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Björn Borg
Quarterly Report • May 18, 2021
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Quarterly Report
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BJÖRN BORG (
BJÖRN BORG AB INTERIM REPORT JANUARY-MARCH 2021
SIGNIFICANTLY INCREASED PROFITABILITY
JANUARY 1- MARCH 31, 2021
- The Group's net sales amounted to SEK 184.7 million (172.0), an increase of 7.4 percent.
- › Net sales for own e-commerce amounted to SEK 24.3 million (17.5), an increase of 39.5 percent. Net sales for own e-commerce and e-tailers amounted to SEK 84.7 million (53.3), an increase of 58.8 percent.
- · The gross profit margin was 53.3 percent (54.1).
- · Operating profit amounted to SEK 22.4 million (7.2).
- Profit after tax amounted to SEK 21.3 million (10.6).
- · Earnings per share before and after dilution amounted to SEK 0.85 (0.42).
QUOTE FROM THE CEO
"Our online focus generates, according to plan, very good growth and now more than 50% of our sales take place online through our own e-commerce, marketplaces, e-tailers and online sales from our retailers' e-commerce sites," commented CEO Henrik Bunge.
| SEK million | January- March 2021 |
January- March 2020 |
April 2020- March 2021 |
Full-year 2020 |
|---|---|---|---|---|
| Net sales | 184.7 | 172.0 | 717.9 | 705.2 |
| Gross profit margin, % | 53.3 | 54.1 | 52.3 | 52.5 |
| Operating profit | 22.4 | 7.2 | 48.9 | 33.7 |
| Operating margin, % | 12.1 | 4.2 | 6.8 | 4.8 |
| Profit after tax | 21.3 | 10.6 | 29.5 | 18.8 |
| Earnings per share before dilution, SEK | 0.85 | 0.42 | 1.17 | 0.75 |
| Earnings per share after dilution, SEK | 0.85 | 0.42 | 1.17 | 0.75 |
CEO'S COMMENT
Our digital journey, which began several years ago with a focus on shifting our business online, continued in the first quarter of 2021 to produce very good results. Our online focus generates, according to plan, very good growth and now more than 50% of our sales take place online through our own e-commerce, marketplaces, e-tailers and online sales from our retailers' e-commerce sites. In addition, essentially all of our brand communications is now online, with very good results where we increased our brand recognition in sports apparel by 100 percent compared with the first quarter of 2020.
Net sales in the quarter amounted to SEK 184.7 million (172.0), an increase of 7.4 percent compared with the previous year. On a currency neutral basis, the increase was 14.6 percent. The increase can exclusively be attributed to very good online growth. Our own e-commerce continued to develop according to plan with an increase of 39.5 percent to SEK 24.3 million (17.5). Marketplaces and e-tailers were also big contributors and grew by over 60 percent in the quarter. For the stores we own ourselves, the impact of the various societal restrictions to reduce the spread of Covid-19 is still high and sales fell 44 percent compared with the same quarter in 2020. However, we were able to reduce our exposure during the year with fewer of our own stores compared with the same quarter in 2020. And again we saw the value of owning your own brand and not being a retailer.
We continued during the quarter to reduce our discounts, but we took large write-downs as a direct result of the very poor development in physical retail. This is related to restrictions due to Covid-19 during 2020, which drove down the gross margin. Consequently, the gross profit margin dropped to 53.3 percent (54.1). Our cost savings initiatives in 2020 at the same time reduced quarterly operating expenses by SEK 9.4 million year-over-year. In total, increased sales with a slightly lower gross profit margin and reduced operating expenses produced a strong operating profit of SEK 22.4 million (7.2) and an operating margin of 12.1 percent.
The new year has begun with the same challenges that 2020 ended with - namely, with many of our stores closed and many customers struggling with restrictions due to the pandemic. But things will get better. For every passing day, more and more people are getting vaccinated. At the same time, we also have unbelievable strength online, where our products and message have found a perfect home. It is clear that we and our brand will continue to play an important role in inspiring people to understand that the road to the best version of yourself and the healthiest you is through physical activity.
Taken together, I am pleased with our work in the quarter and our profit in a continued challenging time.
Now let's go!
Head coach, Henrik Bunge
THE GROUP'S DEVELOPMENT
Net sales and operating profit both recovered in the first quarter compared with the first quarter of 2020. This was mainly due to strong online growth for both our own e-commerce and e-tailers. Quarterly operating profit rose vear-over-vear due to measures which reduced operating expenses by 10 percent and stable operating margins.
QUARTERLY NET SALES AND OPERATING PROFIT, 2018-2021
SALES
First quarter. January-March 2021
The Group's net sales amounted to SEK 184.7 million (172.0) in the first quarter, an increase of 7.4 percent. Currencies negatively affected sales in the quarter. Adjusted for currency effects, sales increased 14.6 percent.
The positive sales trend compared with the first quarter of 2020 is largely due to a positive trend and strong growth online, both for our own e-commerce and e-tailers in the wholesale business, which in total represents 46 percent of the total sales in the first quarter of the vear.
The Swedish wholesale business also reported strong development, growing 29 percent year-over year.
