Interim / Quarterly Report • Nov 11, 2010
Interim / Quarterly Report
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"During the third quarter a number of new products reached stores, including constructed bras and boxer shorts, and the pace of product development remained high. The footwear operations licensed out at the beginning of the year are developing positively, and we feel that focusing the Group's resources on our main area, underwear, is producing results. As a whole, the third quarter showed that the positive trend earlier in the year is continuing. We were able to report higher sales as well as improved income and favorable margins", says Arthur Engel.
| SEK million | July–Sept 2010 |
July–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Oct 2009– Sept 2010 |
Full-year 2009 |
|---|---|---|---|---|---|---|
| Net sales | 171.0 | 155.2 | 420.1 | 417.7 | 522.4 | 519.9 |
| Gross profit margin, % | 52.6 | 50.8 | 52.8 | 50.2 | 53.4 | 51.3 |
| Operating profit | 51.5 | 43.5 | 101.5 | 93.2 | 120.9 | 112.6 |
| Operating margin, % | 30.1 | 28.0 | 24.2 | 22.3 | 23.1 | 21.7 |
| Profit after tax | 36.7 | 30.1 | 73.2 | 67.4 | 86.7 | 80.9 |
| Earnings per share, SEK | 1.46 | 1.20 | 2.91 | 2.68 | 3.45 | 3.22 |
| Earnings per share after dilution, SEK | 1.44 | 1.19 | 2.87 | 2.68 | 3.45 | 3.21 |
| Brand sales* | 507 | 502 | 1,305 | 1,462 | 1,715 | 1,872 |
*Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
Creating opportunities to focus fully on our core business – underwear – is a key element in our strategy and something we are constantly working on. Earlier in the year we licensed out the footwear product area to an established international player to create a better chance of developing and expanding these operations and at the same time to concentrate Björn Borg's resources on underwear, which is what we are best at. We are pleased therefore to state that the footwear product area is growing and developing positively in its new form.
As we earlier reported, intensified product development in underwear has led to an increased number of new products reaching stores. During the fall, for example, a new product group, constructed bras, was launched and received a positive response. We feel that this colorful collection fills a void in the market. Our classic boxer shorts have been relaunched and become a new men's underwear line. We are also introducing socks in eye-catching colors. The range of sporty underwear that hit the market this spring has been expanded, and we are seeing great interest in this category. The Love All women's underwear line has sold well and will be expanded with additional models. The Kids collections have established a foothold with many retailers, with growing demand. Creativity and the ability to continuously improve our products will remain among our most important success factors.
The third quarter confirmed that the positive trend we had seen earlier in the year is continuing. We were able to increase sales and at the same time strengthen profit and margins. Several markets are now growing after a previous decline, including Norway, which had strong brand sales during the quarter. Belgium and Finland continued to report fine growth numbers, while Southern European markets posted weaker development under tough market conditions. In Italy, we are planning to terminate the agreement with our distributor, which has been unable to make the necessary investment. We intend to remain in the country, and strong interest has been expressed by several Italian distributors that would like to build on the work that has already been done. In Switzerland, our German distributor will take over distribution beginning in 2011.
The industry faces uncertainty going forward with regard to cotton prices and production capacity in Asia, which can be partly offset by a favorable dollar exchange rate in purchasing. We are carefully following the market and focusing on what we can influence as well as what we consider decisive to strong long-term growth and profitability: creative branding, innovative product development and efficient distribution.
Arthur Engel, President
Brand sales (excluding VAT) for the third quarter of 2010 increased by 1 percent to SEK 507 million (502). For the first nine months of 2010 brand sales decreased by 11 percent to SEK 1,305 million (1,462). The positive trend from the previous quarter continued during the third quarter, with sales stabilizing in large markets and continued gains in most smaller markets.
Brand sales in the underwear product area fell by 9 percent during the first nine months, compared with the previous year, after recovering during the last two quarters compared with the first. Underwear accounted for 64 percent (62) of brand sales during the period.
In the smaller product area, adjacent products – menswear – brand sales rose substantially during the first three quarters compared with the same period of 2009, but from a low level.
Sales in the footwear product area increased during the third quarter, but fell by 18 percent during the nine-month period.
In other licensed products, sales decreased in bags and women's wear, while eyewear and fragrances reported growth during the first nine months. As a whole, licensed product sales fell by 15 percent, mainly due to the decline in women's clothing in the Netherlands.
* Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
** Underwear: Men's and women's underwear, swimwear and socks. Adjacent products: Men's clothing. Licensees: Bags, fragrances, eyewear and women's clothing in the Netherlands.
Smaller markets accounted for 10 percent (10) of total brand sales during the first nine months of the year. Among larger markets, Norway reported a strong increase during the quarter, while the Netherlands together posted a negative sales trend for the first nine months. Among smaller markets, Belgium and Finland continued to report strong sales, and Germany has gotten off to a good start to its operations, which were launched during the first quarter of the year.
During the quarter Björn Borg began its previously announced takeover of the British operations from the former distributor, which will be completed during the second quarter of 2011.
The agreement with the distributor for the Italian market is expected to be terminated during the fourth quarter of 2010. Operations in Italy, which were launched in fall 2009, have not developed as planned, and the company feels that the current distributor is unable to make the necessary investment to establish the brand in the country. Björn Borg's intent is to remain in operation in Italy. Discussions are currently being held with several possible partners that are interested in building on what has already been created.
A letter of intent was signed with our German distributor to handle distribution in Switzerland as well. Sales to retailers are expected to begin during the second quarter of 2011.
No new Björn Borg stores were opened during the period January to September 2010. At the end of the period there were 46 (45) Björn Borg stores, of which 10 (10) are Groupowned.
Sales and operating profit increased during the third quarter.
Group sales during the third quarter amounted to SEK 171.0 million (155.2), an increase of 10 percent. Sales were positively affected mainly by higher underwear sales to distributors. Sales in the Swedish wholesale operations decreased slightly, mainly due to postponed deliveries. Sales for Groupowned retail operations decreased as well. Excluding currency effects, net sales rose by 11 percent from SEK 155.2 million to SEK 171.6 million. The negative exchange rate effect amounted to SEK 0.6 million.
Group sales during the first nine months of the year amounted to SEK 420.1 million (417.7), an increase of 1 percent. Sales were negatively affected by lower export sales to the Netherlands in the footwear product area during the first quarter, although this was offset by higher export and wholesale sales in the underwear product area. Sales for Group-owned retail operations decreased. Excluding currency effects, net sales increased by 5 percent from SEK 417.7 million to SEK 437.3 million. The negative exchange rate effect amounted to SEK 17.2 million.
The gross profit margin increased during the third quarter to 52.6 percent (50.8), which was largely due to a weaker
USD, but also to some extent to increased sales of highmargin products.
Operating profit increased by 19 percent to SEK 51.5 million (43.5) during the quarter with an operating margin of 30.1 percent (28.0). Profit before tax increased to SEK 49.8 million (40.8).
Operating profit was positively affected by increased sales and higher gross profit. Due to continued investments in marketing and human resources, as well as certain investments in the British market, operating expenses increased.
The gross profit margin increased during the first nine months of the year to 52.8 percent (50.2). Operating profit increased by 9 percent to SEK 101.5 million (93.2) with an operating margin of 24.2 percent (22.3). Profit before tax increased to SEK 99.9 million (91.9). Operating expenses as a share of net sales amounted to 28.7 percent (27.9).
The main reason for the higher gross profit margin was the weaker USD compared with the same period of 2009. Increased operating expenses are mainly due to an agreement with the British distributor during the second quarter. Further cost efficiencies, together with lower investments in the U.S., have compensated positively.
As of September 30, 2010 the company had 25,148,384 shares outstanding. Earnings per share before and after dilution amounted to SEK 2.91 (2.68) and SEK 2.87 (2.68), respectively.
The Group consists of eight companies that operate under the Björn Borg brand on every level from product development to wholesaling and consumer sales in its own Björn Borg stores.
Sales in the Brand and other segment primarily consist of royalty revenue, sales of services within the Björn Borg network and intra-Group services.
Net sales during the period January–September reached SEK 100.2 million (104.8), a decrease of 4 percent. External sales amounted to SEK 40.6 million (44.2). The decrease was mainly due to lower brand sales in the underwear product area as well as the licensed product areas for bags and women's clothing.
