Björn Borg AB (publ) ($BORG)

Good morning, and welcome to our Q1 2026 report. It's a beautiful Wednesday morning, and that's not the only thing that is beautiful this morning; it's also our first quarter. So of course, it's always good to read your own quotes, but to summarize the quarter, our sports apparel growth continues. Now we've been growing double-digit for 15 consecutive quarters. This is also our 21 quarter with sales growth. So of course, we look back at a very, very strong journey, and never before have we started a year stronger, with both record sales and a very, very strong operating margin, increasing 37% versus last year. So all in all, absolutely fantastic. Net sales, as I say, SEK 301 million, so that's a record quarter. Super good, plus 7%; the quarter -- currency neutral, it's just above 10%. Gross margin is at 54%, so a good increase versus last year, and operating profit consequently is also increasing then with 37% versus last year, hitting SEK 47 million. So overall, a super strong start to the year. And given, of course, that the world around us has been fueled with uncertainties, we're super, super proud. And of course, clearly this is the effort of a very, very strong team that don't actually work quarter-by-quarter, but rather have a long-term perspective. And again, just to remind us all, this journey was never about making a quarter versus the quarter before; it was about transforming the brand into becoming something bigger, moving into a bigger house, a bigger arena. And the idea, of course, was to build a sports brand from this old, very beautiful underwear brand. Our mission, and that's the one that we would want then the consumer to tap into, is about inspiring people that you can be more, that you should train, not to win Olympic gold medals, even if that's okay too, but it's far more important than that. You should train to live longer, be happier, be a better father, laugh more. So that's really the core of our message. And looking at the financial KPIs, we've said that we want to grow double digit 10%; currency neutral, we started the year doing that, but of course the world is not currency neutral, so we were a bit shy with just above 7% growth. Looking at our operating margin, of course, well above our target. While the dividend, let's see, we have proposed SEK 3, but of course that will be determined in our AGM in about 2 or 3 weeks. But a very strong history of a high dividend over the years, so a good direct yield, of course, for the company. Looking at equity-asset ratio is also very, very healthy, and of course one highlight is that net debt is lower this year versus last year, which, of course, is also very, very good. Our strategy has been really, really grow online, so both own e-com, but also, of course, our e-tailers and marketplaces, focusing on the wholesale business. In terms of own channels, really, really pushing D2C with own e-com in the spearfront. In terms of category, of course, the most important one is sports apparel, and again to repeat myself, this is now the 15th quarter in a row with double digit growth, so super, super strong. The next, of course, growth engine will be footwear. However, that is not developing the way we want, so we're actually declining in the quarter with 20%. However, there's a few highlights even in the footwear category, so sweden is actually up 14%, own e-com is up 10%, Denmark is up 60% on low numbers. So we see that the footwear collection has been perceived really, really well in some markets. And then we need to do some structural changes in some other markets where we actually have reinforced the team in both Holland and Belgium, and hopefully then that will also fuel then footwear growth, which is one of the identified growth initiatives going forward. Our focus in terms of geography is still the same; we want to continue to grow where we already are, and what we've said is that we want to open up one new market, and that's Germany. So nothing new, but of course massive growth numbers from the German market in the first quarter gives us a lot of confidence that this is actually the right decision. Even though we also see that the consumers in Germany are a bit hesitant, even more so than actually the Nordic ones, but again, with small market shares you can grow in a growing market but also in a declining market, and that is of course our approach. Looking at the brand, so our most important asset together with the team, and the 2 things that makes us completely unique, it's growing in most of our markets, in most of our KPIs, but a couple of highlights. So brand strength for him in Germany is up 500%. Yes, low numbers, but again, of course, we're slowly building the brand in Germany. Looking at consideration him, that's growing. Could you consider buying from this brand? A very, very strong brand KPI. And then looking at Holland, consideration him again also growing versus last year with 24%. So super strong traction for the brand and very, very important of course to continue to fuel this growth journey that we are on. And here listing, of course, all of the brands around us, it's a very competitive landscape, and we, of course, are dominated by 2 giants in terms of Nike and Adidas. But when we ask consumers across all our markets, we see that we are one of the few brands that actually are increasing consideration, where actually most others are declining versus last year. So of course, that's reassuring and showcasing then that the communication we do, the products that we put into the market, and the whole team is really slowly then building this brand into something bigger and stronger than what it was yesterday. So that is exceptionally good. And with that, of course, we will dig a bit into numbers, and of course no one is better doing that than my CFO, Jens. So he will continue talk about records, and again, the highlight if you missed that, SEK 300 million, we've never sold more. So congratulations Jens to a job well done.