The Swedish retail company reported lower store traffic than the previous vear due to the coronavirus, because of which quarterly sales fell. Sales decreased 6 percent for comparable stores and 21 percent in total. E-commerce grew strongly in the quarter, by 40 percent, with better traffic and website conversion than the previous year.
The Benelux operations dropped 22 percent from the previous year. On a currency neutral basis, the decrease was 18 percent. It was mainly the retail business that trailed year-over-year, owing to the coronavirus, down 70 percent in the quarter, during a large part of which both the Netherlands and Belgium were in lockdown. The Dutch wholesale business was also lower year-over-year, due to a greater focus on profitability than sales.
For the company as a whole, quarterly retail sales for our own stores decreased from SFK 22.0 million to SFK 12.7 million, a decrease of 44 percent compared with the first quarter in 2020, while sales for comparable stores fell 42 percent.
Sales to external distributors increased year-over-year, which was due to growth mainly from the Norwegian market. External rovalties decreased slightly.
PROFIT
First quarter, January-March 2021
The gross profit margin for the first quarter decreased to 53.3 percent (54.1). A weaker USD against SEK positively affected margins, while a weaker EUR against SEK had the opposite effect. Adjusted for currency effects, gross profit in SEK would have been practically unchanged, while the gross profit margin would have been 49.8 percent. The decrease in the gross profit marqin is mainly the result of inventory write-downs, primarily due to own stores closed because of Covid-19. which has meant that the company has been unable to sell out merchandise from previous seasons. This has been compensated, however, by a stronger profitability focus in the wholesale business and because our own e-commerce, which has higher profitability, accounted for a larger share of the total.
Other operating revenue amounted to SEK 10.8 million (10.3) and mainly refers to unrealized gains on accounts receivable in foreign currency.
Operating expenses decreased SEK 9.4 million compared with the previous year mainly through lower costs for staff, logistics and travel. Rental expenses also decreased when the headquarters was moved to smaller, less expensive premises.
Increased sales with only a limited drop in the gross profit margin, as well as lower operating expenses compared with the previous year, meant an increase in operating profit to SEK 22.4 million (7.2). The operating margin was 12.1 percent (4.2).
Net financial items amounted to SEK 3.5 million (6.0). The decrease compared with 2020 is mainly due to the revaluation of financial assets and liabilities in foreign currency.
Profit after tax for the period increased to SEK 21.3 million (10.6).
Development by segment
Björn Borg's segment reporting consists of the company's primary revenue sources, which are divided into: Wholesale, Consumer Direct. Distributors and Licensing, which is also how the business is monitored internally in the Group.
Wholesale
The segment consists of revenue and expenses associated with the Björn Borg Group's wholesale operations. The Group has wholesale businesses in Sweden, Germany, Finland, the Netherlands, Belgium and Denmark for apparel and underwear as well as in Sweden, Finland and the Baltic countries for footwear.
The segment's external operating revenue amounted to SEK 142.8 million (130.5), an increase of 9 percent. One reason for the increase is that the company is seeing increased demand through e-tailers, which primarily sell online, especially in the German market, but also in the Netherlands. The Swedish market also saw strong growth in the quarter. The Finnish market and the footwear business, on the other hand, reported decreases due to the impact of Covid-19. Sales to e-tailers rose a combined 68 percent for the quarter to SEK 60.4 million (35.9). All markets with the exception of footwear e-tailers reported growth, with Germany, the Netherlands and Sweden seeing strong growth.
Operating profit amounted to SEK 27.0 million (7.3) compared with the previous year, an increase of SEK 19.7 million. The improvement is primarily due to higher sales combined with slightly better gross profit margins and lower operating expenses.
Consumer Direct
The segment consists of revenue and expenses associated with the Björn Borg Group's direct sales to consumers. The Björn Borg Group owns and operates a total of 28 stores and factory outlets in Sweden. Finland, the Netherlands and Belgium with sales of underwear, sports apparel, adjacent products and other licensed products. In addition, Björn Bora sells online through www.biornbora.com.
External operating revenue in the Consumer Direct segment decreased in the first quarter of 2021 to SEK 37.0 million (39.5), or by 6 percent. The decrease is mainly due to the negative impact of Covid-19, which has resulted in closed stores. This negative effect has been offset, however, by our own e-commerce, which grew strongly in the quarter. The Group's own stores in Sweden declined 21 percent in total year-over-year, while comparable stores fell only 6 percent. The Benelux stores were closed for a large part of the quarter and therefore decreased significantly compared with the first quarter of 2020. down 70 percent in total and 68 percent for comparable stores. The Finnish stores have also been impacted by the coronavirus, with closed stores and sales down in total by 18 percent year-over-year. Comparable stores were down 29 percent. In total, own stores sales decreased 44 percent, while for comparable stores the decrease was 42 percent. This trend was offset by continued strong growth in the own e-commerce business, which grew 40 percent in the first quarter of 2021 compared with the previous year, mainly thanks to high website conversion.
The operating loss for the first quarter of 2021 was SEK -11.3 million (-7.6) mainly due to lower sales with lower gross profit margins than the previous year.
Brick-and-mortar stores play an important role for consumers when combined with a digital presence to create a consistent brand image. We therefore continuously reevaluate market conditions and locations to optimize our retail holdings.