Operating profit amounted to SEK 23.9 million (35.3), a decrease of 32 percent for the period. Profit was affected by the lower sales, but also by expenses attributable to the takeover of the British operations during second quarter as well as higher marketing expenses.
| Sales, SEK thousands | Operating profit, SEK thousands | Operating margin | |||||
|---|---|---|---|---|---|---|---|
| Business segment | Revenue source | Jan–Sept 2010 |
Jan–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
| Brand and other | Royalties and services | 100,196 | 104,776 | 23,945 | 35,304 | 24% | 34% |
| Product development | Products | 298,452 | 277,434 | 60,832 | 47,959 | 20% | 17% |
| Wholesale operations | Wholesale sales | 151,144 | 147,880 | 19,478 | 6,636 | 13% | 4% |
| Retail | Retailers | 34,561 | 38,756 | –2,763 | 3,267 | –8% | 8% |
| Less internal sales | –164,206 | –151,178 | – | – | – | – | |
| Total | 420,147 | 417,668 | 101,492 | 93,166 | 24% | 22% |
The Group has global responsibility for development, design and production of underwear and adjacent products.
The business segment's net sales amounted to SEK 298.5 million (277.4) during the period January–September, an increase of 8 percent. External sales amounted to SEK 224.1 million (211.3). Sales were positively affected by an underlying volume increase in the underwear product area at the same time that lower footwear exports to the Netherlands and a lower USD had a negative effect.
Operating profit increased to SEK 60.8 million (48.0) as a result of the improved gross profit margin and increased sales.
The Björn Borg Group is the exclusive wholesaler for the underwear and adjacent products in Sweden and the U.S. as well as for footwear in Sweden and Finland.
Net sales in wholesale operations increased by 2 percent during the period January–September to SEK 151.1 million (147.9). External sales amounted to SEK 120.8 million (123.3).
Operating profit amounted to SEK 19.5 million (6.6). The increase was due to increased sales, a lower USD, which affected gross profit positively, and lower investments in the U.S.
The Björn Borg Group owns and operates eight stores in the Swedish market that sell underwear, adjacent products, footwear and licensed products. Additionally, Björn Borg operates two factory outlets and a web shop.
Comparable net sales in the Retail business segment amounted to SEK 34.6 million (38.8) during the period January–September, a decrease of 11 percent. Continued weakness in several large stores and the outlets affected sales negatively.
The operating loss for the period January–September was SEK 2.8 million, against a year-earlier profit of SEK 3.3 million, due to the lower sales and to operating expenses resulting from the renovation of a Stockholm store.
Intra-Group sales amounted to SEK 164.2 million (151.2) during the period January–September.
The Björn Borg Group is active in an industry with seasonal variations. Sales and earnings vary by quarter. With the current product mix, the third quarter is generally the weakest in terms of profit. See the figure on quarterly net sales and operating profit on page 4.
Cash flow from operating activities in the Group amounted to SEK 13.3 million (57.7) for the period January–September 2010. The decrease was mainly due to higher working capital caused by later deliveries to customers compared with previous periods, because of which related accounts receivable were paid after the conclusion of the period.
Total investments in tangible and intangible non-current assets amounted to SEK 6.8 million (2.5) during the first nine months, the large part of which was attributable to a new web platform, but also a store renovation and a new
enterprise system. During the first quarter Björn Borg Services AB was acquired for SEK 9.0 million, excluding Björn Borg Services' cash and transaction expenses.
For the first nine months of 2010 cash & cash equivalents decreased by SEK 143.3 million (20.6), which was mainly due to an increased dividend to the shareholders, the investment of a portion of surplus liquidity in funds and delivery delays. In 2010, SEK 125.7 million was distributed to shareholders, compared with SEK 37.6 million in 2009.
The Björn Borg Group's cash & cash equivalents and shortterm investments amounted to SEK 168.2 million (262.1) at the end of the period. During the third quarter SEK 15 million in surplus liquidity was placed in a low-risk fund. The equity/assets ratio was 73.1 percent (75.7). The company has no interest-bearing liabilities.
No changes were made with regard to pledged assets and contingent liabilities compared with December 31, 2009. An agreement has been reached on the previously reported dispute with the English distributor regarding undelivered shipments, which affected profit for the period April–June 2010. For further information, see note 22 on page 56 of the annual report 2009.
The average number of employees in the Group for the period January–September was 99 (93), of whom 63 (58) were women.
No transactions were executed with related parties.
In its operations, the Björn Borg Group is exposed to risks and uncertainties. For further information, refer to pages 37–38 in the annual report 2009.
A letter of intent was signed with our German distributor to handle distribution in Switzerland as well. Sales to retailers are expected to begin during the second quarter of 2011.
