Björn Borg AB (publ)

Good morning guys and happy Friday and welcome to our Q1 2021 five investor presentation. So first things first, we've kicked off the year with record sales. So never before have we started a year in such a good way. And it's a lot of reasons for that. One, of course, is our footwear integration. So for those that have been following us for a while, about a year ago, in the beginning of 2024, our licensed partner went bankrupt. very quickly decide to take it over to integrate it and we've been doing that ever since and that is progressing in a very very good way so footwear is not only growing but also of course when we now review the collection looking at the distribution there's just a lot of things pointing in the right direction so here we feel there's a massive massive potential and that development is according to to plan Sports Apparel is continuing to grow, up 13% in the quarter. Looking at our e-com business, which Sports Apparel is up more than 40%. So we can conclude now that we are clearly gaining market shares when it comes to our Sports Apparel collection in all of our markets, which is, of course, a fantastic victory. Running through then the numbers, we did 280 million. When we look at the sales on all the quarters for Björn Borg, this is our second best quarter. The best quarter was actually last year's Q3. And for those of you that have been watching us for a while, you know that our Q3 is really where we do most of our turnover. That's just the seasonality of our brand. But with Q1 now coming up as the second biggest one, of course, it's a clear sign of strength. So sales is continuing to develop really, really good at the back of, of course, a very strong 2024 where we grew 14%. Wholesale is doing very, very well. But I think what is really sticking out, I think, is own e-com. So when we look at our peers and looking around us, we see that many are struggling a bit with continuing to grow own e-com. We, however, are not only growing more than 26%, we're also increasing our profitability with OwnEcom. And it's working across all markets. And I think what is especially reassuring is that it's working really fine when we want to open up new markets like ours. German push as one example where we see very, very strong growth numbers for our own e-com in Germany. When it comes to retail stores, you know that we've been closing down full price stores. We will continue to do so. We only have two left. The focus on outlets will still remain, so we believe that's a good channel to clear excess inventories. It's also very profitable, so we will continue doing that. However, looking at our retail portfolio, we're still declining both, of course, in absolute numbers due to store closures, but also actually comparable stores. Our distributors also continue to decline in the quarter, even though Norway is actually doing a fairly good job mitigating part of that drop. Looking at the categories, we have strong growth actually across almost everything. Worst mentioning is our development with men's underwear that is declining 12%. That's our biggest category. We, of course, don't want that to decline. Last year, we were growing 6%. The reason for this is... due to later deliveries. So last year, a lot of our high summer deliveries we received in Q1. This year, nothing of that has turned up in Q1, and then they will pop up simply in Q2 instead. So this will be mitigated as the year will progress. With that said, we can conclude that even if the spring has been very cold for all of us, our swimwear collection has been received exceptionally well amongst end consumers, growing 25% in the quarter. Our gross profit is declining. That's due to a number of different things. One is a bit the currency. Another one, of course, is the product mix and the channel mix. We still know that footwear has a slightly lower margin than the other product categories. So even though the footwear margin is better now than a year ago, and we will continue to increase it, it's still lower and drags the overall gross profit down a bit. But with that said, of course, with a strong sales number, very good control over costs, we're still increasing our operating profit to 34 million. If we look at that currency neutral, it's actually up 10% to 37 million. And Jens will talk more about our balance sheet. But that, of course, looks also very, very good. Our mission remains the same so of course we're here as you know to build a sports brand. We like to say a global iconic sports brand. We are still of course more focusing on northern Europe but nevertheless the long-term ambition and we clearly see the potential in this brand to build something that is global. We have a number of different financial objectives, and we've changed them last year to be a bit more aggressive when it comes to driving growth. And in terms of strategy, it's really been focus online, focus on sports apparel and footwear, and really dig where we stand when it comes to our geographical focus. So it's a Northern Europe approach. As you know, we have done a lot of efforts to drive our US business with Amazon, and that was going fairly okay. I'm not sure if you've heard, but it's some challenges currently with importing stuff to the US that is of course impacting us. However, that business is small. So the good thing that we were a bit slow on getting the traction with Amazon US is that we have very little exposure. So actually, what is happening right now with both the US dollar and, of course, all this turmoil is good for the brand. Perhaps not so good for me as an individual because it makes me a bit worried. But looking at us, a weak US dollar is going to be very, very good for our overall P&L development. We want a strong SEC and, of course, a strong euro. And that is exactly what is happening right now. Looking at