Björn Borg - stock price increase from underwear?

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Borg is a former Swedish tennis player, considered one of the most significant players in the history of the sport. Between 1974 and 1981, he won 11 Grand Slam tournaments and represented Sweden, winning the Davis Cup once. Borg achieved the ITF World Championship from 1978–1980 and was named Player of the Year from 1976–1980.

Björn Borg is also a brand, known especially for its underwear, but its selection also includes sportswear, shoes, bags, and a bit of everything else. It is, therefore, a kind of sports fashion brand. :slight_smile:

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Björn Borg operates in approximately 20 different market areas, the largest of which are Sweden, the Netherlands, Finland, and Germany. In 2023, over 80% of the company’s revenue came from these four markets, which was a big surprise to me. I thought the brand was more widely distributed around the world. The company’s strong position in its home country is based on its extensive retail network and its own online store.

The company has grown by an average of 6% per year between 2013 and 2023. The company’s revenue growth has been slower than its competitors, but the company has recently focused on expanding its sportswear offering, which has helped diversify its business. In my opinion, the clothes are nice and probably high quality, but as a gym-goer, I haven’t seen a reason to buy the company’s products, because perfectly good and perhaps more functional clothes can be bought cheaper (extremely interesting information for investors :smiley: )

In 2023, Björn Borg’s revenue was 892 million Swedish kronor (I thought it was a much larger company), which represents a 4% increase from the previous year. The company’s operating profit (EBIT) was 101 million kronor, equivalent to 12% of revenue. Online sales grew significantly, forming 41% of the company’s total sales in 2023, but I cannot say how this compares to other competitors.

More for investors:

Björn Borg has a strong brand, but it is also susceptible to fluctuations in fashion trends, which can affect sales. Competition in the fashion industry is tough, but the company has been able to raise prices, which speaks to the strength of its brand.

Björn Borg offers profitable growth with a strong brand. The company has regularly paid dividends due to its good profitability and stable balance sheet, which provides investors with continuous cash flow.

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Why read the Recruit’s ramblings, BECAUSE:

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This report is then readable by everyone. :slight_smile:

Björn Borg has a strong track record of profitable growth, consistently generating value for its shareholders. We see solid growth opportunities in key markets for this strong Nordic brand. The valuation of P/E 15x and EV/EBIT 11x for 2025 looks moderate and a combination of dividends and earnings growth should give around 10-15% expected return.

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Thanks to the recruit for opening the thread. In my opinion, this is a company that has already shown good growth and still has growth potential, with a fairly neutral valuation. Additionally, the company has a strong balance sheet and a habit of paying out most of its earnings as dividends, so it might suit Finnish tastes :slight_smile: No major turnaround or jump is expected in the coming years, but rather steady 5–10% growth and slight margin improvement as a result.

In terms of its business and investment profile, it reminds me somewhat of domestic names like Marimekko (international presence and growth, a single brand, strong cash flow, balance sheet, and dividend), although the products and price range are naturally different. I’ve been involved in this project to some extent, so if anyone wants to ask questions in Finnish, I can try to help. In English or Swedish, Lucas will of course answer better directly on the Swedish forum: Björn Borg - servar lönsam tillväxt - Aktier - Inderes.se Forum

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There are many different types of brand value. From a consumer experience perspective, I find the quality and comfort of Björn Borg’s products to be at an outstanding level, which one could imagine to be a very sustainable competitive advantage. In my opinion, the brand’s products are not particularly flashy in their appearance.

I see the price perception of brands like this as slightly problematic. I have bought so many of the brand’s clothes at, say, 70% off sales that my perception of a so-called “appropriate” price level has shifted quite a bit since the first time I ordered the brand’s clothes from its own webshop at nearly full price. Although I must admit that even then, the price-to-quality ratio proved to be quite good.

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Here are Lucas’s preview comments regarding the company’s Q2.

