Quarterly Report • Nov 18, 2022
Quarterly Report
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Björn Borg AB • Interim report January-September 2022
"Very strong growth for our own e-commerce which increased by 28 percent during the third quarter of the year and adjusted for non-recurring items and currency changes, we have never shown higher profitability in a single quarter." comments CEO Henrik Bunge.
| SEK million | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Oct 2021- Sep 2022 |
Full year 2021 |
|---|---|---|---|---|---|---|
| Net sales | 248.6 | 240.1 | 636.8 | 587.6 | 817.3 | 768.2 |
| Gross profit margin, % | 48.2 | 54.4 | 50.4 | 54.6 | 51.0 | 54.2 |
| Operating profit | 30.6 | 52.4 | 65.1 | 94.1 | 75.2 | 104.1 |
| Operating margin, % | 12.3 | 21.8 | 10.2 | 16.0 | 9.2 | 13.5 |
| Profit after tax | 22.2 | 40.1 | 45.6 | 75.0 | 56.7 | 86.0 |
| Earnings per share before dilution, SEK | 0.88 | 1.59 | 1.81 | 2.98 | 2.25 | 3.42 |
| Earnings per share after dilution, SEK | 0.88 | 1.59 | 1.81 | 2.98 | 2.25 | 3.42 |
With the first three quarters of the year now a matter of record, I can state that, currency neutral, we have never been more profitable or had a higher turnover. This statement of strength proves that our business concept of building a global sports fashion brand leads both to increased profitability and increased growth. Currency-neutral and adjusted for planned one-off costs, the operating profit for our first three quarters of 2022 would have been SEK 102.9 million (94.1) and for the third quarter SEK 53.2 million (52.4). The one-off costs during 2022 are the costs for the long term incentive program with SEK 9.8 million for the first nine months of the year, where SEK 3.9 million is for the third quarter of 2022, and reserves for potential repayment of governmental Covid-support the company received during 2020 and 2021 for the Dutch operation. For both the first nine month and the third quarter the mentioned support equals a cost of SEK 7.2 million. But reality is not free from one-of costs, nor is the reality currency neutral, and currency changes are one of the challenges that we as a team have to deal with. In addition to very unfavorable USD exchange rates, the quarter continued to be characterized by rising inflation and troubled times in the world around us. Undoubtedly, these factors have a major impact on consumer consumption. For our part, there is of course reason for caution, but we know that our largest category, men's underwear, is less sensitive to economic fluctuations than other categories. Furthermore, we see that the prices of raw materials have stabilized and that shipping prices, mainly driven by lower container costs, are now going down. We have a strong belief in our business, but we also have great humility in the face of troubled times ahead.
Net sales during the quarter amounted to SEK 248.6 million (240.1), an increase of 3.5 percent. We saw continued losses at several of our e-tailers, but at the same time we continued with very good growth in our own e-commerce. Our wholesale operations grew in all markets except the Netherlands and Belgium. Our sports apparel collection continued to grow and increased during the quarter by 21
percent. Bags showed strong growth figures, while underwear and footwear decreased by 7 percent and 8 percent respectively, which can be attributed to the loss we had with e-tailers.
The gross profit margin decreased to 48.2 percent (54.4). Adjusted for currency effects, the gross profit margin would have been 54.5 percent, an increase compared to the previous year. Reduced discounts both in own retail stores and own e-commerce, and in wholesale operations, is the explanation for the currency-neutral gross profit margin increase. We increased our operating expenses in the quarter by SEK 13.6 million as planned. Increased marketing costs were one explanation, but the result was also negatively affected by the company's incentive program that expires in 2022.
Increased sales with a lower gross profit margin and increased costs meant that our operating profit decreased to SEK 30.6 million (52.4), an operating margin of 12.3 percent (21.8).
Clearly, we are currently operating in challenging times and, obviously, everything that happens affects us. But even in challenging times it is possible to create strong results. The third quarter of the year showed several victories which gave us both the courage and perseverance to continue building on our business idea. Never have we had higher profitability in a single quarter, adjusted for non-recurring items and currency changes, than we had in our own e-commerce, which increased by 28 percent during the third quarter of the year. We also saw continued good growth for our sports apparel collection. We are increasingly being seen as a sports fashion brand, and our strong development in Sweden, where our brand preference increased by 23 percent, is particularly pleasing. As we have said earlier, our journey has only just begun, and I look forward with confidence to the challenging times ahead where we can continue to develop our business.
So, let's go!
Head coach, Henrik Bunge
OPERATING REVENUE THIRD QUARTER 2022
The third quarter of the year showed an improvement in total operating revenue, including other income, of 4.5 percent to SEK 255.0 million (243.9). Adjusted for currency effects, total operating revenue increased by 1.7 percent in the quarter.
The underwear product area showed a decrease in sales of 7 percent for the third quarter of 2022, while sports apparel increased by 21 percent.
Sales of footwear decreased by 8 percent compared to the previous year's third quarter, mainly due to timing in distribution, while in other product areas, sales increased by 47 percent, with bags accounting primarily for the increase.
Sales increased in the largest market, Sweden, during the third quarter of the year by 2 percent, while the second largest market, the Netherlands, decreased by 7 percent. Finland increased by 2 percent and Germany increased by 8 percent. Sales in Denmark increased during the third quarter by 6 percent, while Belgium decreased by 14 percent. Other smaller markets increased by a total of 45 percent.