Distributors
The Distributors segment mainly consists of revenue and expenses associated with sales to external distributors of product groups developed by the company.
The segment's external operating revenue increased in the first quarter of 2021 to SEK 11.0 million (5.4), up 103 percent from the previous year. The main reason was a year-over-year increase in sales to both major distributor markets, Norway and the UK, mainly driven by the UK, which has a distributor as of January 2021.
Operating profit increased to SEK 2.4 million (1.5) due to the higher external sales in the segment.
Licensing
The Licensing segment mainly consists of royalty revenue from licensees and expenses for the Group associated with the licensing operations.
The segment's external operating revenue decreased in the first quarter to SEK 4.6 million (6.9). The decrease is a result of lower brand sales of licensed products, with footwear accounting for most of that. Royalties as a percentage vary between product categories, because of which there is not always an exact correlation between royalties and brand sales.
Operating profit decreased to SEK 4.3 million (6.1) in the first quarter of 2021. The decline is due to the lower external sales in the segment.
Intra-Group sales
Intra-Group sales for the first quarter of 2021 amounted to SEK 123.4 million (113.3).
SEASONAL VARIATIONS
The Biörn Borg Group is active in an industry with seasonal variations. Sales and earnings vary by quarter. See the figure on quarterly net sales and operating profit on page 4.
INVESTMENTS AND CASH FLOW
The Group's cash flow from operating activities amounted to SEK –62.6 million (–16.5) in the first quarter of 2021. The decrease from the previous year primarily came from increased inventory levels and increased accounts receivable in the quarter compared with the first quarter of 2020.
Cash flow from investing activities was negative at SEK -3.6 million (-1.2). The largest investments were to update the e-commerce platform and in the new headquarters.
Cash flow from financing activities amounted to SEK 8.1 million (8.9).
FINANCIAL POSITION AND LIQUIDITY
The Björn Borg Group's cash & cash equivalents amounted to SEK 14.0 million (22.0) at the end of the period, plus an unutilized overdraft facility of SEK 127.4 million (66.7). Interest-bearing net liabilities, excluding lease liabilities, amounted to SEK 98.6 million (151.4). The company has a strong liquidity, and the lower net debt at the end of the quarter is mainly due to a decrease in tied-up working capital. Total interest-bearing liabilities amounted to SEK 184.8 million (301.4), where total lease liabilities amounted to SEK 72.2 million (128.0), of which SEK 50.3 million represents the long-term share and SEK 21.9 million the short-term share.
The lease on the new headquarters took effect on January 1, 2021. The lease liability and right-of-use asset amount to SEK 20.6 million.
The Björn Borg Group has SEK 240 million in bank facilities, of which SEK 112.6 million had been utilized as of March 31, 2021. The fair value of financial instruments essentially coincides with book value.
COMMITMENTS AND CONTINGENT LIABILITIES
As a commitment for the overdraft facility and three-vear revolving credit, the company has pledged to ensure that the ratio between the Group's net debt and rolling 12-month EBITDA does not exceed 3.00 on the last day of each quarter. Moreover, the Group will maintain an equity/assets ratio of at least 35 percent.
As of March 31, 2021 the ratio was 1.74 (3.12) and the equity/assets ratio was 54.3 percent (46.8).
No significant changes have been made with regard to pledged assets and contingent liabilities compared with December 31, 2020.
PERSONNEL
The average number of employees in the Group was 185 (211) for the twelve-month period ending March 31, 2021, of whom 64 percent (66) are women.
RELATED PARTY TRANSACTIONS
Other than customary remuneration (salary, fees and other benefits) to the CEO, senior executives and the Board of Directors, as well as intra-Group sales, there were no transactions with related parties during the period.
SIGNIFICANT RISKS AND UNCERTAINTIES
In its operations the Biörn Borg Group is exposed to risks and uncertainties. Information on the Group's risks and uncertainties can be found on page 61 in the annual report for 2020.
The company has stated that the coronavirus outbreak has greatly impacted the market and is negatively affecting the Björn Borg Group. The extent of this is difficult to assess, but the outbreak has had, and will continue to have, a material financial effect on the Group. We are currently seeing a
significant financial impact on our own stores, with fewer visitors and a large drop-off in sales. In particular, the company is seeing that overall development and/or requlatory decisions in the countries where it operates are leading to, or may lead to, reduced retail demand, potential disruptions to the supply chain, unfavorable currency impacts, payment difficulties by customers and closed stores with reduced sales as a result. Such effects were already evident in spring 2020, and for parts of the year our stores were closed in the Netherlands, Belgium, Finland and England. In the first quarter of 2021, we saw the same situation in the Netherlands, Belgium and Finland. The stores in Sweden have been open. Despite the difficult situation, the company has a good financial position with adequate liquidity. The measures that the company has taken to mitigate the financial effects of the coronavirus include renegotiated lease payments for the Group's own stores and overall reductions in operating expenses.
PARFNT COMPANY
Biörn Borg AB (publ) is primarily engaged in intra-Group activities. As of March 31, 2021 the company owns 100 percent of the shares in Björn Borg Brands AB, Björn Borg Footwear AB, Björn Borg Inc., Björn Borg Services AB, Björn Borg UK, Baseline, Bjorn Borg Finland Oy and Björn Borg Denmark Aps. In addition, the company owns 75 percent of the shares in Bjorn Borg (China) Ltd.
