Quarterly Report • Nov 10, 2011
Quarterly Report
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"Our brand sales increased by 9 percent during the quarter, and the share generated by smaller markets is growing, in line with our strategy. It is a positive thing that the brand is holding its own in today's tough market climate. Sales and profit were affected by our forward-looking investments as well as by inventory corrections by our partners after generally weaker-than-expected sales in 2011," said CEO Arthur Engel.
| SEK thousands | July–Sept 2011 |
July–Sept 2010 |
Jan–Sept 2011 |
Jan–Sept 2010 |
Oct 2010– Sept 2011 |
Full-year 2010 |
|---|---|---|---|---|---|---|
| Net sales | 160.2 | 171.0 | 413.4 | 420.1 | 529.3 | 536.0 |
| Gross profit margin, % | 50.6 | 52.6 | 51.2 | 52.8 | 52.3 | 53.6 |
| Operating profit | 33.0 | 51.5 | 69.6 | 101.5 | 94.1 | 126.0 |
| Operating margin, % | 20.6 | 30.1 | 16.8 | 24.2 | 17.8 | 23.5 |
| Profit after tax | 24.1 | 36.7 | 51.2 | 73.2 | 68.8 | 90.8 |
| Earnings per share, SEK | 1.05 | 1.46 | 2.27 | 2.91 | 2.98 | 3.61 |
| Earnings per share after dilution, SEK | 1.05 | 1.44 | 2.26 | 2.87 | 2.96 | 3.57 |
| Brand sales* | 551 | 507 | 1,297 | 1,305 | 1,725 | 1,733 |
*Estimated total sales of Björn Borg products at the consumer level, excluding VAT, based on reported wholesale sales.
During the third quarter total sales of Björn Borg products increased by 9 percent and adjusted for currency effects by 11 percent. It is a positive thing that the brand is holding its own in today's tough market climate. The fact that our smaller markets continue to raise their share of brand sales is also important to us. This is where our future growth will primarily come from.
At the same time the Group is feeling the effects of lower sales by distributors and retailers earlier in 2011, which fell below expectations. As we previously reported, this has led to an inventory buildup that our partners are working to eliminate. Because our products are fairly independent of seasons and fashion trends, we and our customers are able to adjust inventories without discounting prices, but for Björn Borg it has meant fewer orders for merchandise than we anticipated.
Against the backdrop of the weak retail market in Europe, we consider unchanged Group sales excluding currency effects to be acceptable. Profit is being affected by lower sales and scheduled costs for the future investments we announced earlier. This is especially true of the Björn Borg Sport collection and the Group's operations in England, both of which are developing according to plan.
Our footwear operations have developed strongly during the year and during the third quarter continued to report fine growth numbers. The licensee has succeeded in raising sales in core markets as well as a growing number of new countries.
During the quarter we opened our own store in the Gallerian mall in Stockholm. This store has a new shop & go-like format that we consider an attractive complement to traditional stores in certain retail environments. Björn Borg stores are important to brand presentation and sales, and we are working continuously to evaluate attractive locations for new stores in Sweden and other markets.
Our major PR campaign with John McEnroe and Björn Borg, launched in July during the Wimbledon tournament, has received greater media coverage than we ever could have hoped for. We have received media clippings from around the world that describe the fantastic tennis careers of the two former rivals and their new match to sell the most under wear with their signature on them. This has been great for us and of course is positive for the Björn Borg brand.
Looking ahead, we, like everyone else, are finding it hard to predict what will happen in the retail market. The most important thing for us by far is to stay focused on the long term and act wisely, regardless of current market conditions. And to take advantage of the opportunities we have for continued growth and profitability.
Arthur Engel, Chief Executive Officer
Brand sales (excluding VAT) increased by 9 percent to SEK 551 million (507) in the third quarter and decreased by just under 1 percent to SEK 1,297 million (1,305) in the first nine months of the year. Adjusted for currency effects in the form of a stronger SEK, brand sales rose by 11 percent in the third quarter and by 4 percent in the first nine months.
The underwear product area had a good third quarter, with brand sales rising by 5 percent. For the first nine months, however, cumulative brand sales decreased by 6 percent compared with the same period in 2010. Underwear accounted for 64 percent (68) of brand sales during the period.
Sales in the licensed footwear product area rose by 60 percent for the first nine months as a whole.
Other licensed products reported mixed results, with sportswear and eyewear reporting decreases, while bags and fragrances were nearly unchanged. In total, licensed product sales rose by 11 percent during the first nine months of the year, mainly due to the increase in the footwear product area.