In accordance with the resolution of the Annual General Meeting, Björn Borg's Nomination Committee for the 2011 AGM will be appointed by having the Chairman of the Board contact each of the company's four largest shareholders based on voting rights as of August 31, 2010. Björn Borg's Nomination Committee for the 2011 AGM is as follows: Fredrik Lövstedt, Chairman of the Board; Mats Nilsson, representing himself as a shareholder; Carina Tovi, representing the Swedbank Robur funds; Stefan Roos, representing the SEB funds. Mats Nilsson has been appointed the Chairman of the Nomination Committee.
The Annual General Meeting for the financial year 2010 will be held in Stockholm on April 14, 2011.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. In addition, the company owns 100 percent of the shares in Björn Borg Brands AB and Björn Borg Footwear Holding AB.
The Parent Company's net sales for the third quarter amounted to SEK 11.4 million (11.1). During the first nine months of the year net sales amounted to SEK 29.7 million (31.5). The loss before tax amounted to SEK 7.9 million for the third quarter, against a year-earlier loss of SEK 0.9 million, and SEK 28.8 million for the first nine months, against a year-earlier loss of SEK 12.5 million. Cash & cash equivalents and short-term investments amounted to SEK 141.7 million (174.8) on September 30, 2010. For the period investments in tangible and intangible non-current assets amounted to SEK 0.7 million (1.5).
Björn Borg currently has 25,148,384 shares outstanding.
The financial objectives of Björn Borg's operations for the period 2010–2014 are as follows:
The long-term objective will be achieved if established markets grow slightly below the average growth target and new markets provide stronger growth. At the start of the period sales growth could fall below the target, since several new markets are being added.
Surplus liquidity generated by meeting the new financial objectives will be distributed gradually over the forecast period, starting in 2010.
Operating investments are expected to fall in the range of 2–5 percent of net sales depending on the addition of any new concept stores.
This interim report has been prepared in accordance with the Annual Accounts Act and IAS 34 Interim Financial Reporting, and for the Parent Company in accordance with the Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2.3 Accounting in Legal Entities.
The same accounting principles were applied during the period as in 2009, as described on page 47 of the annual report 2009, with the exceptions indicated below.
The new and revised IFRS and the interpretations from IFRIC applied by the Group as of January 1, 2010 have not had a significant impact on the Group's results or financial position, with the exception of IFRS 3 Business Combinations, according to which the transaction expenses in connection with acquisitions are not included in acquisition value and instead are treated as overhead and recognized through profit or loss. According to RFR 2.3, some of the changes which were introduced in IAS 1 2009 and applied in the consolidated financial statements shall also be applied in the Parent Company. Due to these changes, a separate statement of total comprehensive income and a statement of changes in equity are presented for the Parent Company in this interim report.
This interim report has been reviewed by the company's auditors. Their review report can be found on page 12.
As a policy, the company does not issue earnings forecasts.
Condensed
| SEK thousands | July–Sept 2010 |
July–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Oct 2009– Sept 2010 |
Full-year 2009 |
|---|---|---|---|---|---|---|
| Net sales | 170,998 | 155,162 | 420,147 | 417,668 | 522,394 | 519,915 |
| Cost of goods sold | –81,135 | –76,403 | –198,167 | –207,937 | –243,501 | –253,271 |
| Gross profit | 89,863 | 78,759 | 221,979 | 209,730 | 278,893 | 266,644 |
| Distribution expenses | –25,571 | –23,243 | –79,022 | –77,634 | –103,777 | –102,390 |
| Administrative expenses | –9,461 | –8,752 | –30,932 | –29,052 | –40,343 | –38,463 |
| Development expenses | –3,315 | –3,311 | –10,533 | –9,877 | –13,853 | –13,197 |
| Operating profit | 51,516 | 43,454 | 101,492 | 93,166 | 120,920 | 112,594 |
| Net financial items | –1,744 | –2,624 | –1,647 | –1,220 | –1,362 | –936 |
| Profit before tax | 49,772 | 40,830 | 99,845 | 91,946 | 119,557 | 111,658 |
| Tax | –13,110 | –10,747 | –26,651 | –24,538 | –32,869 | –30,756 |
| Profit for the period | 36,662 | 30,083 | 73,194 | 67,408 | 86,688 | 80,902 |
| Profit attributable to: | ||||||
| Parent Company's shareholders | 36,642 | 30,078 | 73,174 | 67,380 | 86,661 | 80,867 |
| Minority interests | 21 | 5 | 20 | 28 | 27 | 35 |
| Other comprehensive income | ||||||
| Translation adjustments for foreign operations | 417 | 467 | 221 | 943 | 122 | 844 |
| Total comprehensive income for the period | 37,080 | 30,550 | 73,416 | 68,351 | 86,811 | 81,746 |
| Total comprehensive income for the period | ||||||
| attributable to | ||||||
| Parent Company's shareholders | 37,059 | 30,545 | 73,396 | 68,323 | 86,784 | 81,711 |
| Minority interests | 21 | 5 | 20 | 28 | 27 | 35 |
| Earnings per share, SEK | 1.46 | 1.20 | 2.91 | 2.68 | 3.45 | 3.22 |
| Earnings per share after dilution, SEK | 1.44 | 1.19 | 2.87 | 2.68 | 3.45 | 3.21 |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| Weighted average number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,098,828 | 25,148,384 | 25,111,217 |
| Effect of dilution* | 319,875 | 192,163 | 340,753 | 63,166 | – | 118,910 |
| Weighted average number of shares after full dilution | 25,468,259 | 25,340,547 | 25,489,137 | 25,161,994 | 25,148,384 | 25,230,128 |
* Björn Borg has two outstanding incentive programs based on warrants: 2008:1 and 2008:2. For more detailed information, see page 53 of the annual report 2009.
