Björn Borg Q4-24

From Head to Toe: Sports Apparel and Footwear Fuel Growth

Björn Borg (“Björn Borg”, “the Company” or “the Group”) is a well-established and renowned company with a rich history spanning decades, earning the place as a favored brand among a broad consumer base. Nevertheless, the predominant association of Björn Borg with underwear presents a compelling challenge: to transition consumer perception from an underwear brand to a sports fashion brand. This strategic shift, central to the Company’s vision since 2014, has already yielded noteworthy progress, as amplified marketing investments and a strengthened brand have driven strong growth in Sports Apparel and Footwear. Analyst Group estimates an attractive growth trajectory on the horizon, supporting a gradual improvement in margins. The forecasted EBIT for 2025 stands at SEK 124m (131), and by applying a forward EV/EBIT multiple of 12.0x (12.0), this presents a potential value of SEK 58.4 (61.3) per share in a Base scenario.

• Maintains Strong Growth Trajectory

Net sales amounted to SEK 234.6m (197.6) during Q4-24, reflec-ting an 18.7% Y-Y growth (18.6% excl. FX). The outcome surpassed our estimate of SEK 228m by 2.9%, primarily driven by stronger-than-expected momentum in Footwear and Sports Apparel, which grew by 57% and 44%, respectively. Performance was strong across all focus categories, with Underwear expanding by 14% Y-Y, while Bags surged by 30%. From a channel perspective, Own-Ecom grew by 10%, while wholesale exhibited a 28% Y-Y growth, underscoring solid traction in both direct and indirect sales channels. Geographically, the strategic key market, Germany, recorded 13% Y-Y growth, while Sweden, stood out with a 43% increase. This quarter reaffirms Björn Borg’s consistent execution within the focus areas, reinforcing the positive growth trajectory observed in recent quarters, which we see as a validation that the strategic initiatives are translating into tangible results.

• Short-Term Margin Headwinds from Strategic Investments

The EBIT during the fourth quarter reached SEK 16.8m (20.2), correspondding to an EBIT margin of 7.2% (10.2). When adjusting for FX- effects, EBIT stood at SEK 17.2m (17.6). Analyst Group had estimated an EBIT of SEK 20.9m, with the deviation largely attributed to one-off costs related to the integration of the Footwear business, alongside elevated marketing investments aimed at reinforcing brand positioning and long-term growth. Although these factors have temporarily pressured margins, the underlying strategic logic remains intact. Footwear is poised to be a key contributor to margin expansion in the coming years. Consequently, Analyst Group does not view the temporary compression of operating margins as alarming. With a solid foundation for future growth and continued brand-enhancing marketing invest-ments, Björn Borg is laying the groundwork for sustained and profitable growth in the coming years.

• Revised Margin Outlook Reflected in the Valuation

In response to the report, Analyst Group has adjusted the top-line estimates, forecasting slightly stronger sales growth ahead. However, we expect the headwinds impacting the operating margin to persist in the short term, resulting in softer margin development. By applying a forward EV/EBIT multiple of 12.0x to the estimated EBIT of 124m for 2025E, a potential value of SEK 58.4 (61.3) per share is derived in a Base scenario.