the brand heat, of course, that's one of the things that makes us completely unique. That's also going in the right direction. If you look at unaided awareness for her, if you look at consideration, if you look at purchase intention, all those key parts are going up. Here, we decided to highlight some of the German numbers. So, of course, as you know, since about a year and a half ago, we said that we need to grow in a market that is big. One of our challenges has been that we have been doing really, really well in a lot of markets, but all of them have been fairly small. But, of course, if we can build traction and momentum and volume in a big market like Germany, which is the second biggest sports market in Europe, that, of course, will allow us to unleash a massive amount of potential. And we have focused a lot on Hamburg, so we have a very sort of narrow approach, and that is working really, really, really well for us. So when we are measuring and asking consumers in Germany, that is actually – picking up on a very, very good note. And the German brand numbers is actually representing the whole of Germany. It's not only Hamburg. So we can see that this narrowed focus on one geographical city is actually spreading across Germany. So that's very, very reassuring. Here, of course, we'll continue to focus. Looking at the brand, the first quarter is usually a bit weaker, so we can see that purchase intent for underwear is slowing down a bit. We're still, you know, market leader, so way ahead of everyone else. Apparel is continuing to increase, even though Q1 is on the same level as last year. But the brand is slowly, slowly getting stronger. But I think the key victory is the development in Germany. Very, very happy with that. Looking at top line, so again of course you know 280 million that's a record looking at the past you can see that in 2020 we did 172 so of course we've added a lot of volumes in q1 so that's very very good and of course as we've said in august we aim to grow you know at least double digit so our ambition is of course to grow even more than the nine percent that we're now showcased in q1 and of course if it wasn't for the slightly late deliveries that would have happened as well All the markets are doing really, really well, with one exception, and that's not really a market or a country, but that's Germany. So we see here it's down 21%. That is obviously not how we have planned it. It's simply due to Zalando. And of course, it's due to the Zalando business that Zalando is doing outside Germany. So we are growing in Germany towards German consumers, according to plan. But Zalando were struggling a bit, partly due to the late deliveries. They do a lot of underwear, underwear slightly delays. Of course, that's impacting as well. So we expect Zalando to slowly recover throughout the year. As an account, Zalando is doing really, really good. We, however, have not been very, very successful in Q1. So that needs to be worked on even harder. Looking at the other markets, of course, you know, Netherlands plus 22%. That's fantastic. Belgium, Denmark, Sweden is also showing very, very strong growth numbers. Norway, as I said, is also continuing to grow. So I think what we can conclude is the stuff where we focus, you know, sports apparel, you know, footwear, Germany, Those marks are really going really, really well. Running through the channels, wholesale is plus 11%. That's still our biggest channel. We see a very, very strong recovery of brick and mortar doors, so growing 20%. E-tailers is declining, but again, that relates to Zalando being such a big e-tailer. On e-commerce, plus 26%, absolutely incredible. The team that is doing... A fantastic job, of course, thanks to strong brand, good products, and of course, a team that is really, really good at optimizing our KPIs at our own e-com platform. Own retail, as we said, is declining, both comparable stores, but also overall. So here we need to work harder. The plan is not to decline comp stores. Here we want to grow, focusing on our outlet business. Distributors are declining. And they are sitting on a bit of high inventories. They're a bit cautious, of course. I think emotional, of course. I think they're very concerned with what is happening now around the world. So we'll see. The plan here, of course, not to focus more on distributors, but of course, we would likely want them to start growing as well. Norway, however, is doing really, really well, growing 27%. We've measured our online exposure a fairly long time. It's actually less and less relevant. If we looked at 2019 and 2020, it was a clear sign of strength that the brand managed to grow their business online. I think it's less the case right now. What you need to do is, of course, handling all the different channels. You need to understand where the consumers are, and that's where you need to put the brand. And where that's going to be then at the stadium store is down the street here. Or whether it's going to be at Boost doesn't matter so much. The important part, of course, is that the consumers really recognizing the brand and then picking us no matter where we decide to put the products. With that said, of course, we'll still continue to focus online and currently the sheer online business is 41%, so a fairly high sheer overall business. But as we said, a strong recovery from brick and mortar stores in Q1. Running through the categories, underwear, again, you know, delivery related, but minus 12, apparel plus 13%, swim plus 25%, and footwear plus 208%. So overall, you know, our categories are developing according to plan. And with that said, you know, let's, you know, dig in a bit to the balance sheet and our bottom line. Of course, there's no one better than that than Jens, so our fantastic CFO, ready to entering the stage. So you guys fire away, Jens.