* 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, socks and adjacent products. Licensed products: Footwear, bags, fragrances, eyewear and sportswear.
Brand sales in smaller markets increased during the first nine months of the year to 14 percent (10) of total brand sales. Among larger markets, Belgium reported strong growth and Sweden noted an increase during the period. Declines were posted in Norway, Denmark and the Netherlands. The Netherlands saw a recovery during the third quarter, however, after a weaker first half-year. Among smaller markets, Finland, Germany and Austria continued to post strong sales trends.
Reporting of brand sales by the new distributors in Italy and France began during the third quarter, although they are starting their sales from a low level.
During the period the Group expanded its own footwear distribution to include the Baltic countries.
A new store was opened in Oostende, Belgium, during the quarter. A Group-owned store was opened in the Gallerian mall in Stockholm, while two Dutch stores were closed during the quarter. As of September 30 the total number of Björn Borg stores was 54 (46), of which 13 (10) are Group-owned.
Since January 2011 Björn Borg has a subsidiary, Björn Borg Sport, for production of fashionable and functional sportswear together with the Dutch distributor. The creation of a separate, Netherlands-based clothing business is another element in the strategy to focus on the core business – underwear – in Stockholm. The new company builds on the Dutch clothing concept within Björn Borg, where an established business with broad-based experience has successfully managed the women's clothing company on a licensed basis. The clothing collections, both women's and men's, mainly focus on functional yet distinctly fashionable sportswear. The products are sold to distributors in Björn Borg's existing markets, with an initial emphasis on larger markets.
Sales and operating profit decreased during the third quarter.
Group sales during the third quarter amounted to SEK 160.2 million (171.0), a decrease of 6 percent. Excluding currency effects, net sales were unchanged. The product company's lower order volumes for the Christmas collection, which were recognized as revenue during the third quarter, were due to inventory corrections by distributors and retailers and were the single biggest reason for the decline. The establishment of Björn Borg Sport has contributed positively to sales compared with the previous year. Wholesale and retail sales both rose. On the brand side, external revenues were slightly higher as a result of higher brand sales during the quarter.
Group sales during the first nine months of the year amounted to SEK 413.4 million (420.1), a decrease of 2 percent. Excluding currency effects, net sales increased by 5 percent. Lower sales volumes for the Christmas collection from the product company during the third quarter, related to inventory corrections by distributors and retailers, were the biggest reason for the decline. The establishment of Björn Borg Sport contributed positively to the increase, while the Group's footwear sales decreased. Wholesale operations and the Group's retail sales both rose, while the brand side posted slightly lower external revenues, in line with slightly lower brand sales during the period.
The gross profit margin for the third quarter decreased to 50.6 percent (52.6). The margin within Björn Borg Sport is lower than in other operations, which contributed negatively to the Group's total margin. Excluding Björn Borg Sport, the margin instead would have risen slightly compared with the same period last year.
Operating profit decreased during the quarter by 36 percent to SEK 33.0 million (51.5) with an operating margin of 20.6 percent (30.1). The investments in Björn Borg Sport and the British operations reduced operating profit according to plan by SEK 3.9 million and SEK 1.2 million, respectively. Hence, operating profit net of these investments was SEK 38.1 million. Profit before tax decreased to SEK 32.7 million (49.8).
The new company Björn Borg Sport raised operating expenses by SEK 7.0 million (minority share SEK 3.4 million), of which SEK 3.1 million are one-off expenses in 2011. Excluding Björn Borg Sport and England, the Group's operating expenses were unchanged compared with the same period in 2010.
The gross profit margin decreased during the first nine months of the year to 51.2 percent (52.8). As mentioned above, Björn Borg Sport contributed negatively to the Group's total margin. Excluding Björn Borg Sport, the margin instead would have risen slightly compared with the same period last year.
Operating profit decreased during the period by 31 percent to SEK 69.6 million (101.5) with an operating margin of 16.8 percent (24.2). The investments in Björn Borg Sport and the British operations reduced operating profit according to plan by SEK 10.1 million and SEK 3.5 million, respectively. Hence, operating profit net of these investments was SEK 83.2 million. Profit before tax decreased to SEK 69.6 million (99.9).