The Parent Company's net sales for the first quarter amounted to SEK 24.8 million (25.6). The result from shares in subsidiaries was negatively affected by SEK 3.4 million for write-downs of shares and receivables from subsidiaries.
Profit before tax amounted to SEK 6.3 million (3.1) for the first quarter. Cash & cash equivalents amounted to SEK 0 million (0) as of March 31, 2021.
EVENTS AFTER THE REPORTING PERIOD
The Dutch government's decision to impose a lockdown, which was introduced in December 2020, has continued in the first quarter of 2021 and appears to be continuing at least in the first month of the second quarter, which is affecting the company's sales at the wholesale level, but has also forced the company to close all its own stores in this market.
Germany is also in lockdown, which there as well are affecting the company's sales and order conversion.
NUMBER OF SHARES
Björn Borg has 25,148,384 shares outstanding.
FINANCIAL GOALS
Björn Borg's long-term financial goals, which were last updated in 2019, are as follows:
- · Annual sales growth of minimum 5 percent
- · Annual operating margin of minimum 10 percent
- · An annual dividend of at least 50 percent of net profit
- · The equity/assets ratio should not fall below 35 percent.
The company is maintaining the above goals despite the financial impact of the coronavirus.
Comments to the financial objectives: Sales growth is expected to mainly come from sports apparel, although other product groups are also expected to grow.
ANNUAL GENERAL MEETING
The Annual General Meeting for the financial year 2020 will be held on May 18, 2021. Due to the ongoing pandemic, the Board of Directors has decided that the meeting will be held without shareholders, proxies and outsiders in attendance and that votes can be cast only by postal voting prior to the meeting. Moreover, the Board of Directors has decided to propose that the Annual General Meeting 2021 resolve to distribute SEK 1.50 (1.00) per share to the shareholders for the financial year 2020, corresponding to 200 percent (0) of profit after tax. As proposed, the distribution would be made through an automatic redemption, where each share is divided into one ordinary and one redemption share. The redemption share will then automatically be redeemed for SEK 1.50 per share. Payment for the redemption share, pending the approval of the Annual General Meeting, is expected to implemented around June 21, 2021. The Board of Directors' proposal corresponds to a transfer to the shareholders of SEK 37.7 million (0.0).
ACCOUNTING PRINCIPLES
This condensed interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and applicable provisions of the Annual Accounts Act. The interim report for the Parent Company has been prepared in accordance with chapter 9 of the Annual Accounts Act on interim reporting and RFR 2 Accounting in Legal Entities. The accounting principles applied in the interim report conform to the accounting principles applied in the preparation of the consolidated accounts and annual report for 2020 (see page 56 in the annual report 2020). New and revised standards and new interpretations that apply as of January 1, 2021 have not had a material impact on the Group's financial reports. Revisions to RFR 2 applicable as of January 1. 2021 have not had a material impact on the Parent Company's financial reports.
CRITICAL ESTIMATES AND ASSUMPTIONS
The preparation of the interim report requires management to make estimates and assumptions that affect the application of the Group's (and Parent Company's) accounting principles as well as recognized amounts for assets, liabilities, revenue and expenses. The financial impact of Covid-19 has been taken into account. The results of these estimates and assumptions are then used to measure the carrying amounts of assets and liabilities that otherwise are not clearly indicated by other sources. The estimates for accounting purposes that result will, by definition, not always correspond to actual results. Important assumptions and estimates are set out in the annual report for 2020. No material revisions have been made to the assumptions or estimates compared with the annual report 2020.
AUDIT REPORT
This interim report has not been reviewed by the company's auditors.
OUTLOOK 2021
As a policy, the company does not issue earnings forecasts.