The largest channel, the wholesale business, showed a total increase of 5 percent during the third quarter of 2022, where physical stores increased by 19 percent. E-tailers
SEK 244 million Growth 5% SEK 255 million
SEK 244 million Growth 5% SEK 255 million
within the wholesale business, on the other hand, were down by 17 percent. Own retail stores decreased in total compared to the previous year by 28 percent, while comparable stores decreased by 11 percent in the quarter. Own e-commerce continued to show strong growth and increased by 28 percent. External distributors increased sales by 56 percent compared to the previous year, while royalty income decreased slightly.
Group net sales during the third quarter amounted to SEK 248.6 million (240.1), an increase of 3.5 percent. The currency effect was positive on sales in the quarter, although adjusted net sales decreased by 0.4 percent.
The main explanation for the decrease in the quarter was that the company saw a temporary decrease in demand from e-tailers within the wholesale business, mainly the Netherlands and Sweden. For further details, see below under "Development by segment".
Group's net sales during the first nine months amounted to SEK 636.8 million (587.6), an increase of 8.4 percent. The currency effect was positive on turnover which increased by 4.9 percent after adjustment,
The main explanation for the increase during the first nine months of the year was increased demand in physical retail where, above all, the largest market, Sweden, showed strong growth. For further details, see below under "Development by segment".
The gross profit margin for the third quarter fell to 48.2 percent (54.4). Adjusted for currency effects, the gross profit margin would have been 54.5 percent, i.e. an increase of 0.1 percentage points compared to the previous year. The general focus on profitability in the wholesale business, as well as reduced discounts in the retail business accounted for the positive effect.
Other operating income amounted to SEK 6.4 million (3.8) and referred mainly to unrealized profits on accounts receivable in foreign currency.
Operating costs increased in the quarter by SEK 13.6 million compared to the previous year's third quarter, primarily through increased marketing activities and rental costs, the latter relating to reserves for potential repayment of governmental Covid-support the company received during 2020 and 2021 for the Dutch operation. The operating result was also negatively affected by SEK 3.9 million during the third quarter of the year, related to the company's incentive program, LTIP 2022. The 2019 AGM decided on the introduction of a new long-term incentive program, LTIP 2022, which can be described as variable cash compensation based on the price for the Björn Borg share. Employees entitled to participate in the incentive program, which runs between the years 2019 and 2022, are members of the company management team. As of September 30, 2022, a cost of SEK 9.8 million (1.8) had been booked.
Increased sales with a lower gross profit margin related to negative currency effects, and increased operating costs compared to the previous year resulted in an operating profit of SEK 30.6 million (52.4) for the quarter. The operating margin was 12.3 percent (21.8).
Net financial items amounted to –0.0 MSEK (–1.4). The improvement in net financial items compared to the previous year was mainly attributable to the revaluation of financial assets and liabilities in foreign currency.
Profit for the period amounted to SEK 22.2 million (40.1). Profit after tax was negatively affected by SEK 2.5 million during the third quarter of the year related to an anticipated tax effect regarding the liquidation of the company's UK operations.
The gross profit margin for the first nine months fell to 50.4 percent (54.6). Adjusted for currency effects, the gross profit margin would have been 55.1 percent, i.e. an increase of 0.5 percentage points compared to the previous year.
Other operating income amounted to SEK 21.8 million (18.6) and referred mainly to unrealized profits on accounts receivable in foreign currency.
Operating costs increased by SEK 32.7 million compared to the previous year, primarily through increased rental and sales costs as well as marketing activities. Operating profit was also negatively affected by SEK 9.8 million during the first nine months, related to the company's incentive program, LTIP 2022, as described above under "Results, third quarter July-September 2022".
Despite a lower gross profit margin related to negative currency effects, and increased operating costs compared to the previous year, the increased sales resulted in an operating profit of SEK 65.1 million (94.1). The operating margin was 10.2 percent (16.0).
Net financial items amounted to SEK –1.1 million (0.8). The deterioration of the financial items compared to the previous year was mainly attributable to the revaluation of financial assets and liabilities in foreign currency.
The period's profit after tax decreased to SEK 45.6 million (75.0). Profit after tax was negatively affected by SEK 5.1 million during the year related to a tax effect regarding the liquidation of the company's UK operations.
Björn Borg's segment reporting consists of the company's primary revenue streams, which are divided into: Wholesale, Consumer Direct, Distributors and Licensing, which is also how the business is monitored internally in the Group.
The segment consists of revenues and costs associated with the Björn Borg Group's wholesale operations. The Group conducts wholesale operations in Sweden, Germany, Finland, the Netherlands, Belgium and Denmark for sports apparel, bags, and underwear as well as footwear in Sweden and Finland.
The segment's external operating income amounted to SEK 425.9 (394.4) million during first nine months of the year, which was an increase of 8 percent. One explanation for the increase was that the company saw increased demand, particularly in physical retail within the segment, which increased by 21 percent during the first nine months of the year. Sweden and Finland increased in total by 15 and 28 percent respectively. Footwear sales in the wholesale segment increased by 2 percent, while Germany and the Netherlands decreased by 7 and 5 percent, respectively.
Operating profit for the first nine months amounted to SEK 54.8 million (68.6), a decrease of 20 percent. The deterioration in earnings was primarily due to lower gross profit margins related to negative currency effects and the planned increase in operating costs.
The segment consists of revenues and costs associated with the Björn Borg Group's direct sales to consumers. The Björn Borg Group owns and operates a total of 18 (24) retail stores and factory outlet stores in Sweden, Finland, the Netherlands, and Belgium, selling underwear, sports apparel, complementary products, and other licensed products. In addition, Björn Borg sells online through www.bjornborg.com.