Björn Borg will report its Q2’24 results on Friday, August 16. We anticipate good growth in revenue compared to the corresponding quarter last year, primarily driven by the integration of the footwear category and continued strong development in own e-commerce. Although we expect a favorable channel mix and reduced discounts to positively impact profitability, we forecast that EBIT-% will remain similar to last year’s corresponding period due to increased costs associated with footwear integration and marketing. Given the challenging economic environment, our focus will be on demand-related information and updates on the footwear transition, which we consider the key highlights of the upcoming Q2 report.

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I have very similar thoughts. I used to consider this a high-end brand, but currently, my underwear collection is almost entirely Björn Borg, because it’s constantly on sale at places like Tokmanni for basically Black Horse prices. The quality feels good, of course, nothing to complain about.

This is, of course, a completely subjective consumer experience, but it’s hard to position this brand anywhere based on this.

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This is by no means high-end; the distribution and pricing strategy is very mass-market driven or “inclusive” as they put it themselves. It is certainly not in the interest of any company that considers itself a brand house if products are regularly on steep discount, although those can happen occasionally. Over the years, the company has tried to address this supply chain management by taking more distribution and sales (through its own retail) into its own hands, but optimizing distribution channels is constant basic work for a company like this.

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If you know Swedish or can read Swedish from the “subtitles” (available in settings), then it’s worth watching this.

Björn Borg reported its second quarter today, August 16. In this interview, analyst Lucas Mattsson interviews CEO Henrik Bunge specifically about the Q2 figures from Björn Borg. How the different categories performed, the journey within ”footwear”, their own e-commerce, and the outlook ahead.

Topics:

00:00 Start 00:13 Q2 summarized 01:26 The journey within ”Footwear” 04:52 Growth within ”Footwear” 06:26 Drivers within ”Sportswear” 07:12 Own e-commerce 09:12 External factors 11:05 Actions going forward 12:20 Risks ahead 13:52 Most important for the rest of 2024

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Lucas on tehnyt lyysiä toisen kvartaalin jälkeen. :slight_smile:

Despite a continued challenging environment, Björn Borg delivered a strong second quarter that beat our estimates. The valuation of P/E 16x and EV/EBIT 12x for 2025 still looks moderate and a combination of dividends and earnings growth should give around 10% total shareholder return.

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Really good interview. The coverage of Swedish companies has been a great addition; run some ads on Kvalitetsaktiepodden, Börspodden, or similar ones to get more traffic to the Swedish site.

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@Isa_Hudd you received some nice feedback, see the message above. And there were some good ideas there too. :slight_smile:

A strong Q2 report from Björn Borg means we are raising our estimates for the coming years. Listen to analyst Lucas explain how Björn Borg has developed the shoe segment in the second quarter, how we see the outlook for Björn Borg, and valuation + recommendation for the next 12 months.

00:00 start 00:36 Q2 summarized 02:05 How the sales process works 02:33 Changes in our estimates 03:24 Future outlook 04:05 Valuation + recommendation

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Thanks for the compliments @Kivi and thanks for pinging @Sijoittaja-alokas <3 :partying_face:
You’ve already praised them (Lucas + Jesper) :heart:, but I’ll definitely pass these compliments along as well :partying_face:!

The guys at Kvalitetsaktiepodden are really nice, and the pod is good! I’m a fan. Also a fan of Börspodden.

What can I say: one step at a time, but stay tuned :wink: :slight_smile:

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Björn Borg updated its financial targets today; the only change was raising the growth target to at least 10% (previously at least 5%). The previous target was modest, as global market growth is also expected to be around 5%. Our forecasts for '25-'26 are 7-9%, and for this year well over 10% (EDIT: figures clarified). With profitability already in line with the target at an operating margin level of over 10%, accelerating growth sounds like a logical goal.