CONSOLIDATED INCOME STATEMENT CONDENSED
| January- | January- | April 2020- | Full-year | ||
|---|---|---|---|---|---|
| SEK thousands | Note | March 2021 | March 2020 | March 2021 | 2020 |
| Net sales | 1 | 184,651 | 171,973 | 717,889 | 705,211 |
| Other operating revenue | 10,817 | 10,329 | 29,283 | 28,796 | |
| Operating revenue | 195,468 | 182,302 | 747,172 | 734,007 | |
| Goods for resale | -86,273 | -78,867 | -342,634 | -335,228 | |
| Other external expenses | 2 | -38,953 | -42,207 | -155,331 | -158,585 |
| Staff costs | -31,792 | -35,307 | -126,013 | -129,528 | |
| Depreciation/amortization of tangible/intangible non-current assets | -8.536 | -11,979 | -37,403 | -40,846 | |
| Other operating expenses | -7,480 | -6,696 | -36,907 | -36,126 | |
| Operating profit | 22,434 | 7,246 | 48,884 | 33,694 | |
| Net financial items | 3,454 | 5,972 | -18,634 | -16,115 | |
| Profit before tax | 25,888 | 13,218 | 30,250 | 17,579 | |
| lax | -4.575 | -2,585 | -737 | 1,254 | |
| Profit for the period | 21,313 | 10,633 | 29,513 | 18,833 | |
| Profit for the period attributable to | |||||
| Parent Company's shareholders | 21,313 | 10.633 | 29.513 | 18.833 | |
| Non-controlling interests | |||||
| Earnings per share before dilution, SEK | 0.85 | 0.42 | 1.17 | 0.75 | |
| Earnings per share after dilution, SEK | 0.85 | 0.42 | 1.17 | 0.75 | |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONDENSED
| SEK thousands Note |
January- March 2021 |
January- March 2020 |
April 2020- March 2021 |
Full-year 2020 |
|---|---|---|---|---|
| Net profit for the period | 21,313 | 10,633 | 29,513 | 18,833 |
| OTHER COMPREHENSIVE INCOME Components that may be reclassified to profit or loss |
||||
| Translation difference for the period | -4,307 | -133 | 3.122 | 7,296 |
| Total other comprehensive income for the period | -4.307 | -133 | 3,122 | 7,296 |
| Total comprehensive income for the period | 17.006 | 10,500 | 32.635 | 26,129 |
| Total comprehensive income attributable to | ||||
| Parent Company's shareholders | 17,006 | 10.500 | 32,635 | 26,129 |
| Non-controlling interests | 1 | 1 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONDENSED
| SEK thousands Note |
31 March 2021 |
31 March 2020 |
31 Dec 2020 |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | 34,706 | 36,396 | 34,306 |
| Trademarks | 187,532 | 187,532 | 187,532 |
| Other intangible assets | 11,787 | 9,221 | 10,255 |
| Tangible non-current assets | 16,415 | 18,343 | 16,580 |
| Deferred tax assets | 15,171 | 15,800 | 15,761 |
| Right-of-use assets | 73,751 | 126,241 | 57,481 |
| Total non-current assets | 339,362 | 393,533 | 321,915 |
| Current assets | |||
| Inventory | 143,503 | 137,535 | 123,357 |
| Accounts receivable | 121,935 | 137,545 | 83,627 |
| Other current receivables | 21,833 | 27,151 | 19,884 |
| Cash & cash equivalents | 13,958 | 21,968 | 70,235 |
| Total current assets | 301,229 | 324.199 | 297,103 |
| Total assets | 640,591 | 717,732 | 619,018 |
| Equity and liabilities | 308,019 | 275,384 | |
| Equity Deferred tax liabilities |
39,281 | 40.254 | 291,013 39,289 |
| Non-current liabilities credit institutions | 99,000 | 150,000 | 99,000 |
| 50,308 | 90,506 | 35,701 | |
| Long-term lease liability Current liability to credit institution |
13,597 | 23,347 | |
| Accounts payable | 49,252 | 61,479 | 77,245 |
| Short-term lease liability | 21,919 | 37.505 | 21,383 |
| Other current liabilities | 59,215 | 39,257 | 55,387 |
| Total equity and liabilities | 640,591 | 717,732 | 619,018 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY CONDENSED
| Equity attributable to Parent Company's |
Non-controlling | Total | ||
|---|---|---|---|---|
| SEK thousands | Note | shareholders | interests | equity |
| Opening balance, January 1, 2020 | 270,774 | -5,890 | 264,884 | |
| Total comprehensive income for the period | 10.970 | -470 | 10.500 | |
| Closing balance, March 31, 2020 | 281,744 | -6,360 | 275,384 | |
| Opening balance, January 1, 2020 | 270,774 | -5,890 | 264,884 | |
| Total comprehensive income for the period | 25,534 | 595 | 26,129 | |
| Closing balance, December 31, 2020 | 296,308 | -5,295 | 291,013 | |
| Opening balance, January 1, 2021 | 296,308 | -5,295 | 291,013 | |
| Total comprehensive income for the period | 17,334 | -328 | 17,006 | |
| Closing balance, March 31, 2021 | 313,642 | -5,623 | 308,019 |
CONSOLIDATED STATEMENT OF CASH FLOWS
CONDENSED
| SEK thousands | January- March 2021 |
January- March 2020 |
Full-vear 2020 |
|---|---|---|---|
| Cash flow from operating activities | |||
| Before changes in working capital | 28,691 | 5.088 | 53,358 |
| Changes in working capital | -91,263 | -21,570 | 89,222 |
| Cash flow from operating activities | -62,572 | -16,482 | 142,580 |
| Investments in intangible non-current assets | -2,306 | -337 | -3,474 |
| Investments in tangible non-current assets | -1,255 | -906 | -5,490 |
| Cash flow from investing activities | -3,561 | -1,243 | -8,964 |
| Amortization of loans | -3,890 | -94,890 | |
| Amortization of lease liability | -5,440 | -3,365 | -28,183 |
| Loan proceeds | 40.000 | ||
| Overdraft facility | 13,597 | 16,105 | -7,242 |
| Cash flow from financing activities | 8,157 | 8,850 | -90,315 |
| Cash flow for the period | -57,976 | -8,875 | 43,301 |
| Cash & cash equivalents at beginning of year | 70,235 | 29,002 | 29,002 |
| Translation difference in cash & cash equivalents | 1.699 | 1,841 | -2,068 |
| Cash & cash equivalents at end of the period | 13,958 | 21,968 | 70,235 |
KEY FIGURES
| SEK thousands | January- March 2021 |
January- March 2020 |
April 2020- March 2021 |
Full-year 2020 |
|---|---|---|---|---|
| Gross profit margin, % | 53.3 | 54.1 | 52.3 | 52.5 |
| Operating margin, % | 12.1 | 4.2 | 6.8 | 4.8 |
| Profit margin, % | 14.0 | 7.7 | 4.2 | 2.5 |
| Return on capital employed, % | 8.8 | 8.7 | 8.8 | 4.8 |
| Return on average equity, % | 10.1 | 11.4 | 10.1 | 6.8 |
| Profit attributable to Parent Company's shareholders | 21,313 | 10.633 | 29.513 | 18,833 |
| Equity/assets ratio, % * | 54.3 | 46.8 | 54.3 | 51.8 |
| Equity per share, SEK | 12.25 | 10.95 | 12.25 | 11.57 |
| Investments in intangible non-current assets | 2,306 | 337 | 5,443 | 3,474 |
| Investments in tangible non-current assets | 1,255 | 906 | 5,839 | 5,490 |
| Depreciation, amortization and impairment losses for the period | -8,536 | -11,979 | -37,403 | -40,846 |
| Average number of employees | 185 | 204 | 185 | 192 |
* The figure is an alternative performance measure (APM) and not IFRS. It is described under definitions and explained on page 12.