Thanks a lot, Enric, and welcome from me as well. It's a fantastic Friday. The sun is shining, at least here in Stockholm, and I'm very proud to be here to present our first quarterly report for 2025. If we look at the bottom line in the P&L, Henrik already mentioned the gross margin is slightly declining to 50%, currency neutral 51%, much related to the very large share of footwear, which has a slightly lower gross margin than the other categories, even though it's picking up in the last, well, let's say 12 months then. So let's hope that continues going up and then we'll see some better development here. In terms of the operating income, very good development, 34 million compared to the previous years you see on the slide here. It's a solid and steady development on the bottom line as well. If you look at the net income, that's even more impressive. So it's up 36 million compared to mid-20s previous years. So here we've had some foreign FX-related impacts that is working positively for us in the quarter for this year. So that's positive, of course. If we look at the balance sheet, the solidity or the equity through assets is slightly declining to 52%. However, still strong above 50% and way above the 35% that we've communicated to you guys previously. The net debt also increasing to 120 million, which is still okay. And according to plan, it's related to having more footwear in the warehouse as we took that over a year ago, mainly related to that. But also some change in the way that we keep our inventory, so that has also increased slightly overall. In terms of the working capital, we track that we want to be around 20%, which you can see that we are. We try to compare the core working capital to a 12-month role in gross sales. Obviously, it's important that we have the right stuff in the warehouse, and we feel that we have. Being stable around 20% is something that I'm very pleased with. With that short bottom line and the balance sheet update, Yes, I'm back again. You're back again.

Yeah, brilliant. You can probably summarize it yourself. I think we've been pretty clear. The brand is gaining momentum. I think the development we see in Germany is simply fantastic. And of course, it's reassuring. We now see that we have the ability to build the brand with... The limited resources we have of course being still a fairly small brand and get a measurable traction. So let's look at Germany even more and of course we'll continue to talk about that. Record sales, so 280 million, absolutely fantastic. We've integrated footwear, we've done an incredible job in moving that into the organization, continuing to push of course, making better products, putting them in the right distribution. and of course even though it looks great with 208 growth we're not even the beginning of the footwear journey so of course a lot of hard work remains you know until that has been completely sorted out but uh we're off for a very very good start and looking at the different channels again i think the clearly highlight is the ecom business you know growing 26 that's really where you know the end consumers can see the brand can see the products and even though of course the the world is not potentially a perfect place right now. They are buying our products to a much higher extent than what they do from a lot of our competitors. And that's a clear sign of strength, of course. Yesterday we had our AGM. Only a fraction of our 9,517 shareholders showed up. So I welcome you to join us next year. If you can't wait to meet us live, then why don't you join us today at our sports hour? We work out every day, 11 to 12. It's compulsory, so you have to join. It's going to be a lot of fun. We do that in all of our markets. And of course, that's part of us just living the brand. We believe that this world don't need any more brands inspiring you to win gold medals or go to the Olympics. We believe that the world needs a new brand, a brand that reaches out and reminds you on a very tough Monday or a hard Tuesday that the best gift to yourself is to take a walk, take a run, or go to the gym. And the feeling afterwards is going to be simply incredible. So that's our story. And if you want to see that live, you're welcome to join us every Friday, 11 to 12, out at Frösnavik. Or if you're in Finland or Norway, you can simply join the local offices over there. So that's what this is simply all about. And with that said, thank you for listening in. As you can hear, we're really, really happy with how 2025 has started out for us. And I'll see you soon again. But before you hang up, I'm sure that Hjalmar will have tons of questions for us as well. So, Hjalmar.

