Björn Borg (BORG) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales rose 28.7% year-over-year to SEK 213–213.2 million, setting a new quarterly record, with all product categories and markets showing robust growth.

• Footwear sales surged 199% in Q2, driven by successful integration after a license partner bankruptcy, and sports apparel grew 43%.

• Operating profit increased 17.5% to SEK 9.5 million, with profit after tax up 55.7% to SEK 6.5 million.

• Brand awareness and purchase intent rose significantly in key markets, especially Sweden, supported by increased marketing and influencer engagement.

• All major markets, including Sweden (+40%), Netherlands (+52%), Belgium (+42%), Germany (+15%), Finland (+10%), and Denmark (+20%), posted strong growth.

Financial highlights

• Q2 gross profit margin declined to 51.8% (down 3.8 ppt) due to one-off footwear discounts, currency effects, and higher transport costs.

• Wholesale channel grew 50% in Q2, own e-commerce up 9–15%, own retail up 10–17%, and distributors up 4%.

• H1 operating profit reached SEK 43.0 million, up 8.9% year-over-year; EPS for H1 was SEK 1.10.

• Cash flow from operations in H1 was SEK 17.9 million, down from SEK 50.5 million, mainly due to increased working capital from footwear integration.

• Equity ratio at quarter-end was 46%, with net debt/EBITDA at 0.45 and net debt (excl. leases) at SEK 51.2 million.

Outlook and guidance

• Long-term targets: annual sales growth ≥5%, operating margin ≥10%, dividend ≥50% of net profit, equity/assets ratio ≥35%.

• Long-term goal to achieve a 55% gross margin, with expectations for margin recovery as one-off discounts subside and supply chain control improves.

• Footwear expected to become 50% of product mix in the long term if integration continues successfully.

• No major investments anticipated, as major system upgrades and consolidations were completed in 2019.

• Strategy focuses on expanding online, growing sports apparel, and geographic expansion in Europe.