SUMMARY BY SEGMENT
GROUP
| SEK thousands | January- March 2021 |
January- March 2020 |
April 2020- March 2021 |
Full-year 2020 |
|---|---|---|---|---|
| Operating revenue | ||||
| Wholesale | ||||
| External revenue | 142,756 | 130,466 | 476,685 | 464,394 |
| Internal revenue | 102 | 701 | 1,644 | 2,244 |
| 142,858 | 131,167 | 478,329 | 466,638 | |
| Consumer Direct | ||||
| External revenue | 37,018 | 39,519 | 208,484 | 210,986 |
| Internal revenue | 89 | 89 | ||
| 37,018 | 39,519 | 208,573 | 211,075 | |
| Distributors | ||||
| External revenue | 11,049 | 5,443 | 50,272 | 44,667 |
| Internal revenue | 104,825 | 96,464 | 418.572 | 410,210 |
| 115,874 | 101,907 | 468,844 | 454,877 | |
| Licensing | ||||
| External revenue | 4,645 | 6,874 | 11,732 | 13,960 |
| Internal revenue | 18,467 | 16,161 | 71,084 | 68,785 |
| 23,112 | 23,041 | 82,816 | 82,745 | |
| Less internal sales | -123,394 | -113,332 | -491,390 | -481,328 |
| Operating revenue | 195,468 | 182,302 | 747,172 | 734,007 |
| Operating profit | ||||
| Wholesale | 27,027 | 7,260 | 36,672 | 16,904 |
| Consumer Direct | -11,262 | -7,615 | -6,332 | -2,686 |
| Distributors | 2,392 | 1,457 | 7,890 | 6,955 |
| Licensing | 4,277 | 6,144 | 10,654 | 12,521 |
| Operating profit | 22,434 | 7,246 | 48,884 | 33.694 |
Reconciliation between operating profit and profit before tax
The difference between operating profit for segments for which information must be disclosed, SEK 22,434 thousand (7,246), and the result before tax, SEK 25,888 thousand (13,218), is net financial items, SEK 3,454 thousand (5,972).
QUARTERLY DATA GROUP
| SEK thousands | Q1 2021 | 04 2020 | 03 2020 | Q2 2020 | 01 2020 | 04 2019 | 03 2019 | 02 2019 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 184.651 | 160,364 | 224,909 | 147.966 | 171,973 | 196,407 | 230,585 | 141.705 |
| Gross profit margin, % | 53.3 | 56.6 | 50.4 | 49.1 | 54.1 | 50.8 | 52.5 | 55.4 |
| Operating profit (loss) | 22,434 | 6,455 | 33,403 | -13,410 | 7,246 | 1,432 | 33,065 | -1,678 |
| Operating margin, % | 12.1 | 4.0 | 14.9 | -9.1 | 4.2 | 0.7 | 14.3 | -1.2 |
| Profit (loss) after financial items | 25,888 | -5,744 | 32,951 | -22,846 | 13,218 | -2,566 | 34,140 | -2,828 |
| Profit margin, % | 14.0 | -3.6 | 14.7 | -15.4 | 7.7 | -1.3 | 14.8 | -2.0 |
| Earnings per share before dilution, SEK | 0.85 | 0.05 | 1.02 | -0.75 | 0.42 | -0.11 | 1.07 | -0.09 |
| Earnings per share after dilution, SEK | 0.85 | 0.05 | 1.02 | -0.75 | 0.42 | -0.11 | 1.07 | -0.09 |
| Number of Björn Borg stores | ||||||||
| at end of period | 31 | 32 | 33 | 33 | 33 | 33 | 33 | 32 |
| of which Group-owned | ||||||||
| Björn Borg stores | 28 | 29 | 30 | 30 | 30 | 30 | 30 | 29 |
PARENT COMPANY INCOME STATEMENT CONDENSED
| SFK thousands | Note | January- March 2021 |
January- March 2020 |
April 2020- March 2021 |
Full-year 2020 |
|---|---|---|---|---|---|
| Net sales | 24,806 | 25,644 | 101,306 | 102,144 | |
| Other operating revenue | 1,089 | 712 | 1,436 | 1,059 | |
| Operating revenue | 25,895 | 26,356 | 102,742 | 103,203 | |
| Goods for resale | -1 | -3 | -4 | ||
| Other external expenses | 2 | -10,433 | -13,727 | -40,396 | -43,690 |
| Staff costs | -11,185 | -9,623 | -37,494 | -35,932 | |
| Depreciation/amortization of tangible/intangible non-current assets | -574 | -563 | -2,258 | -2,247 | |
| Other operating expenses | -6 | -269 | -1,699 | -1,963 | |
| Operating profit | 3,697 | 2,173 | 20,892 | 19,367 | |
| Result from shares in subsidiaries | -3,420 | -11,251 | -7,831 | ||
| Net financial items | 6,038 | 899 | -11,987 | -17,126 | |
| Profit (loss) after financial items | 6,315 | 3,072 | -2,346 | -5,590 | |
| Group contributions received | -9,610 | -9.610 | |||
