goes for footwear. We simply need to get on with it, understand how important it is, and then just, you know, get it going. And with that said, it will be challenges, you know, no matter where we look. But I think we've shown in the past we can handle all of those. We have a very, very, very strong team in place. Super happy and super proud. And I'm sure they will do something absolutely incredible. And first signs also of the collection is very, very promising.

Very helpful. Thank you. And speaking of geographical markets, maybe you mentioned like Germany, for example. What are the key characteristics for such a market and how do you perceive Germany compared to other European countries for the potential of expansion?

I think the way we do things, and I know there was a question around UK that came up here from some of you guys, but on one hand, we believe you need to be reactive and sort of data-driven, meaning that if something is working, dig, continue to focus, but also, of course, you need to have your own plan in terms of what you want to accomplish. And the difference between Germany and UK, for example, so of course both markets are really, really big, massive potential. However, in UK, for whatever reason, we don't feel the same traction that we see and feel in Germany. So instead then of pushing sort of water up the hill in UK, then we swap our focus into Germany because of course breaking through in one of those markets will be enough to double or quadruple the turnover for us. So that's a bit how we work. And of course it didn't really help with Brexit and all the other stuff that happened in the UK. And of course doing business in Germany is simply a lot easier. So the reason for our approach is that we test a lot of stuff, get some traction, and then we select what we feel that, hey, here we have signs that things could work. And then we simply made the decision to continue to dig there with sort of relentless focus. And that's really the approach now in Germany. We will succeed in Germany. The question is just, okay, when?

Yes, thank you. And then on the pricing, you mentioned that you feel that you maintain a strong pricing power. Do you feel confident looking into 2025 that you will be able to maintain this pricing towards the end customer when we are assessing the gross margin?

Well, you know, I'm super confident. I believe that we can see a lot of signs that our brand is getting stronger and stronger and stronger. So looking at e-commerce, of course, lowering discounts now for the second or third year in a row and still, of course, driving double digit growth. I think that's a very, very clear sign. And not to mention, of course, that Massey continues to, you know, to buy our stuff from own ecom. So I think the brand is getting stronger and we see a lot of evidence for that. And of course, with that, you know, comes then a strong pricing power. One of the measurements of, you know, a strong brand is your ability then to, you know, charge full price. And we need to find the right balance here. So of course, we want to build a brand that is accessible. So it's not a premium brand in a sense that it should be super expensive. We want to create a good T-shirt made of recycled polyester with a great fit at a very accessible price point. So there's no hurdles for you to pick it up. And every time you see that in your closet, we want you to think about Bjorn Borg as your best friend, reminding you that today is the day where you will go out running or do a push up or a couple of burpees. That's the whole intention with the entire brand. And here I think we are making inroads every quarter, every year to becoming stronger and stronger.

That's great. Thank you so much. Thank you, Henrik and Jens, for coming here. I'll leave it to you to finish.

yes thank you albert you're happy to be here happy that you're listening in you know continue to follow us we're on a quest you know to make sure that the entire world moves more more needed than ever and as of course you know on fridays we have a compulsory sports hour meaning that all of the offices are closing down then we're training together and of course you're always welcome to join us whether you're in amsterdam or in sweden yes look up our headquarter and then you join us for a workout and at least you know That will make your day a lot better than if you're not joining. So with that said, have a fantastic Friday and I'll see you in, well, three months then for our Q1. I can't wait to talk to you again. Thank you.