The consumer direct segment increased its external operating income during the first nine months of 2022 to SEK 157.9 million (152.9), an increase of 3 percent. The increase was mainly due to strong growth in own e-commerce, which grew to SEK 80.4 million (70.1) during the first nine months of the year, an increase of 15 percent. Sales in own physical retail stores were down by 9
percent in total for the company, mainly due to fewer stores compared to the previous year. For comparable stores, sales in own retail stores increased by 7 percent during the first nine months of the year.
Operating profit for the first nine months of 2022 amounted to SEK –10.8 million (4.6). The deterioration in operating profit was mainly explained by reduced gross margins within own retail stores due to negative currency effects, as well as slightly higher operating costs related to non-recurring items within the reserve for repayment of governmental Covid-support in the Netherlands.
This segment mainly consists of revenues and costs associated with sales to external distributors of product groups that are developed in-house by the company.
The segment's external operating income during the first nine months of the year 2022 amounted to SEK 67.6 million (49.9), which was an increase of 36 percent. Sales to the two major distributor markets Norway and Great Britain increased by 45 percent and 82 percent respectively compared to the previous year, driven by wider distribution as a result of the UK market now being fully handled by an external distributor. Denmark, which is now a fully integrated part of the wholesale business, had the opposite effect within the distributor segment.
Operating profit increased to SEK 15.1 million (12.9).
The licensing segment mainly consists of royalty income from licensees and costs for the Group associated with licensing operations.
The segment's external operating income decreased slightly during the first nine months of 2022 to SEK 7.4 million (9.0). The decrease was a result of lower brand sales of licensed products, where footwear mainly accounted for the reduction.
Operating profit decreased to SEK 6.1 million (8.0) for the first nine months of 2022. The reduced operating profit was a consequence of the lower external sales in the segment.
Intra-Group sales for the first nine months of 2022 amounted to SEK 344.5 million (411.1).
The Björn Borg Group operates in an industry with seasonal variations. The different quarters vary in terms of sales and profit. See diagram on 'Quarterly net sales and operating profit' on page 4.
| Operating income, SEK thousands January-September |
Operating profit, SEK thousands January-September |
Operating margin,% January-September |
|||||
|---|---|---|---|---|---|---|---|
| Segment | Revenue type | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
| Wholesale | Products | 425,869 | 394,431 | 54,807 | 68,598 | 13 | 17 |
| Consumer direct | Products | 157,576 | 152,882 | –10,829 | 4,563 | –7 | 3 |
| of which stores | 75,398 | 82,764 | –24,294 | –8,118 | –32 | –10 | |
| of which e-commerce | 82,178 | 70,118 | 13,465 | 12,681 | 16 | 18 | |
| Distributors | Products | 67,645 | 49,866 | 15,078 | 12,908 | 22 | 3 |
| Licensing | Royalties | 7,431 | 9,014 | 6,084 | 7,999 | 82 | 12 |
| Total | 658,520 | 606,193 | 65,140 | 94,068 | 10 | 16 |
The cash flow from the operating activities in the Group during the first nine months of 2022 amounted to –10.9 MSEK (35.8).
Cash flow from investment activities was negative SEK –6.6 million (–8.4). The major investments were in the remodeling of an outlet store. Cash flow from financing activities amounted to SEK –71.5 million (–54.1). The negative cash flow compared to the previous year was mainly due to a higher distribution to shareholders of SEK –62.9 million (–37.7).
The Björn Borg Group's cash and cash equivalents at the end of the period amounted to SEK 14.4 million (45.8), plus unused bank facilities of SEK 61.1 million (141.0). At the end of the third quarter of the year, the company had a net debt, excluding lease liabilities, of SEK 74.5 million (53.2). Total interest-bearing liabilities amounted to SEK 140.0 million (163.2), where total leasing debt amounted to SEK 51.1 million (64.2), of which SEK 33.1 million represented the long-term share and SEK 18.0 million the short-term share.
The Björn Borg Group had SEK 150 million in bank facilities, of which SEK 88.9 million (0) was utilized as of September 30, 2022. The fair value of financial instruments essentially conincides with book value.
As a commitment for the overdraft facility and the three-year revolving credit, the company has undertaken to ensure that the ratio of the Group's net debt and 12-month rolling EBITDA will not exceed 3.00 on the last day of each quarter. Furthermore, the group will maintain an equity/assets ratio of at least 35 percent.
As of September 30, 2022, the ratio was 0.87 (0.48) and the equity/assets ratio was 52.3 percent (53.1).
There have been no significant changes in pledged assets and contingent liabilities compared to December 31, 2021.
The average number of employees in the Group for the twelve-month period ending September 30, 2022, was 154 (169), of which 67 percent (68) were women. The reduction in personnel compared to the previous year was due to store closures.
In addition to the customary remuneration (salary, fees, and other benefits) to the CEO, senior executives and the Board of Directors, as well as Intra-Group sales, no transactions with related parties were carried out during the period.
Through its operations, the Björn Borg Group is exposed to risks and uncertainties. Information about the Group's risks and uncertainties is given on page 61 of the annual report for 2021.
The company notes, however, that at the end of February 2022, what has been called the most politically threatening event in Europe since the Second World War began. Russia launched a large-scale attack and thus started a war against Ukraine. Consequences of the war have included large flows of refugees, as well as severe retaliatory sanctions against Russia from the outside world. It is difficult today to determine how the war will
affect the Björn Borg Group's operations financially. The fact that the company does not do business in either Russia or Ukraine should minimize any direct risks of business impact, even though declining consumer confidence in the future may have an indirect, negative effect. However, the company can note that increased fuel prices lead to increased shipping costs and is something that should be seen as a financial risk.