| Condensed | |||
|---|---|---|---|
| SEK thousands | Sept 30 2010 |
Sept 30 2009 |
December 31 2009 |
| Non-current assets | |||
| Goodwill | 13,944 | 13,944 | 13,944 |
| Trademarks | 187,532 | 187,532 | 187,532 |
| Other intangible assets | 7,371 | 1,843 | 3,437 |
| Tangible non-current assets | 8,588 | 12,061 | 11,150 |
| Deferred tax assets | 9,046 | – | – |
| Total non-current assets | 226,481 | 215,379 | 216,063 |
| Current assets | |||
| Inventories, etc. | 37,330 | 31,654 | 26,455 |
| Current receivables | 126,640 | 81,704 | 65,719 |
| Short-term investments | 15,000 | – | – |
| Cash & cash equivalents | 153,174 | 262,100 | 296,484 |
| Total current assets | 332,143 | 375,458 | 388,657 |
| Total assets | 558,624 | 590,837 | 604,720 |
| Equity and liabilities | |||
| Equity | 408,629 | 447,533 | 460,956 |
| Deferred tax liabilities | 42,546 | 36,720 | 40,011 |
| Other non-current liabilities | 36,265 | 42,371 | 40,889 |
| Accounts payable | 28,904 | 9,116 | 15,480 |
| Other current liabilities | 42,280 | 55,097 | 47,385 |
| Total equity and liabilities | 558,624 | 590,837 | 604,720 |
Condensed
| SEK thousands | Jan–Sept 2010 |
Jan–Sept 2009 |
Full-year 2009 |
|---|---|---|---|
| Opening balance | 460,956 | 413,803 | 413,803 |
| New share issues | – | 2,968 | 2,996 |
| Dividend | –125,742 | –37,589 | –37,589 |
| Total comprehensive income for the period | 73,416 | 68,351 | 81,746 |
| Closing balance | 408,629 | 447,533 | 460,956 |
Condensed
| SEK thousands | July–Sept 2010 |
July–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Full-year 2009 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Before change in working capital | 41,913 | 34,090 | 71,962 | 73,093 | 69,246 |
| Change in working capital | –42,756 | –11,711 | –58,739 | –15,387 | 24,873 |
| Cash flow from operating activities | –809 | 22,379 | 13,257 | 57,706 | 94,119 |
| Investments in intangible non-current assets | –973 | –158 | –4,834 | –1,419 | –3,160 |
| Investments in tangible non-current assets | –31 | –78 | –1,946 | –1,063 | –1,380 |
| Investments in financial non-current assets | – | – | –9,046 | – | – |
| Short-term placement | –15,000 | – | –15,000 | – | – |
| Cash flow from investing activities | –16,004 | –236 | –30,826 | –2,482 | –4,540 |
| Dividend | – | – | –125,742 | –37,589 | –37,589 |
| Incentive programs/new share issues | – | – | – | 2,968 | 2,996 |
| Cash flow from financing activities | – | – | –125,742 | –34,621 | –34,593 |
| Cash flow for the period | –16,813 | 22,143 | –143,311 | 20,602 | 54,986 |
| Cash & cash equivalents at beginning of period | 169,986 | 239,957 | 296,484 | 241,498 | 241,498 |
| Cash & cash equivalents at end of period | 153,174 | 262,100 | 153,174 | 262,100 | 296,484 |
Group
| SEK thousands | July–Sept 2010 |
July–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Oct 2009– Sept 2010 |
Full-year 2009 |
|---|---|---|---|---|---|---|
| Gross profit margin, % | 52.6 | 50.8 | 52.8 | 50.2 | 53.4 | 51.3 |
| Operating margin, % | 30.1 | 28.0 | 24.2 | 22.3 | 23.1 | 21.7 |
| Profit margin, % | 29.1 | 26.3 | 23.8 | 22.0 | 22.9 | 21.5 |
| Return on capital employed, % | 25.0 | 26.0 | 25.0 | 26.0 | 25.0 | 20.9 |
| Return on average equity, % | 20.2 | 21.7 | 20.2 | 21.7 | 20.2 | 18.5 |
| Profit attributable to Parent Company's shareholders | 36,642 | 30,078 | 73,174 | 67,380 | 86,661 | 80,867 |
| Earnings per share, SEK | 1.46 | 1.20 | 2.91 | 2.68 | 3.45 | 3.22 |