All right, let's fire away. Thank you so much, Henrik and Jens. I was thinking maybe we start on the wholesale, of course, the physical wholesale going very well. Is this mainly, would you say, due to easier comps than on the shoe level, or can we also interpret this as some sort of like a positive stance on their end that is reflected in the purchase pattern as well?

No, I think it's a mix of everything. So, of course, when we're growing footwear with 208%, of course, that's going to reflect also, of course, the channel development. And we know that the biggest share of our footwear business is coming from wholesale. So, of course, that is helping out. But even if we take out the footwear business, we see, of course, that all of the other carriers are also showing promising growth, even though underwear is having a short-term decline due to this delivery that we spoke about. But overall, we see wholesale is recovering. I think they're doing fairly good. When we look at the Swedish data, I think sporting goods has been declining for a number of quarters. And I think this year actually was one of the first ones where actually The industry has started to grow again. So I think that the world around us will be perhaps a bit more forgiving than what it was in the past. We've always said, though, that we're still small. So whether it's an easy market or a hard market, we still need to be able to grow. And I think we've showcased that throughout the years as well.

Speaking of that, how would you describe the current state of the Swedish consumer? Going into the year, there was a lot of, in the industry at least, some general optimism. What would you say is the current view? Is it a more cautious approach or is there still cause for optimism if we look into the remainder of the year?

Well, I think individuals are still a bit cautious. I think we started out the year on a fairly optimistic note. We had a bit more money in our wallet due to interest reductions and tax reductions. But then with everything that happened in the US, of course, that's impacting us emotionally, even though perhaps not so much factual. So that, I think, is very clear. But it's more a feeling that I get when we meet buyers, when we talk to people. When we look at our numbers, reviewing our own e-commerce business, we can't really see that that's transforming into anything tangible there. We see that the consumers are still shopping. Our conversion on our e-commerce site is higher than last year. We keep the same basket size. So, yeah, as a brand, I think we seem to be coping with that really, really well. Most likely perhaps also due to, of course, having fairly forgiving price points. We're not a luxury brand. We are like a mid-premium brand. And I think also the message that we are trying to bring across is resonating really well you know also in a in a world where you're a bit worried so uh hey you know do what you can to improve and one of the things of course is to train and it doesn't need to cost that much you know it's just about you know taking the stairs instead of the elevator or you know going for a run or whatever you want to do so i think us reminding people that even when things are tough you can make things that will actually make you feel better i think it's resonating really really well with consumers and of course our core message has been all the time to you know train to live

Yeah, thank you. And then if we could just spend some more time on the gross margin, I mean, both you and Jens spoke of it and the product mix is of course impacting, but what is the real impact from the shoe side? Is it mainly that you currently feel that you maybe have to give some additional discounts to sort of price yourself into certain markets or can this be also said to relate to production in some sense? Could you maybe like break down the impact from that is impacting the shoe segment internally?