Furthermore, the company notes that inflation in the markets in which the Björn Borg Group operates is reaching record levels, which may have a further impact on consumers' purchasing behavior.
Björn Borg AB (publ) mainly conducts intra-Group activities. As of September 30, 2022, the company owned 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, BBM, Björn Borg Finland Oy and Björn Borg Denmark Aps. Furthermore, the company owned 75 percent of the shares in Bjorn Borg (China) Ltd. The company has restructured the Baseline group, which consisted of six legal entities in the Netherlands and Belgium. After the restructuring, the Belgian units are directly owned by Björn Borg AB. The acquisition was carried out on the entry date of January 1, 2022.
The parent company's net sales for the first nine months of 2022 amounted to SEK 75.8 million (74.9).
Profit before tax amounted to –8.8 MSEK (–16.5) for the first nine months of 2022. Cash and cash equivalents at the end of the period amounted to 0 MSEK (25.6).
There are no significant events to report after the end of the reporting period.
The number of shares in Björn Borg amounts to 25,148,384 shares.
Björn Borg's long-term financial goals for the business, which were most recently established in 2019 for a five-year period until 2023, are:
The company is maintaining the above goals despite the ongoing unrest in the outside world.
Comments on the financial targets: Sales growth is estimated to come mainly from growth in sports apparel, although other product groups are also expected to grow.
The annual general meeting held on 19 May 2022, approved a distribution of SEK 2.50 (1.50) per share to the shareholders for the financial year 2021. Fredrik Lövstedt, Mats H Nilsson, Heiner Olbrich, Alessandra Cama, Anette Klintfeldt and Jens Høgsted were re-elected to the board. Johanna Schottenius was elected as a new board member. The total number of members is seven. The meeting decided that Heiner Olbrich should be re-elected as chair of the board.
This condensed interim report for the Group has been prepared in accordance with IAS 34 Interim Financial Reporting and the applicable regulations in the Annual Accounts Act. The interim report for the parent company has been prepared in accordance with the Annual Accounts Act chapter 9, on interim reporting and RFR 2 Accounting for legal entities. The accounting principles applied in the interim report conform to the accounting principles applied when preparing the Group accounts and annual report 2021 (see page 56 of the annual report for 2021). New and amended standards and new interpretations that applied from 1 January 2022 had no significant impact on the Group's financial reports. Changes in RFR 2 that applied from 1 January 2022 had no significant impact on the parent company's financial reports.
When preparing an interim report, management is required to make assessments and estimates regarding assumptions that affect the application of the Group's (and the parent company's) accounting principles as well as reported amounts for assets, liabilities, income, and expenses. The effects of the negative financial impact of the Corona virus have been taken into account, as well as possible negative financial effects of the war in Ukraine. The results of these estimates and assumptions are then used to assess the reported values of assets and liabilities that otherwise are not clearly indicated from other sources. The estimates for accounting purposes that result from these will, by definition, not always correspond to the actual result. The outcome of the above estimates has not had any significant impact on the Group's financial reports. Important estimates and judgments appear in the annual report for 2021. No other significant changes in estimates or judgments have taken place compared to the 2021 annual report.
This interim report has been subject to a general review by the company's auditors. The review report can be found on page 15.
The company's policy is not to provide forecasts.
IN SUMMARY
| SEK thousands | Note | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Oct 2021- Sep 2022 |
Full year 2021 |
|---|---|---|---|---|---|---|---|
| Net sales | 1 | 248,590 | 240,141 | 636,754 | 587,627 | 817,330 | 768,203 |
| Other operating revenue | 6,398 | 3,799 | 21,766 | 18,565 | 31,092 | 27,892 | |
| Operating revenue | 254,988 | 243,940 | 658,520 | 606,193 | 848,422 | 796,095 | |
| Goods for resale | –128,793 | –109,579 | –315,602 | –267,046 | –400,219 | –351,663 | |
| Other external expenses | 2 | –50,396 | –37,321 | –128,424 | –108,066 | –178,668 | –158,310 |