Thanks a lot, Henrik, and that warms my heart. Well, good morning from me as well. It's a beautiful day. Someone once told me that the day will only become as good as you'd let it. I think that's quite wise. That was you, Henrik. I think that's a wise saying, so I'm going to live by that. Anyway, so the sales for the quarter has started really, really well this year, so over SEK 300 million, as you can see from this slide. Never have we sold more any quarter in the company history, so that's 7% up, as Henrik already said; currency neutral, that's above 10% growth. If we look at the different categories, underwear had a really, really strong quarter, plus 15%, which is extremely good, so many of the wholesale markets have delivered a first quarter in underwear category super strong. Apparel continues to grow double digit 12% in Q1, socks 30%. Other categories, as you heard, footwear for instance is declining and so is bags, so there we still have some work to do. Looking at the geographies and the markets in our own subsidiaries, most of the markets are growing. However, the Benelux markets are declining, mainly related to the footwear category as I just mentioned. But the biggest market, Sweden, is up 3%, Finland super strong, so 27% up, Denmark low numbers but close to 70% growth. The distributors as a whole is growing as well, however it differs wildly between the different markets. The biggest one, for instance, Norway, is declining, while the joint of the smaller ones is increasing rapidly with 160% up. If we look at the channels, wholesale, as I mentioned before, super strong double-digit growth 11%, and here we see mainly the e-tailers, so the online players within the wholesale segment, are growing quite fast with 20% up, but also the physical stores or the brick and mortar are growing 7% in the quarter. Own e-com is still growing, however a bit slower than what we've seen before, but still on a good track. Own retail declining heavily with 29%, however that's not comparable, so we're closing down stores, that's why the numbers looks like quite a big decline. However, comparable stores, meaning the stores that would open the same quarter last year, they are also declining with 8%. So something needs to be done here as well. Distributors, as I said, up 9% as a whole, where the smaller ones actually Austria, Slovenia for instance, are growing really quickly at the moment. Gross margin up 4 points up to 54%, super strong quarter, and also, as you heard before, the operating margin or the EBIT is up 37% in the quarter to SEK 47 million. So extremely strong, never have we had a stronger EBIT in any Q1 in the history of this company. So super glad to see that, obviously. If we summarize this to a simplified P&L, sales, as I said, 7% up, over SEK 300 million, margin 54%, 4 points up versus last year. The operating expenses are increasing as planned with SEK 122 million, 8% up, and that brings us to an EBIT of then SEK 47 million. The margin is also increasing with 3.4 points to 15.3%. Before I hand over to Henrik again to close this up, a few highlights from the balance sheet as well. So the solidity of the company is also increasing, being stronger, so 53.5%, 1.5 points up versus last year. As you heard before, net debt is decreasing, so that's very positive to see, we're declining that one with SEK 15 million, and the working capital is fairly stable. We've said before we want to track around 20%, and that's more or less where we are. So there are good numbers in the balance sheet as well. I'm super pleased with the quarter. Wishing you all a fantastic week. And with that, Henrik, I hand over to you again.