The new company Björn Borg Sport raised operating expenses by SEK 19.5 million (minority share SEK 9.5 million), of which SEK 9.3 million are one-off expenses limited to 2011. Further investments in personnel and the operations in the British market have led to higher operating expenses. Excluding Björn Borg Sport and England, the Group's operating expenses decreased slightly compared with the same period in 2010.
| Sales, SEK thousands January–September |
Operating profit, SEK thousands January–September |
Operating margin January–September |
|||||
|---|---|---|---|---|---|---|---|
| Business segment | Revenue source | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 |
| Brand | Royalties | 63,839 | 70,489 | 16,971 | 19,632 | 27% | 28% |
| Product development | Products | 296,494 | 320,732 | 29,413 | 56,402 | 10% | 18% |
| Wholesale operations | Wholesale revenues | 175,116 | 155,568 | 29,709 | 30,221 | 17% | 19% |
| Retail | Retailers | 40,776 | 37,564 | –6,530 | –4,763 | –16% | –13% |
| Less internal sales | –162,816 | –164,206 | – | – | – | – | |
| Total | 413,408 | 420,147 | 69,563 | 101,492 | 17% | 24% |
The Group consists of ten 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.
As of January 1, 2011 the company has streamlined the segment previously called "Brand and other," which also included the Parent Company's sales and expenses. The segment is now called "Brand" and comprises only brandrelated operations, which the company believes provides a clearer description of this segment and is in line with the Group's internal reporting. The Parent Company's income statement has been divided by segment based on various distribution keys; 2010 figures have been restated in accordance with this new basis of distribution. Moreover, the U.S. operations, which today are limited to e-commerce, have been shifted from Wholesale to Retail, similar to the international e-commerce operations that are already part of the Retail segment.
The Brand segment primarily consists of royalty revenue and expenses associated with the brand.
Net sales during the period January–September reached SEK 63.8 million (70.5), a decrease of 9 percent. External sales amounted to SEK 37.9 million (39.2). The decrease was due to, among other things, lower brand sales during the period.
Operating profit amounted to SEK 17.0 million (19.6), a decrease of 13 percent for the period. The operating profit was a consequence of the lower net sales in the segment. Operating expenses are in line with the same period in 2010.
The Björn Borg Group has global responsibility for development, design and production of underwear and adjacent products, as well as functional sportswear through Björn Borg Sport.
The business segment's net sales amounted to SEK 296.5 million (320.7) during the period January–September, a decrease of 8 percent. External sales amounted to SEK 200.5 million (225.2), a decrease of 11 percent compared with the same period in 2010. Weak sales of the Christmas collection, due to inventory corrections by distributors and retailers, reduced sales for the period, while Björn Borg Sport contributed positively. A weaker U.S. dollar has significantly affected sales in a negative direction.
Operating profit decreased to SEK 29.4 million (56.4) as a result of lower sales primarily during the third quarter as well as increased expenses for Björn Borg Sport. A weaker U.S. dollar has also adversely affected operating profit.
The Björn Borg Group is the exclusive wholesaler for underwear and adjacent products in Sweden and England as well as for footwear in Sweden, Finland and the Baltic countries.
Net sales in wholesale operations increased by 13 percent during the period January–September to SEK 175.1 million (155.6). External sales amounted to SEK 136.2 million (120.6).
Operating profit amounted to SEK 29.7 million (30.2). A weaker USD has affected gross profit and operating profit positively, while the investment in the British operations has raised operating expenses.
The Björn Borg Group owns and operates eleven stores in the Swedish market that sell underwear, adjacent products, footwear and licensed products. Additionally, Björn Borg operates two factory outlets as well as a web shop in the U.S. and one for international sales.
Net sales in Retail amounted to SEK 40.8 million (37.6) during the period January–September, an increase of 9 percent. External sales increased by 11 percent to SEK 38.8 million (35.1). Björn Borg stores reported a positive sales trend, while the outlets declined slightly. For comparable Björn Borg stores, sales fell by 3 percent. E-commerce noted continued sales growth, but from a low level.
The operating loss for the half-year amounted to SEK 6.5 million, against a year-earlier loss of SEK 4.8 million, partly due to increased operating expenses from the web venture and the opening of three new Group-owned stores during the nine-month period.
Intra-Group sales amounted to SEK 162.8 million (164.2) for the period.