EDIT: Including Lucas’s comment on the matter as well

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Lucas and I visited a Björn Borg store the last time I was in Stockholm :star_struck:
First video in English, the rest in Swedish:

In Swedish below:

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Hi everyone! :smiley: We are having a competition together with PinPoint. Guess the estimates for Björn Borg’s Q3 report and get a chance to win great prizes.
Are you ready to take on the challenge?

Go to Björn Borg company page
2. Scroll down the page and submit your estimates to participate in the competition! :sunglasses:
3. A winner for each key figure will be announced after Björn Borgs report is published on 15/11.

Join the contest to win Inderes merch! The winner for net sales will receive an Inderes beanie, and the winner for EBIT will get an Inderes tote bag.

This competition is created by Inderes and is in no way affiliated with or sponsored by the social media platforms we publish on, in accordance with their rules.

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@lucas.mattsson on kirjoittanut ennakkokommentit yhtiön perjantaina julkaistavaan Q3-raporttiin. :slight_smile:

Björn Borg will report its Q3’24 results on Friday, November 15. We anticipate strong revenue growth compared to the same quarter last year, primarily driven by the integration of the footwear category and continued strong development in the company’s own e-commerce. While we anticipate that reduced discounts within direct-to-consumer sales will continue to positively impact margins, we expect a decline in profitability compared to the same period last year due to increased costs from footwear integration and marketing activities. Given the continued challenging economic environment, our focus will be on demand-related information as well as any insights related to core growth within the footwear category.

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Q3 interim report is out: https://storage.mfn.se/b791deaa-1079-4d3d-9a6b-6bc0706add22/bjorn-borg-interim-repport-q3-2024.pdf

At a quick glance, net sales were slightly below forecasts and the result was slightly above forecasts:

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Below is a link to Analyst Group’s analysis; I will summarize some of its content below. :slight_smile:

Björn Borg’s results fell short of expectations, but on the other hand, the areas where the company has invested strategically moved forward. Revenue grew by nearly 9% and especially sportswear and shoes performed well, although sales in the footwear category fell short of expectations.

Their own e-commerce continues to grow strongly, and tremendous growth was seen in the German market. Development in the Swedish market was more subdued. The company has increased marketing investments, which weighs on profitability in the short term but supports long-term growth. The result did not fully meet expectations, but Björn Borg seems to be on a good path as it focuses on key growth areas and strengthens its brand.

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Ja tästä vielä laadukasta analyysia @lucas.mattsson:ilta. :slight_smile:

The operating environment continues to be challenging due to low consumer purchasing power and confidence. In addition, Björn Borg has, during the past year, struggled with internal challenges in integrating the footwear distribution from the previous partner that went bankrupt early this year. Despite these factors, we believe that Björn Borg delivered a stable third quarter, although it was somewhat below our expectations in terms of sales. The valuation of P/E 17x and EV/EBIT 13x for 2025 looks quite attractive and a combination of dividends and earnings growth should give around 10% total shareholder return.

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Analysis read and an interesting case in terms of the numbers; I was wondering if the best window for upside has already passed for this one. Then just a side note about the products themselves: the underwear is selling like wildfire. I have to say, though, that they are damn poor quality → then again, that increases sales :smiley: Signed: Mom bought a big pack as a Christmas present and they all have a hole :frowning:

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@lucas.mattsson from Inderes has written preliminary comments as Björn Borg reports its Q4 results this Friday. :slight_smile:

EDIT: Changed to a Finnish comment (formerly in English)

Björn Borg reports its Q4’24 results on Friday. We expect revenue to have grown well compared to the reference period, mainly due to the integration of the footwear category, sales growth in the sportswear category, and the continued strong development of its own online store. We forecast that the gross margin has decreased due to changes in the sales mix and increased operating expenses, which in turn are mainly caused by increased marketing activity. Overall, we expect this to offset the benefits of strong revenue growth, leading to relatively flat absolute operating profit development. In the upcoming report, we will specifically look for demand-related information and an update on the footwear transition.

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