I think first, though, neither one of us is happy with the gross margin development. So this is not where we should be, to be clear. So if you look at the entire quarter, I think there's a lot of victories, a lot of stuff to be really proud over. The gross margin is not one of them. So we simply need to work more here. We can still explain why it is the way it is. Of course, one is actually currency, but... Looking at our own operations and of course footwear having a fairly big impact. And there's numerous different reasons. But of course, one is that we've had a licensed partner that's been doing footwear for us for many, many, many, many years. And of course, when you are a licensed partner, you potentially don't really invest for the future. Because you don't know whether you will have the brand for five years or ten years or for the rest of your life, because we own the brand. And of course, that will limit, of course, your willingness to invest. And that usually then transforms into not making the products as good as they could be. Because instead, of course, you want to make that additional margin potentially. And what we have said is that we need to first make fantastic footwear. That is our main priority. The second one, of course, is to make sure that's also profitable. But there will be a bit of a journey for us to first, of course, change the footwear so they're much better. There's no room to increase the price a lot short term, but we might need to do that long term. But what that means is that the margin versus other categories is going to be lower. So it is a cautious decision that we want to invest into the category. We want to build great products without repricing ourselves completely out of the market because there was a retail price last year on the footwear. So even though the footwear was not as good a year ago, We don't believe that we've been able to communicate that to the consumer. So the risk was that they will simply buy less if we simply increase the prices. So that's going to be a bit of a balance. But with time, of course, we're going to catch up. We know when we look at what we did before Björn Borg, so at Adidas, for example, that leisure footwear is one of those products that should have a very, very high starting margin. as opposed to potentially sports bras or sports apparel. But it will take a bit of time to get to that point. I think that's clearly one.

I think Jens also mentioned, of course, that there has been some improvement in this segment already. But based on your experience then, should we maybe expect this to be visible in 2026? Or when could we see maybe like a recovery in the gross margin in this segment?

We're avoiding getting into this forecasting, but our internal ambition is to slowly increase the gross margins on all of our product groups. That's a work that we do constantly. That's a mix of increasing prices, reviewing discounts, and looking at purchases. including then, of course, tariffs, which country to produce, how do you transport it back to a lot of different dimensions. And I think what we've said is that we should be able to, given our business model, to have around 55% gross margin. So that has been our ambition ever since I started. And I think it's been clear that more often than not, have we missed that. And of course now, well, we're at 50, so it's a fair bit to go. But the work continues. And the plan, of course, is to be able to make that recognizable every quarter.

And granted that the shoe segment is important for driving growth ahead, could you maybe give us some soft values on the development so far? Maybe some specific launch that you would like to highlight or some reception that you received from customers?

Yeah, absolutely. And one of those victories that took at least me with a bit of a surprise was just last week. So, of course, the marketing team together with our e-com team is ongoing activating the brand in different social channels. And here, of course, we're giving away products to a bunch of different people, influencers, ambassadors. And, of course, they, to a different extent, are posting those and telling stories about those products. And when we evaluated the first week result of the activation we did with almost 400 individuals here just a few weeks ago, the top most sold products of all at our own e-com was three women's footwear models. So, of course, that has been completely unheard of. We know, of course, that there's a massive potential in men's footwear. That's what we've been doing in the past. That is also our focus. But now when we are getting some of the female styles up to the level where we're really proud over them, and when we put them into the right context, it's simply flying out. you know much much much higher much much much better than what men's are doing and actually looking at you know last year's quarter you know our best sold products all categories on own ecom was uh women's winterized footwear absolutely incredible and that was not something that i you know counted on when i did the business plan you know a year ago when we took it over So we can clearly see that the brand is really resonating well with female consumers. And of course, now also the product is doing that. So that's perhaps more of the sort of the soft values, if you will.

Yeah. Thank you so much. Sounds very positive for the segment. And thank you, Henrik and Jens, for coming here and presenting today.

Yes. Thank you, Hjalmar. Join us for the training. You too. Thank you, guys, and have a fantastic Friday.