The Björn Borg Group is active in an industry with seasonal variations. Sales and earnings vary by quarter. With the current product mix, the second 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 5.2 million (13.1) for the first nine months of the year. Large shipments from factories at the end of the period led to an increase in working capital tied up in inventory and accounts receivable as well as a decrease in tied-up capital through increased accounts payable compared with December 31, 2010. The company does not believe that credit risk has risen as a result of the increased accounts receivable as of the closing date. Net tied-up working capital has increased by SEK 53.3 million in 2011, compared with an increase of SEK 58.7 million in the same period in 2010. Although inventories grew slightly due to the stock in new stores opened during the year as well as the recently launched British operations, they remain nearly unchanged compared with the same date in 2010. The company is working actively to balance inventories and reduce tied-up capital. Accounts receivable have increased by SEK 1.0 million since September 30, 2010.
Total investments in tangible and intangible non-current assets amounted to SEK 18.1 million (6.8) for the period, the large part of which relates to the establishment of Björn Borg Sport in the Netherlands and store renovations.
The Björn Borg Group's cash & cash equivalents and shortterm investments amounted to SEK 86.8 million (168.2) at the end of the period. During the first nine months cash & cash equivalents decreased by SEK 123.8 million, compared with a year-earlier decrease of SEK 143.3 million. This is mainly due to the distribution to shareholders of SEK 130.8 million (125.7) during the period. The equity/assets ratio was 70.2 percent (73.1).
No changes were made with regard to pledged assets and contingent liabilities compared with December 31, 2010.
The average number of employees in the Group during the period January–September 2011 was 119 (99), of whom 72 (63) were women.
Board member Fabian Månsson has acquired 4 percent of the shares in the subsidiary Björn Borg Sport during the first nine months of the year. No transactions have otherwise been executed with related parties.
In its operations, the Björn Borg Group is exposed to risks and uncertainties. Other than an increased currency exposure resulting from the establishment of the new subsidiary in the Netherlands, information on the Group's risks and uncertainties can be found on pages 37–38 and in note 3 in the annual report 2010.
There are no significant events to report following the conclusion of the report period.
In accordance with the resolution of the Annual General Meeting, Björn Borg's Nomination Committee for the 2012 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, 2011. Björn Borg's Nomination Committee for the 2012 AGM is as follows:
The Annual General Meeting for the financial year 2011 will be held in Stockholm on May 3, 2012.
Björn Borg AB (publ) is primarily engaged in intra-Group activities. The company also owns 100 percent of the shares in Björn Borg Brands AB, Björn Borg Footwear AB, Björn Borg Inc. and Björn Borg Services AB (dormant). In addition, the company owns 80 percent of the shares in Björn Borg UK and 51 percent of the shares in Björn Borg Sport BV.
The Parent Company's net sales for the third quarter amounted to SEK 12.1 million (11.4). During the first nine months of the year the Parent Company's net sales amounted to SEK 30.3 million (29.7).
The loss before tax amounted to SEK 8.6 million for the third quarter (against a year-earlier loss of SEK 7.9 million) and SEK 28.6 million for the first nine months (against a year-earlier loss of SEK 28.8 million). Cash & cash equivalents and short-term investments amounted to SEK 41.6 million (141.7) on September 30, 2011. Investments in tangible and intangible non-current assets for the period amounted to SEK 1.8 million (0.7).
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 Björn Borg stores.
This interim report has been prepared in accordance with the Annual Accounts Act, RFR 1 Additional Accounting Regulations for Consolidated Groups (December 2010) and IAS 34 Interim Financial Reporting, and for the Parent Company in accordance with the Annual Accounts Act and RFR 2 Accounting in Legal Entities (December 2010).
The same accounting and valuation principles have been applied during the year as in 2010, as described on page 47 of the annual report 2010, with the exceptions indicated below.
The new and revised IFRS and the interpretations from IFRIC applied by the Group as of January 1, 2011 have not had a significant impact on the Group's results or financial position.