| Personnel costs | –33,203 | –32,636 | –106,039 | –94,485 | –137,055 | –125,501 | |
| Depreciation/amortization of tangible/ | |||||||
| intangible non-current assets | –8,531 | –9,451 | –26,131 | –26,689 | –34,945 | –35,503 | |
| Other operating expenses | –3,468 | –2,596 | –17,184 | –15,839 | –22,375 | –21,030 | |
| Operating profit | 30,597 | 52,357 | 65,140 | 94,068 | 75,160 | 104,088 | |
| Net financial items | –52 | –1,420 | –1,084 | 772 | 925 | 2,782 | |
| Profit before tax | 30,545 | 50,938 | 64,056 | 94,840 | 76,085 | 106,870 | |
| Tax | –8,355 | –10,836 | –18,473 | –19,885 | –19,428 | –20,840 | |
| Profit for the period | 22,190 | 40,102 | 45,583 | 74,955 | 56,657 | 86,030 | |
| Profit for the period attributable to | |||||||
| Parent Company shareholders | 22,190 | 40,102 | 45,583 | 74,955 | 56,657 | 86,030 | |
| Non-controlling interests | – | – | – | – | – | – | |
| Earnings per share before dilution, SEK | 0.88 | 1.59 | 1.81 | 2.98 | 2.25 | 3.42 | |
| Earnings per share after dilution, SEK | 0.88 | 1.59 | 1.81 | 2.98 | 2.25 | 3.42 | |
| Number of shares | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 | 25,148,384 |
| SEK thousands | Note | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Oct 2021- Sep 2022 |
Full year 2021 |
|---|---|---|---|---|---|---|---|
| Profit/loss for the period | 22,190 | 40,102 | 45,583 | 74,955 | 56,657 | 86,030 | |
| OTHER COMPREHENSIVE INCOME | |||||||
| Components that may be reclassified to profit or loss for the period |
|||||||
| Translation difference for the period | –821 | 1,050 | 857 | –3,326 | –920 | –5,103 | |
| Total other comprehensive income for the period |
–821 | 1,050 | 857 | –3,326 | –920 | –5,103 | |
| Total comprehensive income for the period |
21,369 | 41,152 | 46,440 | 71,629 | 55,737 | 80,927 | |
| Total comprehensive income attributable to |
|||||||
| Parent Company shareholders Non-controlling interests |
21,369 – |
41,152 – |
46,440 – |
71,629 – |
55,737 – |
80,927 – |
IN SUMMARY
| SEK thousands Note |
Sep 30, 2022 |
Sep 30, 2021 |
Dec 31, 2021 |
|---|---|---|---|
| Non-current assets | |||
| Goodwill | 36,065 | 34,633 | 34,685 |
| Trademarks | 187,532 | 187,532 | 187,532 |
| Other intangible assets | 8,510 | 11,930 | 10,917 |
| Tangible non-current assets | 16,483 | 16,058 | 15,405 |
| Deferred tax assets | 11,134 | 10,702 | 13,952 |
| Right-of-use assets | 52,597 | 64,385 | 54,950 |
| Total non-current assets | 312,321 | 325,240 | 317,441 |
| Current assets | |||
| Inventory | 170,016 | 134,869 | 151,991 |
| Accounts receivable | 149,775 | 145,226 | 91,969 |
| Other current receivables | 16,482 | 24,995 | 22,524 |
| Cash and cash equivalents | 14,386 | 45,795 | 96,743 |
| Total current assets | 350,659 | 350,886 | 363,227 |
| Total assets | 662,980 | 676,127 | 680,668 |
| Equity and liabilities | |||
| Equity | 317,786 | 324,919 | 334,217 |
| Deferred tax liabilities | 39,623 | 39,279 | 39,596 |
| Non-current liabilities credit institutions | – | 99,000 | 80,000 |
| Other non-current liabilities | – | 1,753 | 1,932 |
| Long-term lease liabilities | 33,059 | 41,554 | 33,777 |
| Current liability to credit institution | 88,896 | – | – |
| Accounts payable | 69,332 | 62,355 | 97,036 |
| Short-term lease liabilities | 17,978 | 22,690 | 20,242 |
| Other current liabilities | 96,306 | 84,577 | 73,868 |
| Total equity and liabilities | 662,980 | 676,127 | 680,668 |
| SEK thousands | Note | Equity attributable to the parent company's shareholders |
Possession without controlling influence |
Total equity |
|---|---|---|---|---|
| Opening balance, January 1, 2021 | 296,308 | –5,295 | 291,013 | |
| Total comprehensive income for the period | 72,018 | –389 | 71,629 | |
| Distribution for 2020 | –37,723 | – | –37,723 | |
| Closing balance, September 30, 2021 | 330,603 | –5,684 | 324,919 | |
| Opening balance, January 1, 2021 | 296,308 | –5,295 | 291,013 | |
| Total comprehensive income for the period | 81,499 | –572 | 80,927 | |
| Distribution for 2020 | –37,723 | – | –37,723 | |
| Closing balance, December 31, 2021 | 340,084 | –5,867 | 334,217 | |
| Opening balance, January 1, 2022 | 340,084 | –5,867 | 334,217 | |
| Total comprehensive income for the period | 47,534 | –1,094 | 46,440 | |
| Distribution for 2021 | –62,871 | – | –62,871 | |
| Closing balance, September 30, 2022 | 324,747 | –6,961 | 317,786 |
IN SUMMARY
| SEK thousands | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Full year 2021 |
|---|---|---|---|---|---|
| Cash flow from operating activities | |||||
| Before changes in working capital | 36,819 | 63,057 | 92,158 | 117,360 | 136,818 |