| Earnings per share after dilution, SEK | 1.44 | 1.19 | 2.87 | 2.68 | 3.45 | 3.21 |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| Weighted average number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,098,828 | 25,148,384 | 25,111,217 |
| Effect of dilution | 319,875 | 192,163 | 340,753 | 63,166 | – | 118,910 |
| Weighted average number of shares after dilution | 25,468,259 | 25,340,547 | 25,489,137 | 25,161,994 | 25,148,384 | 25,230,128 |
| Equity/assets ratio, % | 73.1 | 75.7 | 73.1 | 75.7 | 73.1 | 76.2 |
| Equity per share, SEK | 16.25 | 17.80 | 16.25 | 17.80 | 16.25 | 18.33 |
| Investments in intangible non-current assets | 973 | 158 | 4,834 | 1,419 | 6,575 | 3,160 |
| Investments in tangible non-current assets | 31 | 78 | 1,946 | 1,063 | 2,229 | 1,380 |
| Investments in financial non-current assets | – | – | 9,046 | – | 9,046 | – |
| Depreciation and impairment losses for the period | –1,665 | –1,703 | –5,377 | –5,662 | –6,739 | –7,024 |
| Average number of employees | 99 | 93 | 99 | 93 | 98 | 92 |
| Group | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | July–Sept 2010 |
July–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Oct 2009– Sept 2010 |
Full-year 2009 |
| Operating revenue | ||||||
| Brand and other | ||||||
| External revenue | 17,054 | 13,857 | 40,646 | 44,226 | 51,357 | 54,936 |
| Internal revenue | 23,772 | 22,577 | 59,550 | 60,550 | 82,341 | 83,341 |
| 40,826 | 36,434 | 100,196 | 104,776 | 133,698 | 138,277 | |
| Product development | ||||||
| External revenue | 92,322 | 75,334 | 224,132 | 211,343 | 270,180 | 257,391 |
| Internal revenue | 36,634 | 23,445 | 74,320 | 66,091 | 90,017 | 81,788 |
| 128,955 | 98,779 | 298,452 | 277,434 | 360,197 | 339,179 | |
| Wholesale | ||||||
| External revenue | 47,086 | 49,689 | 120,808 | 123,344 | 150,567 | 153,102 |
| Internal revenue | 11,218 | 11,449 | 30,336 | 24,536 | 46,512 | 40,713 |
| 58,304 | 61,138 | 151,144 | 147,880 | 197,079 | 193,815 | |
| Retail | ||||||
| External revenue | 14,537 | 16,283 | 34,561 | 38,756 | 50,290 | 54,485 |
| Internal revenue | – | – | – | – | 6 | 6 |
| 14,537 | 16,283 | 34,561 | 38,756 | 50,296 | 54,491 | |
| Less internal sales | –71,624 | –57,472 | –164,206 | –151,178 | –218,876 | –205,847 |
| Operating revenue | 170,998 | 155,162 | 420,147 | 417,668 | 522,394 | 519,915 |
| Operating profit | ||||||
| Brand and other | 15,830 | 16,368 | 23,945 | 35,304 | 32,584 | 43,943 |
| Product development | 26,999 | 15,468 | 60,832 | 47,959 | 63,857 | 50,984 |
| Wholesale | 8,309 | 8,905 | 19,478 | 6,636 | 22,477 | 9,635 |
| Retail | 379 | 2,713 | –2,763 | 3,267 | 2,002 | 8,032 |
| Operating profit | 51,516 | 43,454 | 101,492 | 93,166 | 120,920 | 112,594 |
| Group | ||||||||
|---|---|---|---|---|---|---|---|---|
| SEK thousands | Q3 2010 |
Q2 2010 |
Q1 2010 |
Q4 2009 |
Q3 2009 |
Q2 2009 |
Q1 2009 |
Q4 2008 |
| Net sales | 170,998 | 100,770 | 148,379 | 102,247 | 155,162 | 97,832 | 164,674 | 131,233 |
| Gross profit margin, % | 52.6 | 55.1 | 51.6 | 55.7 | 50.8 | 50.9 | 49.3 | 54.1 |
| Operating profit | 51,516 | 13,939 | 36,037 | 19,427 | 43,454 | 12,131 | 37,582 | 26,049 |
| Operating margin, % | 30.1 | 13.8 | 24.3 | 19.0 | 28.0 | 12.4 | 22.8 | 19.8 |
| Profit after financial items | 49,772 | 14,644 | 35,429 | 19,712 | 40,830 | 11,871 | 39,245 | 28,693 |
| Profit margin, % | 29.1 | 14.5 | 23.9 | 19.3 | 26.3 | 12.1 | 23.8 | 21.9 |
| Earnings per share, SEK | 1.46 | 0.43 | 1.03 | 0.54 | 1.20 | 0.34 | 1.15 | 0.91 |