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 2011 |
July–Sept 2010 |
Jan–Sept 2011 |
Jan–Sept 2010 |
Oct 2010– Sept 2011 |
Full-year 2010 |
|---|---|---|---|---|---|---|
| Net sales | 160,150 | 170,998 | 413,408 | 420,147 | 529,301 | 536,040 |
| Cost of goods sold | –79,149 | –81,135 | –201,732 | –198,167 | –252,409 | –248,844 |
| Gross profit | 81,001 | 89,863 | 211,676 | 221,979 | 276,892 | 287,196 |
| Distribution expenses | –31,338 | –25,571 | –93,225 | –79,022 | –120,845 | –106,643 |
| Administrative expenses | –13,285 | –9,461 | –39,037 | –30,932 | –49,142 | –41,037 |
| Development expenses | –3,402 | –3,315 | –9,851 | –10,533 | –12,829 | –13,511 |
| Operating profit | 32,976 | 51,516 | 69,563 | 101,492 | 94,076 | 126,005 |
| Net financial items | –312 | –1,744 | 36 | –1,647 | –327 | –2,010 |
| Profit before tax | 32,664 | 49,772 | 69,599 | 99,845 | 93,749 | 123,995 |
| Tax | –8,592 | –13,110 | –18,410 | –26,651 | –24,991 | –33,232 |
| Profit for the period | 24,072 | 36,662 | 51,189 | 73,194 | 68,758 | 90,763 |
| Profit attributable to: | ||||||
| Parent Company's shareholders | 26,320 | 36,642 | 57,098 | 73,174 | 74,821 | 90,897 |
| Minority interests | –2,248 | 21 | –5,909 | 20 | –6,063 | –134 |
| Other comprehensive income | ||||||
| Translation adjustments for foreign operations | –370 | 417 | –430 | 221 | –398 | 253 |
| Total comprehensive income for the period | 23,702 | 37,080 | 50,759 | 73,416 | 68,360 | 91,017 |
| Total comprehensive income for the period attributable to | ||||||
| Parent Company's shareholders | 25,950 | 37,059 | 56,668 | 73,396 | 74,423 | 91,151 |
| Minority interests | –2,248 | 21 | –5,909 | 20 | –6,063 | –134 |
| Earnings per share, SEK | 1.05 | 1.46 | 2.27 | 2.91 | 2.98 | 3.61 |
| Earnings per share after dilution, SEK | 1.05 | 1.44 | 2.26 | 2.87 | 2.96 | 3.57 |
| 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 | 24,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| Effect of dilution* | 0 | 319,875 | 138,222 | 340,753 | 119,287 | 321,818 |
| Weighted average number of shares after full dilution | 25,148,384 | 25,468,259 | 25,286,606 | 25,489,137 | 25,267,671 | 25,470,202 |
* Björn Borg has an incentive program, 2008:2, based on warrants in Björn Borg. For more detailed information, see page 53 of the annual report 2010.
Condensed
| SEK thousands | Sept 30 2011 |
Sept 30 2010 |
Dec 31 2010 |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | 13,944 | 13,944 | 13,944 |
| Trademarks | 187,532 | 187,532 | 187,532 |
| Other intangible assets | 5,815 | 7,371 | 6,858 |
| Tangible non-current assets | 11,473 | 8,588 | 7,808 |
| Deferred tax assets | 6,438 | 9,046 | 6,438 |
| Total non-current assets | 225,202 | 226,481 | 222,580 |
| Current assets | |||
| Inventories, etc. | 38,570 | 37,330 | 26,239 |
| Accounts receivable | 96,133 | 95,087 | 50,993 |
| Other current receivables | 48,592 | 31,553 | 34,351 |
| Short-term investments | 16,291 | 15,000 | 35,567 |
| Cash & cash equivalents | 70,467 | 153,174 | 194,275 |
| Total current assets | 270,053 | 332,143 | 341,425 |
| Total assets | 495,255 | 558,624 | 564,005 |
| Equity and liabilities | |||
| Equity | 347,704 | 408,629 | 427,276 |
| Deferred tax liabilities | 50,898 | 42,546 | 48,189 |
| Other non-current liabilities | 30,357 | 36,265 | 34,724 |
| Accounts payable | 20,790 | 28,904 | 9,987 |
| Other current liabilities | 45,506 | 42,280 | 43,829 |
| Total equity and liabilities | 495,255 | 558,624 | 564,005 |