| Changes in working capital | –100,823 | –42,412 | –103,040 | –81,515 | –22,891 |
| Cash flow from operating activities | –64,004 | 20,645 | –10,882 | 35,845 | 113,927 |
| Investments in intangible non-current assets | –429 | –1,259 | –740 | –4,135 | –4,828 |
| Investments in tangible non-current assets | –1,560 | –631 | –5,824 | –4,272 | –5,680 |
| Cash flow from investing activities | –1,989 | –1,890 | –6,564 | –8,407 | –10,508 |
| Distribution | – | – | –62,871 | –37,723 | –37,723 |
| Amortization of loans | – | – | –80,000 | – | –19,000 |
| Amortization of lease liabilities | –6,994 | –6,008 | –17,572 | –16,330 | –23,400 |
| Newly-raised loans | 30,000 | – | 30,000 | – | – |
| Overdraft facility | 40,103 | – | 58,896 | – | – |
| Cash flow from financing activities | 63,109 | –6,008 | –71,547 | –54,053 | –80,123 |
| Cash flow for the period | –2,884 | 12,747 | –88,993 | –26,615 | 23,296 |
| Cash and cash equivalents at the beginning of the period | 14,365 | 30,760 | 96,743 | 70,235 | 70,235 |
| Translation difference in cash and cash equivalents | 2,905 | 2,288 | 6,637 | 2,175 | 3,212 |
| Cash and cash equivalents at the end of the period | 14,386 | 45,795 | 14,386 | 45,795 | 96,743 |
| SEK thousands | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Oct 2021- Sep 2022 |
Full year 2021 |
|---|---|---|---|---|---|---|
| Gross profit margin,% * | 48.2 | 54.4 | 50.4 | 54.6 | 51.0 | 54.2 |
| Operating margin,% | 12.3 | 21.8 | 10.2 | 16.0 | 9.2 | 13.5 |
| Profit margin,% | 12.3 | 21.2 | 10.1 | 16.1 | 9.3 | 13.9 |
| Return on capital employed,% | 17.4 | 21.2 | 17.4 | 21.2 | 17.4 | 24.4 |
| Return on average equity,% | 17.6 | 25.0 | 17.6 | 25.0 | 17.6 | 27.5 |
| Profit attributable to the Parent Company's | ||||||
| shareholders | 22,190 | 40,101 | 45,583 | 74,955 | 56,657 | 86,030 |
| Equity/assets ratio,% * | 52.3 | 53.1 | 52.3 | 53.1 | 52.3 | 53.4 |
| Equity per share, SEK | 12.64 | 12.92 | 12.64 | 12.92 | 12.64 | 13.29 |
| Investments in intangible non-current assets | 429 | 1,259 | 740 | 4,135 | 1,433 | 4,828 |
| Investments tangible non-current assets | 1,560 | 631 | 5,824 | 4,272 | 7,232 | 5,680 |
| Depreciation, amortization and impairment | ||||||
| losses for the period | –8,531 | –9,451 | –26,131 | –26,689 | –34,944 | –35,503 |
| Average number of employees | 154 | 164 | 154 | 164 | 154 | 162 |
* The figure is an alternative performance measure (APM) and not (IFRS). It is described under definitions and explained on page 14.
THE GROUP
| SEK thousands | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Oct 2021- Sep 2022 |
Full year 2021 |
|---|---|---|---|---|---|---|
| Operating revenue | ||||||
| Wholesale | ||||||
| External revenue | 163,082 | 156,000 | 425,869 | 394,431 | 533,711 | 502,273 |
| Internal revenue | 1,237 | 873 | 3,127 | 1,126 | 3,609 | 1,607 |
| 164,319 | 156,873 | 428,996 | 395,557 | 537,320 | 503,880 | |
| Consumer Direct | ||||||
| Brick-and-mortar | ||||||
| External revenue | 31,248 | 43,537 | 75,398 | 82,764 | 105,837 | 113,203 |
| Internal revenue | 66 | 2 | 66 | 2 | 83 | 19 |
| E-commerce | ||||||
| External revenue | 30,022 | 22,947 | 82,178 | 70,118 | 111,569 | 99,509 |
| Internal revenue | –52 | – | 239 | – | 520 | 281 |
| 61,284 | 66,486 | 157,881 | 152,884 | 218,009 | 213,012 | |
| Distributors | ||||||
| External revenue | 28,860 | 18,523 | 67,645 | 49,866 | 89,218 | 71,439 |
| Internal revenue | 115,852 | 139,928 | 305,286 | 352,868 | 418,014 | 465,596 |
| 144,712 | 158,451 | 372,931 | 402,733 | 507,232 | 537,035 | |
| Licensing | ||||||
| External revenue | 1,778 | 2,933 | 7,431 | 9,014 | 8,088 | 9,671 |
| Internal revenue | 1,519 | 24,525 | 35,734 | 57,056 | 60,083 | 81,404 |
| 3,297 | 27,458 | 43,165 | 66,070 | 68,171 | 91,075 | |
| Less internal sales | –118,623 | –165,328 | –344,453 | –411,051 | –482,310 | –548,907 |
| Operating revenue | 254,989 | 243,941 | 658,520 | 606,193 | 848,422 | 796,095 |
| Operating profit | ||||||
| Wholesale | 23,156 | 34,604 | 54,807 | 68,598 | 54,732 | 68,523 |
| Consumer Direct, brick-and-mortar | –8,708 | 3,348 | –24,294 | –8,118 | –22,554 | –6,380 |
| Consumer Direct, e-commerce | 6,706 | 3,444 | 13,465 | 12,681 | 20,978 | 20,194 |
| Distributors Licensing |
7,983 1,460 |
8,252 2,709 |
15,078 6,084 |
12,908 7,999 |
15,739 6,265 |
13,571 8,180 |
| Operating profit | 30,597 | 52,357 | 65,140 | 94,067 | 75,160 | 104,088 |
Reconciliation between operating profit and profit before tax
The difference between operating profit for segments for which information must be disclosed is SEK 30,597 thousand (52,357) and profit before tax SEK 30,545 thousand (50,938) is net financial items, SEK –52 thousand (–1,420).