| Appropriations | |||||
| Profit (loss) before tax | 6,315 | 3,072 | -11,956 | -15,200 | |
| Tax | -26 | -26 | |||
| Profit (loss) for the period | 6,315 | 3,072 | -11,982 | -15,226 | |
| Other comprehensive income | |||||
| Total comprehensive income for the period | 6,315 | 3,072 | -11,982 | -15,226 |
PARENT COMPANY BALANCE SHEET CONDENSED
| 31 March | 31 March | 31 Dec | |
|---|---|---|---|
| SEK thousands Note |
2021 | 2020 | 2020 |
| Non-current assets | |||
| Intangible assets | 4,403 | 5,965 | 4,741 |
| Tangible non-current assets | 2,622 | 1,069 | 1,764 |
| Deferred tax | 8 | 11 | 8 |
| Shares in Group companies | 305,343 | 344,106 | 306,185 |
| Total non-current assets | 312,376 | 351,151 | 312,698 |
| Current assets | |||
| Receivables from Group companies | 933,966 | 777,871 | 831,000 |
| Current receivables | 6,364 | 10,423 | 5,483 |
| Cash & cash equivalents | 55,450 | ||
| Total current assets | 940,330 | 788,294 | 891,933 |
| Total assets | 1,252,706 | 1,139,445 | 1.204.631 |
| Equity and liabilities | |||
| Equity | 185,102 | 197,084 | 178,787 |
| Untaxed reserves | 1,038 | 1,038 | 1,038 |
| Non-current liabilities credit institutions | 99,000 | 150,000 | 99,000 |
| Current liability to credit institution | 13,597 | 23,347 | |
| Due to Group companies | 939,969 | 751,562 | 913,229 |
| Accounts payable | 3,786 | 7,964 | 5,104 |
| Other current liabilities | 10,214 | 8,450 | 7,473 |
| Total equity and liabilities | 1.252.706 | 1.139.445 | 1.204.631 |
PARENT COMPANY STATEMENT OF CHANGES IN EQUITY CONDENSED
| SEK thousands | January- | January- | Full-year |
|---|---|---|---|
| March 2021 | March 2020 | 2020 | |
| Opening balance | 178.787 | 194.012 | 194.012 |
| Total comprehensive income for the period | 6.315 | 3,072 | -15,226 |
| Closing balance | 185,102 | 197,084 | 178.787 |
SUPPLEMENTARY DISCLOSURES
NOTE 1 NET SALES
The Group's net sales consist of sales of products and royalties for usage of the company's brand. Transfers of goods/royalties are made at fixed points in time.
| Group | |||
|---|---|---|---|
| Jan-Mar | Jan-Mar | ||
| SEK thousands | 2021 | 2020 | |
| Sweden | 63.297 | 59.719 | |
| Netherlands | 36.611 | 42,343 | |
| Finland | 28,265 | 35.077 | |
| Other | 56.478 | 34.834 | |
| Total net sales | 184,651 | 171,973 |
NOTE 2 OTHER EXTERNAL EXPENSES
| Group | Parent Company | |||
|---|---|---|---|---|
| Jan-Mar | Jan-Mar | Jan-Mar | Jan-Mar | |
| SEK thousands | 2021 | 2020 | 2021 | 2020 |
| Cost of premises | 2.378 | 2.000 | 1.250 | 2,945 |
| Selling expenses | 13.213 | 16,548 | 735 | 1,210 |
| Marketing expenses | 12.021 | 13.291 | 6,002 | 5.636 |
| Administrative | ||||
| expenses | 10,504 | 7.655 | 2.353 | 3.236 |
| Other | 837 | 2.713 | 93 | 700 |
| 38.953 | 42.207 | 10.433 | 13.727 |
DEFINITIONS
The company presents certain financial measures in this interim report that are not defined according to IFRS. The company considers these measures to be valuable complementary information for investors and the company's management. Since not all companies calculate financial measures in the same way, they are not always comparable with measures used by other companies. Consequently, these measures should not be seen as a substitute for measures defined according to IFRS. For more on the calculation of these key financial ratios, see
https://corporate.bjornborg.com/en/section/investors/ interim-reports/
https://corporate.bjornborg.com/en/financial-definitions/ https://corporate.biornborg.com/en/financial-data/
CAPITAL EMPLOYED
Total assets less non-interest-bearing liabilities and provisions. Purpose: Capital employed measures capital use and efficiency.