Condensed
| SEK thousands | Equity attributable to Parent Company's shareholders |
Non- controlling interests |
Total equity |
|---|---|---|---|
| Opening balance, January 1, 2010 | 460,842 | 114 | 460,956 |
| Total comprehensive income for the period | 73,396 | 20 | 73,416 |
| Dividend for 2009 | –125,742 | – | –125,742 |
| Closing balance, September 30, 2010 | 408,496 | 134 | 408,629 |
| Opening balance, January 1, 2010 | 460,842 | 114 | 460,956 |
| Total comprehensive income for the year | 91,150 | –134 | 91,017 |
| Dividend for 2009 | –125,742 | – | –125,742 |
| Non-controlling interests that arose through formation of subsidiaries | – | 1,046 | 1,046 |
| Closing balance, December 31, 2010 | 426,250 | 1,026 | 427,276 |
| Opening balance, January 1, 2011 | 426,250 | 1,026 | 427,276 |
| Total comprehensive income for the year | 56,668 | –5,909 | 50,759 |
| Distribution 2010 | –130,772 | – | –130,772 |
| Non-controlling interests that arose through formation of subsidiaries | – | 438 | 438 |
| Closing balance, September 30, 2011 | 352,147 | –4,444 | 347,704 |
| Condensed | |||||
|---|---|---|---|---|---|
| SEK thousands | July–Sept 2011 |
July–Sept 2010 |
Jan–Sept 2011 |
Jan–Sept 2010 |
Full-year 2010 |
| Cash flow from operating activities | |||||
| Before change in working capital | 28,525 | 41,772 | 58,495 | 71,868 | 99,092 |
| Change in working capital | –25,222 | –42,756 | –53,318 | –58,739 | –26,733 |
| Cash flow from operating activities | 3,303 | –984 | 5,177 | 13,129 | 72,359 |
| Investments in intangible non-current assets | –3,378 | –973 | –10,103 | –4,834 | –4,878 |
| Investments in tangible non-current assets | –2,288 | –31 | –7,975 | –1,946 | –2,498 |
| Investments in financial non-current assets | – | – | – | –9,046 | –9,046 |
| Sale of tangible non-current assets | – | – | 436 | – | 161 |
| Investments in short-term investments | – | –15,000 | –1,701 | –15,000 | –35,567 |
| Sale of short-term investments | 20,977 | – | 20,977 | – | – |
| Reversal of deferred tax assets | – | – | – | – | 2,608 |
| Cash flow from investing activities | 15,311 | –16,004 | 1,634 | –30,826 | –49,220 |
| Dividend/distribution | – | – | –130,772 | –125,742 | –125,742 |
| Amortization of loans | 441 | – | 441 | – | -- |
| Cash flow from financing activities | 441 | – | –130,331 | –125,742 | –125,742 |
| Cash flow for the period | 19,055 | –16,988 | –123,520 | –143,439 | –102,603 |
| Cash & cash equivalents at beginning of period | 52,259 | 169,986 | 194,275 | 296,484 | 296,484 |
| Exchange rate difference in cash & cash equivalents | –847 | 176 | –288 | 129 | 394 |
| Cash & cash equivalents at end of period | 70,467 | 153,174 | 70,467 | 153,174 | 194,275 |
| Group | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | July–Sept 2011 |
July–Sept 2010 |
Jan–Sept 2011 |
Jan–Sept 2010 |
Oct 2010– Sept 2011 |
Full-year 2010 |
| Gross profit margin, % | 50.6 | 52.6 | 51.2 | 52.8 | 52.3 | 53.6 |
| Operating margin, % | 20.6 | 30.1 | 16.8 | 24.2 | 17.8 | 23.5 |
| Profit margin, % | 20.4 | 29.1 | 16.8 | 23.8 | 17.7 | 23.1 |
| Return on capital employed, % | 23.3 | 25.0 | 23.3 | 25.0 | 23.3 | 25.7 |
| Return on average equity, % | 19.8 | 20.2 | 19.8 | 20.2 | 19.8 | 20.5 |
| Profit attributable to Parent Company's shareholders | 26,320 | 36,642 | 57,098 | 73,174 | 74,821 | 90,897 |
| Equity/assets ratio, % | 70.2 | 73.1 | 70.2 | 73.1 | 70.2 | 75.8 |