THE GROUP
| SEK thousands | Q3 2022 | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | Q1 2021 | Q4 2020 |
|---|---|---|---|---|---|---|---|---|
| Net sales | 248,590 | 161,544 | 226,620 | 180,576 | 240,141 | 162,836 | 184,651 | 160,364 |
| Gross profit margin,% | 48.2 | 54.5 | 50.0 | 53.1 | 54.4 | 56.3 | 53.3 | 56.6 |
| Operating profit/loss | 30,597 | 5,233 | 29,309 | 10,020 | 52,357 | 19,277 | 22,434 | 6,455 |
| Operating margin,% | 12.3 | 3.2 | 12.9 | 5.5 | 21.8 | 11.8 | 12.1 | 4.0 |
| Profit/loss after net financial items | 30,545 | 4,344 | 29,166 | 12,030 | 50,937 | 18,015 | 25,888 | –5,744 |
| Profit margin,% | 12.3 | 2.7 | 12.9 | 6.7 | 21.2 | 11.1 | 14.0 | –3.6 |
| Earnings per share, | ||||||||
| before dilution, SEK | 0.88 | 0.01 | 0.92 | 0.44 | 1.59 | 0.54 | 0.85 | 0.05 |
| Earnings per share, after dilution, SEK | 0.88 | 0.01 | 0.92 | 0.44 | 1.59 | 0.54 | 0.85 | 0.05 |
| Number of Björn Borg stores | ||||||||
| at the end of the period | 19 | 24 | 26 | 26 | 27 | 28 | 31 | 32 |
| of which Group-owned | ||||||||
| Björn Borg stores | 18 | 21 | 23 | 23 | 24 | 25 | 28 | 29 |
IN SUMMARY
| SEK thousands | Note | Jul-Sep 2022 |
Jul-Sep 2021 |
Jan-Sep 2022 |
Jan-Sep 2021 |
Oct 2021- Sep 2022 |
Full year 2021 |
|---|---|---|---|---|---|---|---|
| Net sales | 25,457 | 25,058 | 75,795 | 74,891 | 100,844 | 99,940 | |
| Other operating revenue | 95 | 257 | 1,105 | 1,486 | 1,659 | 1,990 | |
| Operating revenue | 25,552 | 25,315 | 76,900 | 76,377 | 102,503 | 101,930 | |
| Goods for resale | – | – | –153 | – | –204 | –51 | |
| Other external expenses | 2 | –13,784 | –10,562 | –40,265 | –31,443 | –63,095 | –54,272 |
| Personnel costs | –12,290 | –9,251 | –38,795 | –30,441 | –49,045 | –40,691 | |
| Depreciation/amortization of intangible | |||||||
| and tangible non-current assets | –612 | –582 | –1,852 | –1,735 | –2,443 | –2,326 | |
| Other operating expenses | –95 | –296 | –758 | –628 | –848 | –668 | |
| Operating profit | –1,229 | 4,624 | –4,923 | 12,130 | –13,131 | 3,922 | |
| Result from shares in subsidiaries | – | 294 | – | –33,755 | –439 | –34,194 | |
| Net financial items | –2,483 | 3,312 | –3,919 | 5,129 | 1,869 | 10,918 | |
| Profit/loss after financial items | –3,712 | 8,230 | –8,842 | –16,496 | –11,701 | –19,354 | |
| Group contributions received/paid | – | – | – | – | 48,988 | 48,988 | |
| Appropriations | – | – | – | – | –218 | –218 | |
| Profit/loss before tax | –3,712 | 8,230 | –8,842 | –16,496 | 37,070 | 29,416 | |
| Tax | – | – | – | – | –14,451 | –14,451 | |
| Profit/loss for the period | –3,712 | 8,230 | –8,842 | –16,496 | 22,619 | 14,965 | |
| Other comprehensive income | – | – | – | – | – | – | |
| Total comprehensive income | |||||||
| for the period | –3,712 | 8,230 | –8,842 | –16,496 | 22,619 | 14,965 |
IN SUMMARY
| Sep 30, | Sep 30, | Dec 31, | |
|---|---|---|---|
| SEK thousands Note |
2022 | 2021 | 2021 |
| Non-current assets | |||
| Intangible assets | 2,734 | 3,894 | 3,669 |
| Tangible non-current assets | 2,404 | 2,252 | 2,112 |
| Deferred tax | 4 | 8 | 4 |
| Shares in Group companies | 279,956 | 277,676 | 277,676 |
| Total non-current assets | 285,098 | 283,830 | 283,461 |
| Current assets | |||
| Receivables from Group companies | 1,142,435 | 940,380 | 980,598 |
| Current receivables | 3,798 | 8,709 | 3,864 |
| Cash and cash equivalents | – | 25,624 | 75,392 |
| Total current assets | 1,146,233 | 974,713 | 1,059,854 |
| Total assets | 1,431,331 | 1,258,543 | 1,343,315 |
| Equity and liabilities | |||
| Equity Untaxed reserves |
84,316 1,256 |
124,568 1,038 |
156,029 1,256 |
| Non-current liabilities credit institutions | – | 99,000 | 80,000 |
| Other non-current liabilities | – | 1,753 | 1,932 |
| Current liabilities credit institutions | 88,896 | – | – |
| Due to Group companies | 1,216,567 | 1,017,923 | 1,070,468 |
| Accounts payable | 5,403 | 2,688 | 9,251 |
| Other current liabilities | 34,893 | 11,573 | 24,379 |
| Total equity and liabilities | 1,431,331 | 1,258,543 | 1,343,315 |
| SEK thousands | Jan-Sep 2022 |
Jan-Sep 2021 |
Full year 2021 |
|---|---|---|---|
| Opening balance | 156,029 | 178,787 | 178,787 |
| Distribution | –62,871 | –37,723 | –37,723 |
| Total comprehensive income for the period | –8,842 | –16,496 | 14,965 |
| Closing balance | 84,316 | 124,568 | 156,029 |
The Group's net sales consist of sales of products and royalties for the use of the company's brand. Transfers of goods/royalties are made at fixed points in time. Listed in the table below are markets with a net sales above 10 percent of the total.