COMPARABLE STORE SALES
Sales for own stores that were also open in the previous period.
Purpose: To obtain comparable sales between periods for own stores.
EARNINGS PER SHARE
(DEFINED ACCORDING TO IFRS)
Profit after tax in relation to the weighted average number of shares during the period.
Purpose: This measure is used to assess an investment from an owner's perspective.
EARNINGS PER SHARE AFTER DILUTION (DEFINED ACCORDING TO IFRS)
Earnings per share adjusted for any dilution effect. Purpose: This measure is used to assess an investment from an owner's perspective.
EQUITY/ASSETS RATIO
Equity as a percentage of total assets adjusted for lease liabilities.
Purpose: This measure shows financial risk, expressed as a share of total restricted equity financed by the owners.
GROSS PROFIT MARGIN
Net sales less cost of goods sold divided by net sales. Purpose: Gross margin is used to measure operating profitability.
GROSS PROFIT MARGIN BEFORE ACQUISITIONS
Net sales less cost of goods sold divided by net sales. Purpose: Gross profit margin before acquisitions is used to measure operating profitability adjusted for acquisition effects.
GROSS PROFIT MARGIN EXCL. CURRENCY EFFECTS
Gross profit margin calculated using year-earlier exchange rates.
Purpose: To obtain a currency neutral gross profit margin.
GROUP NET SALES EXCL. CURRENCY EFFECTS
Net sales calculated using year-earlier exchange rates. Purpose: To obtain comparable and currency neutral net sales.
NET DEBT
Interest-bearing liabilities excluding lease liabilities less investments and cash & cash equivalents. Purpose: Net debt reflects the company's total debt situation.
NET DEBT TO EBITDA RATIO
Interest-bearing liabilities excluding lease liabilities less investments and cash & cash equivalents divided by operating profit before depreciation/amortization. Purpose: This measure shows the company's ability to pay debts.
net financial items
Financial income less financial expenses. Purpose: Describes the company's financial activities.
OPERATING MARGIN
Operating profit as a percentage of net sales. Purpose: Operating margin is used to measure operating profitability.
OPERATING PROFIT
Profit before tax plus net financial items. Purpose: This measure facilitates profitability comparisons regardless of the company's tax rate and independent of its funding structure.
PROFIT MARGIN
Profit before tax as a percentage of net sales. Purpose: Profit margin shows the company's profit in relation to sales.
RETURN ON CAPITAL EMPLOYED
Profit before tax (per rolling 12-month period) plus financial expenses as a percentage of average capital employed. Purpose: This is the key measure to quantify the return on the capital used in operations.
RETURN ON EQUITY
Profit for the period/year attributable to the Parent Company's shareholders (for rolling 12 months) 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.
Purpose: This measure is used to show, from an ownership perspective, the return generated on the owners' invested capital.
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.
Stockholm, May 18, 2021
Heiner Olbrich Chairman
Alessandra Cama Board member
Anette Klintfeldt Board member
Fredrik Lövstedt Board member
Mats H Nilsson Board member
Henrik Bunge CEO
CALENDAR 2021
The interim report for January-June 2021 will be released at 7:30 am (CET) on August 20, 2021.
The interim report for January-September 2021 will be released on at 7:30 am (CET) November 19, 2021.
The year-end report for 2021 will be released at 7:30 am (CET) on February 25, 2022.
FINANCIAL REPORTS
Financial reports can be downloaded from the company's website, www.bjornborg.com or ordered by telephone +46 8 506 33 700 or by e-mail [email protected].
SHARFHOI DFR CONTACT
Henrik Bunge, CEO E-mail: [email protected] Tel: +46 8 506 33 700
Jens Nyström, CFO E-mail: [email protected] Tel: +46 8 506 33 700
ABOUT THE BJÖRN BORG GROUP
The Group owns the Björn Borg trademark and its core business is sports apparel and underwear. It also offers footwear, bags and eyewear through licensees. Björn Borg products are sold in around twenty markets, the largest of which are Sweden and the Netherlands. The Björn Borg Group has operations at every level from branding to consumer sales in its own Björn Borg stores. Group net sales amounted to SEK 705.2 million in 2020, with an average of 192 employees. The Björn Borg share has been listed on Nasdaq Stockholm since 2007.
IMAGES IN THE INTERIM REPORT
The images used in the interim report are taken from Björn Borg's spring/summer 2021 collection.
Björn Borg AB Frösundaviks allé 1 SE-169 70 Solna, Sweden www.bjornborg.com
Björn Borg is required to make public this information according to the EU's Market Abuse Regulation. The information was released for publication by the above-mentioned contacts on May 18, 2021 at 5:30 pm (CET).