| Equity per share, SEK | 13.83 | 16.25 | 13.83 | 16.25 | 13.83 | 16.99 |
| Investments in intangible non-current assets | 3,378 | 973 | 10,103 | 4,834 | 10,147 | 4,878 |
| Investments in tangible non-current assets | 2,288 | 31 | 7,975 | 1,946 | 8,527 | 2,498 |
| Investments in financial non-current assets | – | – | – | 9,046 | – | 9,046 |
| Depreciation and impairment losses for the period | –4,938 | –1,665 | –14,741 | –5,377 | –16,500 | –7,136 |
| Average number of employees | 119 | 99 | 119 | 99 | 120 | 100 |
| Group | ||||||
|---|---|---|---|---|---|---|
| SEK thousands | July–Sept 2011 |
July–Sept 2010 |
Jan–Sept 2011 |
Jan–Sept 2010 |
Oct 2010– Sept 2011 |
Full-year 2010 |
| Operating revenue | ||||||
| Brand | ||||||
| External revenue | 17,040 | 16,846 | 37,925 | 39,236 | 48,270 | 49,582 |
| Internal revenue | 9,531 | 12,566 | 25,914 | 31,253 | 34,735 | 40,074 |
| 26,571 | 29,412 | 63,839 | 70,489 | 83,005 | 89,655 | |
| Product development | ||||||
| External revenue | 73,454 | 92,477 | 200,459 | 225,189 | 246,406 | 271,135 |
| Internal revenue | 36,537 | 45,038 | 96,035 | 95,543 | 124,353 | 123,861 |
| 109,991 | 137,516 | 296,494 | 320,732 | 370,759 | 394,997 | |
| Wholesale | ||||||
| External revenue | 52,573 | 46,981 | 136,202 | 120,648 | 181,001 | 165,447 |
| Internal revenue | 14,578 | 13,459 | 38,914 | 34,921 | 53,497 | 49,503 |
| 67,151 | 60,440 | 175,116 | 155,568 | 234,498 | 214,950 | |
| Retail | ||||||
| External revenue | 17,083 | 14,694 | 38,823 | 35,074 | 53,624 | 49,876 |
| Internal revenue | 578 | 560 | 1,953 | 2,489 | 3,426 | 3,963 |
| 17,661 | 15,255 | 40,776 | 37,564 | 57,050 | 53,839 | |
| Less internal sales | –61,224 | –71,624 | –162,816 | –164,206 | –216,011 | –217,401 |
| Operating revenue | 160,150 | 170,998 | 413,408 | 420,147 | 529,301 | 536,040 |
| Operating profit | ||||||
| Brand | 10,351 | 10,817 | 16,971 | 19,632 | 20,395 | 23,057 |
| Product development | 11,181 | 27,600 | 29,413 | 56,402 | 40,259 | 67,249 |
| Wholesale | 11,882 | 13,197 | 29,709 | 30,221 | 36,845 | 37,356 |
| Retail | –438 | –98 | –6,530 | –4,763 | –3,423 | –1,657 |
| Operating profit | 32,976 | 51,516 | 69,563 | 101,492 | 94,076 | 126,005 |
| Group | ||
|---|---|---|
| SEK thousands | Q3 2011 |
Q2 2011 |
Q1 2011 |
Q4 2010 |
Q3 2010 |
Q2 2010 |
Q1 2010 |
Q4 2009 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 160,150 | 101,937 | 151,321 | 115,893 | 170,998 | 100,770 | 148,379 | 102,247 |
| Gross profit margin, % | 50.6 | 53.3 | 50.4 | 56.3 | 52.6 | 55.1 | 51.6 | 55.7 |
| Operating profit | 32,976 | 8,190 | 28,398 | 24,513 | 51,516 | 13,939 | 36,037 | 19,427 |
| Operating margin, % | 20.6 | 8.0 | 18.8 | 21.2 | 30.1 | 13.8 | 24.3 | 19.0 |
| Profit after financial items | 32,664 | 8,903 | 28,033 | 24,150 | 49,772 | 14,644 | 35,429 | 19,712 |
| Profit margin, % | 20.4 | 8.7 | 18.5 | 20.8 | 29.1 | 14.5 | 23.9 | 19.3 |
| Earnings per share, SEK | 1.05 | 0.33 | 0.89 | 0.70 | 1.46 | 0.43 | 1.03 | 0.54 |
| Earnings per share after dilution, SEK | 1.05 | 0.33 | 0.88 | 0.70 | 1.44 | 0.42 | 1.01 | 0.53 |
| Number of Björn Borg stores at end of period | 54 | 54 | 50 | 47 | 46 | 46 | 46 | 46 |
| of which Björn Borg-owned stores | 13 | 12 | 10 | 10 | 10 | 10 | 10 | 10 |
| Brand sales | 551,267 | 314,967 | 431,029 | 428,234 | 506,572 | 338,253 | 460,156 | 410,053 * |
* Because brand sales for the full-year 2009 have been changed to correct the previously reported figure, quarterly brand sales for 2009 have been updated.
