Björn Borg AB (publ)

Good morning, guys, and welcome to our Q2 presentation. Beautiful Friday. We're getting ready for the midnight run tomorrow. You should join us if you can. So we're partnering up with Midnattsloppet. And so tomorrow in Stockholm, more than 30,000 runners will be wearing a beautiful Diva Pink Borg tea. And of course, everyone working from Björn Borg is doing their one as well. But enough of that. Looking at Q2, I think the clear highlights obviously is that our sports apparel and our own e-commerce is continuing to perform exceptionally well. So, OwnEcom growing 26% in the quarter, benchmarking that against competitors, we're clearly taking market cheers. The growth is spread across almost all of our markets, so that's very, very reassuring. And of course, a clear sign that the brand is getting stronger and stronger and stronger. And of course, the combination with a very strong product offering, of course, is the reason for this very strong growth. of course, together with a great team that is managing our e-commerce business. But of course, I think the highlight that is worth talking about, you know, over and over again is our ongoing, very, very strong momentum with sports power. So plus 45% in the quarter. So those has been following us for a while. You know that this journey was all about, you know, taking this very beautiful, strong men's underwear brand and moving that into a bigger arena. moving into sports, sports apparel, extending the categories, and by doing so, growing in our already existing markets. That was the plan. And we can now conclude that we have 10, perhaps even 11 quarters of very, very strong sports apparel growth. So the clear highlight, obviously, plus 45% versus last year. in a market that is very, very challenging. And again, these are, you know, comp numbers. So it's not like we have bought something or that we've added something that we hadn't in the past. It's really comparable numbers. So I'm super, super, super proud over that development. And the highlights, of course, we're continuing to grow our top line. 6%. Of course, I'm not really happy with that. We want to grow even more. Currency neutral. Looking at total sales, we're actually above 10%, which I think is good in a fairly tough market. It's driven from wholesale and, of course, own e-commerce I already talked about. Our retail operations, our own stores, of course, is declining because we're closing down here. But also those that we still have are getting smaller and smaller versus last year. Part of that is actually related to that we got some support last year, a payback from a COVID support back in the days. But nevertheless, on retail, of course, that's not our focus. Wholesale and e-commerce. Looking at the product categories, of course, sports apparel plus 45%. Bags is doing really, really well. Underwear is also on a strong growth number. And yes, footwear in the quarter is down, but we just need to remind ourselves that last year in Q2, that's when we sold almost all of our products the first half year due to the bankruptcy that happened in Q1 last year. so it's not really comparable numbers nevertheless of course we want to see stronger footwear numbers the highlight obviously is that we're still growing very very good with footwear in our own econ which is more sort of comparable numbers our gross margin is declining versus last year And there's many different reasons for that. One is that we got a bit of a support last year, so it's hard comparable numbers. It's also product mix, also a bit category mix and the country split. And I think we also have to just acknowledge that, of course, we have been a bit more aggressive when it comes to clearance on own ecom to continue to take market shares and drive growth. And that's also, of course, impacting it versus last year's same quarter. Profit is increasing, which is fantastic, of course. And we have a very strong financial position, as always. Our long-term goal doesn't change. This has been with us and me since I joined Bjorn Borg in 2014. We're here to build a sports fashion brand. Our long-term financial objectives remain the same, and the strategy obviously remains exactly the same. So really growing the sports apparel business, the footwear business, the bag business, and moving us into a bigger arena. That's clearly the main objectives. And the good thing, of course, is that the brand... One of the things that makes us truly unique is getting stronger and stronger. And this slide probably would be my screen saver for the rest of the year. But when we look at the Q2 data from all the markets where we're measuring this, which is Sweden, Finland, Denmark, Norway, Holland, Belgium, We ask 400 consumers every week a bunch of different questions. And one of the questions is that out of this list of brands, which would you consider buying? And in Q2, we are at an average in those markets number three. So this is absolutely incredible. And thanks, of course, to a great effort from the marketing team. But in combination, of course, with being in the right distribution and creating great products. So the only ones that are now bigger in terms of people considering buying them is Nike and Adidas. We're ahead of everyone else. So let's just hang on to this slide for a while. It's just very, very beautiful. If we dig a bit deeper into it, we can see that the push in Germany is actually going really, really well. Consideration for him is also increasing and purchase intent is also going up. So, of course, in this brand track numbers is a number of different KPIs, but the main message is that the brand is getting stronger and stronger every quarter. And of course, that is what we also then see in our e-commerce growth number as one example. The trick has always been how do you maintain a strong underwear position, being the market leader in underwear, and at the same time then moving into this bigger arena of sports products. And we can see that personal intent is going down a bit, you know, versus last year, but still, of course, very, very high on underwear hymns. We're maintaining a very strong position. Apparel continuing to be on a very, very good trend. And looking at the top line, As we've seen, we want more. But with that said, we have never sold more in a Q2. But for the details, I'll bring in my CFO again. So listen now.