Yes, brilliant, brilliant. Thank you, Jens. And yes, to wrap it up then, so 3, I think, major key takeaways. The first one is Germany, so not only are we growing strongly in the German market, also we see that the brand is getting stronger and stronger on fairly low levels, but still the strategy of really focusing on Hamburg and building it from 1 street to 2 street to 1 city to 2 cities is really, really working for us. The second one, of course, we have a very, very strong wholesale development, growing in the quarter, especially of course driven by Finland, Germany, Denmark and Sweden. And here within that we see good momentum within e-tailers, and we see that the distributor are recovering as well, but again, of course, small numbers in the quarter. Looking at the categories, both underwear and sports is really, really growing versus last year, and of course again, as we've said now numerous times, if you want to keep track on whether what we're doing is working, look at the sports apparel development, and now again 15 quarter in a row with double digit sports apparel growth, so of course we're super proud over that. To sum it up, a very strong start of 2026, and again we're here for the long run, so I'm sure there will be strong quarters and perhaps there will be weaker quarters, who knows, but overall, of course, our ambition is to constantly improve and become better every day. And I think we've now proven that for a number of quarters in a row, which is, of course, thanks to a great team focusing on this idea that you can indeed move a strong underwear brand into a bigger arena and built then a global sports fashion brand. And as we've said a couple of times, even though we've been here for a long time now, this is merely the beginning. I think we're up for something really, really big here if we do things right. So I think with that said, thank you for listening in. Let's see if Hjalmar has any questions, he usually has some stuff that he wants to ask us, so let's fire away.

Yes, Henrik, and I think we should start at the strong point of course in the sports apparel. I mean, could you break this growth down a bit maybe in terms of markets, do you feel that you are gaining market share, and maybe elaborate a bit on the underlying drivers of the strong sports apparel growth that we saw here in Q1?

No, no, I think we absolutely see that we are taking market shares, and we've been doing so for well, 14 or 15, perhaps even 16 quarters; the underlying growth is not even close to our growth numbers. It's spread into 2 parts of course: on one hand we do performance products that you can use when you're actually working out, and of course at the same time we're doing sports apparel that you can use on your way to the gym or when you're leaving the gym. And of course the intersection between those 2 is really blurry, so of course that consumers are wearing tights when they go out for dinner, and sometimes they're wearing a cotton t-shirt when they go out for a run. And I think we want to be in that middle where we call sort of train for life, so really mixing those products, but both is really, really growing. We see a very, very strong growth in women's, and of course we believe that's going to be crucial to continue to fuel growth going forward, given that in the past, of course, men has been really, really the big part of our sports apparel volume, but now at e-com for example, women's is bigger than what men has in certain months, and overall of course it's a fairly even share now women and men, which I think is also a sign of strength.

Yes. Okay. And then if we look at the channels, I mean we have seen previously that you've been able to grow of course in a tough and challenging environment, we know that many other consumer facing companies are facing a challenging environment right now, and despite this, the wholesale is showing impressive growth here. Is this reflecting maybe an optimistic view among the wholesale customers, or is it that you have success with the new product segment launches for example, could you elaborate a bit on this?

Well, I think there's many different components. So of course it's clear when we sort of open up the office doors and look out at the reality, we see that the consumer sentiment is a bit hesitant, consumer confidence is decreasing. I think I read yesterday in Sweden it was 95% where index is 100; in Germany it's even lower, so of course last 2 months people are a bit more concerned than what we saw in the beginning of the year. But it seems to me that that's almost like a new reality; I can't now even recall when we had a quarter when things were sort of normal, so I think that's just something you need to learn to navigate within. I think our strength has always been that we have been operating various different channels very successfully. So sometimes e-com is doing really, really well, other quarters wholesale is doing really, really well. Sometimes within wholesale e-tailers are doing well, and other quarters brick and mortar doing well, and I think we simply need to be able to operate wherever the consumers decides to be. And again, if you look at our categories, we know from the past that underwear has really no impact on how the economy is going; it's a very stable category, you never really need a pair of underwear but also you can always buy a pair of underwear. And of course, here we are market leader and still top of mind, so of course that is helping us when consumers are perhaps a bit more hesitant to purchase more expensive stuff. And then when it comes to sports apparel and bags and footwear, we're still very small. So even if we would grow 10%, 15%, 20%, 25%, we still only have a fraction of the overall market. So of course that means that we can still grow even though the market is declining, even though of course it's easier to grow when everything is growing, so I think the quick answer is that we managed to navigate because we operate different channels, we have product groups within those channels that is sort of helping each other out when the world is a bit challenging.