Previously reported figure: Q4 2009 = SEK 422,121,000
Condensed
| SEK thousands | July–Sept 2011 |
July–Sept 2010 |
Jan–Sept 2011 |
Jan–Sept 2010 |
Oct 2010– Sept 2011 |
Full-year 2010 |
|---|---|---|---|---|---|---|
| Net sales | 12,123 | 11,414 | 30,290 | 29,707 | 46,401 | 45,818 |
| Cost of goods sold | –31 | –102 | –400 | –228 | –540 | –368 |
| Gross profit | 12,092 | 11,312 | 29,890 | 29,478 | 45,861 | 45,450 |
| Distribution expenses | –10,407 | –10,275 | –31,437 | –34,642 | –41,538 | –44,742 |
| Administrative expenses | –4,003 | –3,952 | –12,091 | –13,324 | –15,976 | –17,208 |
| Development expenses | –1,601 | –1,581 | –4,837 | –5,329 | –6,390 | –6,883 |
| Operating profit/loss | –3,919 | –4,496 | –18,475 | –23,816 | –18,043 | –23,383 |
| Dividend from subsidiary | – | – | – | – | 100,000 | 100,000 |
| Net financial items | –4,700 | –3,439 | –10,089 | –4,947 | –12,970 | –7,829 |
| Profit before tax | –8,619 | –7,935 | –28,564 | –28,763 | 68,987 | 68,788 |
| Appropriations | – | – | – | – | 818 | 818 |
| Tax | 2,267 | 2,087 | 7,512 | 7,525 | 7,999 | 8,011 |
| Profit for the period | –6,352 | –5,848 | –21,052 | –21,238 | 77,804 | 77,617 |
| Other comprehensive income | – | – | – | – | – | – |
| Total comprehensive income for the period | –6,352 | –5,848 | –21,052 | –21,238 | 77,804 | 77,617 |
| Condensed | |||
|---|---|---|---|
| SEK thousands | Sept 30 2011 |
Sept 30 2010 |
Dec 31 2010 |
| Non-current assets | |||
| Intangible non-current assets | 1,336 | 1,803 | 1,686 |
| Tangible non-current assets | 3,367 | 3,171 | 2,830 |
| Shares in Group companies | 321,227 | 316,585 | 320,771 |
| Total non-current assets | 325,930 | 321,559 | 325,287 |
| Current assets | |||
| Receivables from Group companies | 95,736 | 87,542 | 47,801 |
| Current receivables | 13,762 | 12,790 | 4,597 |
| Short-term investments | 16,291 | 15,000 | 35,567 |
| Cash & cash equivalents | 25,262 | 126,701 | 181,742 |
| Total current assets | 151,051 | 242,033 | 269,707 |
| Total assets | 476,981 | 563,593 | 594,994 |
| Equity and liabilities | |||
| Equity | 37,351 | 67,758 | 189,174 |
| Untaxed reserves | 6,540 | 7,359 | 6,540 |
| Amounts owed to Group companies | 424,064 | 476,243 | 383,256 |
| Accounts payable | 1,637 | 1,853 | 2,913 |
| Other current liabilities | 7,389 | 10,380 | 13,111 |
| Total equity and liabilities | 476,981 | 563,593 | 594,994 |
Condensed
| SEK thousands | Jan–Sept 2011 |
Jan–Sept 2010 |
Full–year 2010 |
|---|---|---|---|
| Opening balance | 189,174 | 214,738 | 214,738 |
| Dividend/distribution | –130,772 | –125,742 | –125,742 |
| Group contributions | – | – | 30,611 |
| Tax effect of Group contributions | – | – | –8,050 |
| Total comprehensive income for the period | –21,052 | –21,238 | 77,617 |
| Closing balance | 37,351 | 67,758 | 189,174 |
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 CEO 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.
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, which owns the Björn Borg trademark, is focused on underwear. Through licensees it also offers clothing, footwear, bags, eyewear and fragrances. Björn Borg products are sold in around twenty markets, of which Sweden and the Netherlands are the largest. 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 2010 amounted to about SEK 1.7 billion at the consumer level, excluding VAT. Group net sales amounted to SEK 536 million in 2010, with 100 employees. The Björn Borg share is listed on NASDAQ OMX Nordic in Stockholm since 2007.
We have reviewed the interim report for Björn Borg AB (publ) for the period January 1 to September 30, 2011. 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 the International Standards of Auditing (ISA) 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 10, 2011 Deloitte AB
Fredrik Walméus Authorized Public Accountant
The year-end report for 2011 will be released on February 9, 2012. The annual report will be published in March 2012. The interim report January–March 2012 will be released on May 3, 2012. The Annual General Meeting for 2012 will be held on May 3, 2012.
For further information, please contact: Arthur Engel, President and CEO, telephone +46 8 506 33 700 Magnus Teeling, 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 10, 2011 at 7:30 am (CET).
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