| The group | ||
|---|---|---|
| Jan-Sep | Jan-Sep | |
| SEK thousands | 2022 | 2021 |
| Sweden | 228,682 | 210,765 |
| Netherlands | 133,803 | 134,909 |
| Finland | 89,275 | 80,382 |
| Germany | 63,835 | 65,402 |
| Others | 121,159 | 96,169 |
| Total net sales | 636,754 | 587,627 |
| The group | Parent Company | |||
|---|---|---|---|---|
| Jan-Sep | Jan-Sep | Jan-Sep | Jan-Sep | |
| SEK thousands | 2022 | 2021 | 2022 | 2021 |
| Cost of premises | 15,788 | 7,287 | 5,135 | 4,006 |
| Sales expenses | 42,319 | 37,782 | 2,846 | 1,844 |
| Marketing expenses | 43,596 | 35,632 | 20,515 | 17,232 |
| Administrative | ||||
| expenses | 22,407 | 24,368 | 11,123 | 8,005 |
| Other | 4,314 | 2,997 | 646 | 356 |
| 128,424 | 108,066 | 40,265 | 31,443 |
NOTE 2 OTHER EXTERNAL EXPENSES
The company presents certain financial measures in this year-end report that are not defined in accordance with 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 financial measures should not be seen as a substitute for measures defined in accordance with IFRS. For more on the calculation of these key figures see:
https://corporate.bjornborg.com/en/section/investors/ interim-reports/
https://corporate.bjornborg.com/en/financial-definitions/ https://corporate.bjornborg.com/en/financial-data/
Total assets less non-interest-bearing liabilities and provisions.
Purpose: Capital employed measures capital use and efficiency.
Sales for own retail stores that were also open in the previous period.
Purpose: To obtain comparable sales between periods for own retail stores.
Profit after tax in relation to the weighted average number of shares during the period. Purpose: This indicator is used to assess an investment from an owner's perspective.
Earnings per share adjusted for any dilution effect. Purpose: This indicator is used to assess the investment from an owner's perspective.
Equity as a percentage of total assets adjusted for lease liabilities.
Purpose: This indicator shows financial risk, expressed as a share of the total restricted equity financed by the owners.
Net sales less costs of goods sold divided by net sales. Purpose: Gross margin is used to measure operating profitability.
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 calculated using the previous year's exchange rate.
Purpose: To obtain a currency-neutral gross profit margin.
Net sales calculated using the previous year's exchange rate.
Purpose: To obtain comparable and currency-neutral net sales.
Interest-bearing liabilities excluding leasing liabilities less investments and cash and cash equivalents. Purpose: Net debt reflects the company's total debt situation.
Interest-bearing liabilities excluding lease liabilities less investments and cash and cash equivalents divided by operating profit before depreciation/amortizartion. Purpose: To show the company's ability to pay debts.
Financial income less financial expenses. Purpose: To describe the company's financial activities.
Operating profit as a percentage of net sales. Purpose: The operating margin is used to measure operating profitability.
Profit before tax plus net financial items. Purpose: : This indicator facilitates comparisons of profitability regardless of the company's tax rate and independent of the company's financing structure.
Profit before tax as a percentage of net sales. Purpose: Profit margin shows the company's profit in relation to its sales.
Profit before tax (per rolling 12-month period) plus financial expenses as a percentage of average capital employed. Average capital employed is calculated by adding equity at January 1 to equity at December 31 and dividing by two. Purpose: This indicator is the key measure to quantify the return on all the capital used in operations.
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 indicator shows, from an owner's 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 significant risks and uncertainties faced by the Parent Company and the companies in the Group.
Stockholm, November 18, 2022
Heiner Olbrich Chairman of the Board
Alessandra Cama Jens Høgsted Board member Board member
Johanna Schottenius Anette Klintfeldt Board member Board member
Fredrik Lövstedt Mats H Nilsson
Board member Board member
Henrik Bunge CEO
We have reviewed the interim report for Björn Borg AB (publ) for the period January 1 to September 30, 2022. 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 International Standard on Review Engagements (ISRE) 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 18, 2022 BDO Mälardalen AB
Authorized Public Accountant Authorized Public Accountant Responsible auditor
Johan Pharmanson Carl-Johan Kjellman
The year-end report 2022 will be released at 7.30 a.m. on February 23, 2023.
Annual report 2022 in late April 2023.
Annual General Meeting 2023 will be held on May 17, 2023.
Financial reports can be downloaded from the company's website www.bjornborg.com or ordered by phone +46 8 506 33 700 or by e-mail [email protected].
Henrik Bunge, CEO Email: [email protected] Phone: +46 8 506 33 700
Jens Nyström, CFO Email: [email protected] Phone: +46 8 506 33 700
The Björn Borg Group owns the Björn Borg brand and the focus of the business is sports apparel, underwear and bags. In addition, footwear and eyewear are also offered via licensees. Björn Borg products are sold in about twenty markets, of which Sweden and the Netherlands are the largest. The Björn Borg Group has its own operations at all stages from brand development to consumer sales in its own Björn Borg stores. In total, Group net sales in 2021 amounted to SEK 768.2 million and the average number of employees was 162. Björn Borg has been listed on Nasdaq Stockholm since 2007.
The images in the interim report are taken from Björn Borg's autumn and winter collection 2022.
Björn Borg AB Frösundaviks allé 1 169 70 Solna Sweden www.bjornborg.com
Björn Borg AB (publ) is required to make public this information in accordance with the EU Market Abuse Regulation. The information was released for publication by the above-mentioned contacts on November 18, 2022 at 7.30 a.m. (CET).
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