| Earnings per share after dilution, SEK | 1.44 | 0.42 | 1.01 | 0.53 | 1.19 | 0.33 | 1.15 | 0.91 |
| Number of Björn Borg stores at end of period | 46 | 46 | 46 | 46 | 45 | 43 | 44 | 44 |
| of which Björn Borg-owned stores | 10 | 10 | 10 | 10 | 10 | 10 | 11 | 11 |
| Brand sales | 506,572 | 347,300 | 460,156 | 410,053 * | 501,629 * | 358,037 * | 602,183 | 475,806 |
*Because brand sales for the full-year 2009 have been changed to correct the previously reported figures, quarterly brand sales for 2009 have been updated. Previously reported figures: Q2 2009 = SEK 385,637,000, Q3 2009 = SEK 566,423, 000, Q4 2009 = SEK 422,121,000
Condensed
| SEK thousands | July–Sept 2010 |
July–Sept 2009 |
Jan–Sept 2010 |
Jan–Sept 2009 |
Oct 2009– Sept 2010 |
Full-year 2009 |
|---|---|---|---|---|---|---|
| Net sales | 11,414 | 11,093 | 29,707 | 31,533 | 45,782 | 47,608 |
| Cost of goods sold | –102 | –7 | –228 | –2,413 | –223 | –2,407 |
| Gross profit | 11,312 | 11,087 | 29,478 | 29,120 | 45,559 | 45,201 |
| Distribution expenses | –10,275 | –7,934 | –34,642 | –28,012 | –47,456 | –40,826 |
| Administrative expenses | –3,952 | –3,052 | –13,324 | –10,774 | –18,252 | –15,702 |
| Development expenses | –1,581 | –1,221 | –5,329 | –4,310 | –7,301 | –6,281 |
| Operating profit/loss | –4,496 | –1,120 | –23,816 | –13,975 | –27,449 | –17,608 |
| Dividend from subsidiary | – | – | 100,000 | 100,000 | ||
| Net financial items | –3,439 | 202 | –4,947 | 1,452 | –4,425 | 1,975 |
| Profit/loss before tax | –7,935 | –918 | –28,763 | –12,522 | 68,126 | 84,367 |
| Tax | 2,087 | 241 | 7,525 | 3,315 | 8,226 | 4,017 |
| Profit/loss for the period | –5,848 | –676 | –21,238 | –9,208 | 76,352 | 88,383 |
| Other comprehensive income | – | – | – | – | – | – |
| Total comprehensive income for the period | –5,848 | –676 | –21,238 | –9,208 | 76,352 | 88,383 |
Condensed
| SEK thousands | Sept 30 2010 |
Sept 30 2009 |
Full-year 2009 |
|---|---|---|---|
| Non-current assets | |||
| Intangible non-current assets | 1,803 | 1,330 | 1,694 |
| Tangible non-current assets | 3,171 | 4,390 | 4,238 |
| Shares in Group companies | 316,585 | 54,497 | 54,497 |
| Total non-current assets | 321,559 | 60,217 | 60,428 |
| Current assets | |||
| Receivables from Group companies | 87,542 | 34,027 | 88,903 |
| Current receivables | 12,790 | 11,070 | 5,703 |
| Short-term investments | 15,000 | – | – |
| Cash & cash equivalents | 126,701 | 174,766 | 287,657 |
| Total current assets | 242,033 | 219,863 | 382,263 |
| Total assets | 563,593 | 280,080 | 442,691 |
| Equity and liabilities | |||
| Equity | 67,758 | 105,952 | 214,738 |
| Untaxed reserves | 7,359 | 7,359 | 7,359 |
| Due to Group companies | 476,243 | 156,098 | 207,835 |
| Accounts payable | 1,853 | 3,458 | 1,840 |
| Other current liabilities | 10,380 | 7,213 | 10,919 |
| Total equity and liabilities | 563,593 | 280,080 | 442,691 |
| Condensed | |||
|---|---|---|---|
| SEK thousands | Jan–Sept 2010 |
Jan–Sept 2009 |
Full-year 2009 |
| Opening balance | 214,738 | 149,782 | 149,782 |
| New share issues | – | 2,966 | 2,966 |
| Dividend | –125,742 | –37,589 | –37,589 |
| Group contributions | – | – | 15,191 |
| Tax effect of Group contributions | – | – | –3,995 |
| Total comprehensive income for the period | –21,238 | –9,208 | 88,383 |
| Closing balance | 67,758 | 105,952 | 214,738 |
Net sales less cost of goods sold divided by net sales.
Operating profit as a percentage of net sales.
Profi t margin Profit before tax as a percentage of net sales.