Thanks a lot, Henrik. It's good to be back from summer holidays. Good to be back with Henrik. You're fired up. Maybe I should print the slide on the brand position and frame it for you. It's beautiful. I agree. On the top line, however, we can see that the Q2 is super strong. Never have we had a stronger Q2 in the history of this company. So really proud to see that we're growing. Yes, we want to grow more. We want above 10%, 6%. It's still good in a tough quarter. Breaking it down to the different markets, we can see that in our own subsidiaries, almost all markets are growing. We struggled a little bit in the Benelux, but that is temporary and it will bounce back. In terms of the distributors overall, going down, however, our biggest market in Norway is still just above the zero line. If we combine that into our segments or channels, wholesale is growing 9% in the quarter. Here we can see that the physical doors, the brick and mortar, are growing even 16%, while the online players are fighting a bit with minus 3%. And own e-commerce, you heard from Henrik, is growing 26% in the quarter, super strong, while everyone else is losing market shares, we're gaining. Own retail is declining. Comparable stores, meaning the same ones we had open last year, is excluding contributions from any government on COVID, etc., It's a minus 6%, so still declining, but not really the focus either, as you heard before. Distributors minus 11, mainly some of the smaller distributors have a bit of a catch up to do. If we look at the online sales, and when we talk about online sales, we talk about our own e-commerce, obviously, the wholesale e-tailers, meaning wholesale partners selling online only, and marketplaces. Here, we've kept track of this for a while, and we can see it's going up in absolute numbers, and if we compare it to last year, even in percentage of the total sales. Obviously, if we were to see how much of our products are sold on physical players' own websites, it should be an even higher number, obviously. Breaking down the sales to our categories, you heard from Henrik many times today that the sports apparel is up 45% in the quarter, super strong. really comparable numbers as well. So very, very good to see. But also underwear bounced back. For those of you remembering that Q1 had a timing problem, let's say, or challenge in the first quarter, it now bounced back in the second quarter with plus 11. Bags back to growth on 38%. So, yeah, good to see as well. Looking at the bottom line, so gross margin is down towards the end of the Q2. Mainly, you heard a bit from Henrik as well, but we have the biggest contributed to that is that the large key accounts are taking a bigger share of sales with slightly higher discounts, but also the D2C channel, mainly in Ecom, is having slightly lower margins in the Q2. In the operating profit, it's increasing versus last year slightly, while net income is slightly declining. However, this is related to revaluation or FX revaluation of our accounts, as well as some hedging impact that's impacting us negatively in the quarter. In terms of the balance sheet, the equity is still strong, very stable, around 50%. Net debt is increasing slightly. We have slightly higher dividend. At the same time, the old Nikon channel is taking a bigger share of sales, requiring a higher inventory, requiring that the net debt is increasing slightly compared to previous years. The working capital in relation to the rolling gross sales, we want to be around 20% slightly up during the Q2, but not alarming. So it's 22%. But I think it's going to keep fairly stable around the 20% line roughly. With that, very happy to be back to work. Very happy it's Friday. Henrik, should you round this up before we go training?

Yes.