Equity/assets ratio Equity as a percentage of total assets.
Profit after financial items (over a rolling 12-month period) plus financial expenses as a percentage of average capital employed.
Net profit (over a rolling 12-month period) according to the income statement as a percentage of average equity. Average equity is calculated by adding equity at January 1 to equity at December 31 and dividing by two.
Earnings per share in relation to the weighted average number of shares during the period.
Earnings per share adjusted for any dilution effect.
Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
The Board of Directors and the President certify that the interim report provides a true and fair overview of the operations, financial position and results of the Parent Company and the Group and describes the material risks and uncertainties faced by the Parent Company and the companies in the Group.
Stockholm, November 11, 2010
Fredrik Lövstedt Chairman
Nils Vinberg Vice Chairman
Monika Elling Board Member Kerstin Hessius Board Member
Fabian Månsson Board Member
Mats H Nilsson Board Member
Vilhelm Schottenius Board Member
Michael Storåkers Board Member
Arthur Engel President and CEO
The Group owns the Björn Borg trademark and has operations in five product areas: clothing, footwear, bags, eyewear and fragrances. Björn Borg products are sold in fifteen markets, of which Sweden and the Netherlands are the largest. Operations are managed through a network of product and distribution companies which are either part of the Group or are independent companies with licenses for product areas and geographical markets. The Björn Borg Group has operations at every level from branding to consumer sales through its own Björn Borg stores. Total sales of Björn Borg products in 2009 was SEK 1.9 billion at the consumer level, excluding VAT. Group net sales amounted to SEK 520 million in 2009, with 92 employees at year-end. The Björn Borg share is listed on NASDAQ OMX Nordic, Mid Cap list, since May 7, 2007.
We have reviewed the interim report for Björn Borg AB (publ) for the period January 1 to September 30, 2010. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Standard on Review Engagements (SÖG) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity." A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.
A review is substantially less in scope than an audit conducted in accordance with Standards on Auditing in Sweden RS and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material aspects, prepared in accordance with IAS 34 and the Annual Accounts Act for the Group and in accordance with the Annual Accounts Act for the Parent Company.
Stockholm, November 11, 2010 Deloitte AB
Håkan Pettersson Tommy Mårtensson Authorized Public Accountant Authorized Public Accountant
The year-end report for 2010 will be released on February 24, 2011. Annual Report March 2011. The 2011 Annual General Meeting will be held on April 14, 2011. The interim report January–March 2011 will be released on May 5, 2011.
For further information, please contact: Arthur Engel, President and CEO, telephone +46 8 506 33 700 Johan Mark, CFO, telephone +46 8 506 33 700
Björn Borg AB Götgatan 78 SE-118 30 Stockholm, Sweden www.bjornborg.com
Björn Borg is required to make public the information in this report in accordance with the Securities Market Act. The information was released for publication on November 11, 2010 at 7:30 a.m. (CET).
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