And then if we look at other product areas, if we look at the shoes for example or maybe the bags here, what are the challenges or your focus areas now during 2026? Do you feel that you have a product offering that you are satisfied with? Is it a matter of addressing the customers from here on? What are the challenges maybe that you will address? Or what will your focus be in 2026 considering these product areas?

Well, the focus of course, we took over now footwear roughly 2 years ago, and of course we knew that integrating something is always trickier than what you would want it to be, and it's going to take a bit of time to rebuild and do something that will also be maintained over the years, and the first thing you do of course is to make sure that you create a strong collection. And of course that takes a bit of time, the lead times in wholesale is roughly between 20 and 21 months from you say hey, this is a great product until you have it on the shop floor, so it takes a bit of time if you want to do wholesale. So that of course means that to change something takes time, so that's why you of course need to start working with the product, and when we look at the collection that is out in the market right now, I believe it's very, very strong. And also we see a few evidence that the also the end consumers really picking that up, so again Sweden is growing footwear with 14%, own e-com is growing 10%, so of course we see that there are pockets of footwear growth. However, of course, Holland and Belgium is drastically declining footwear, actually also now versus fairly low numbers last year, and of course here we need to rebuild, so of course it's a new team in place, we need to slowly rebuild confidence amongst the distribution landscape on footwear in those 2 markets, and when we do that of course then the entire category start growing again. But again, it's going to take time, and the longer it takes to rebuild something, the longer it takes to break it down again, so we're not in a rush, but of course we want footwear to start growing versus last year's numbers, but that clearly takes a bit of time for us.

And then looking at the strong gross margin, I mean we know the channel mix is important here, but then again maybe we saw some growth from more dilutive areas actually in the first quarter here, but could you elaborate a bit on other items, maybe pricing, maybe the product mix or currency, how did these items impact the gross margin that we saw here in the first quarter?

So of course it's many, many different aspects of course that together then will give us a strong gross margin. One of the biggest impacts is of course which category that is growing. So underwear being strong is good because we have high gross margins; footwear declining is actually something good because it's slightly lower gross margins. Looking at the channel, D2C e-com has a strong gross margin, so of course when e-com has a bigger share that will lift up the gross margin, so there's number of different components, but again of course also looking at Q1 it's very clear that one big part of the currency increase is currency related. So of course we've been working against the currency almost every season since 2014, but now since roughly a year back the Swedish kronor has really strengthened a bit up and down but over the months continued to strengthen predominantly versus the U.S. dollar, and of course we are buying in U.S. dollar and in euro but we don't sell anything at all in U.S. dollar. So of course that has an impact on our gross margin. So that is really the impact, so currencies, channel mix, and product mix, those are sort of the 3 big components. Then of course our ability to increase prices and negotiate what we buy products for, but that's something ongoing, but those 3 is really the stuff that is making the quarters look a bit different.

All right. Yes, that's clear. And then lastly then on the own online. I mean now you're back to single digit growth in the own online, and we've seen this previously but then it's only been like a historical lump and then you returned to double digits following this, do you feel confident when we look forward that you can come back to double digits in the own online? And what are the challenges that you see in this channel?

Well -- so first, I try a bit to avoid giving too much of a forecasting, so I don't want to say what we will then do in the future, but very clearly of course our ambition is to grow more than 2%. And actually if you look at article sales in Q1 we were actually growing probably 4%, 5%, so it depends a bit of course how you close the quarter, how much returns you do so that's a bit of a trick, but so we're growing a bit more than 2%, but with that said the growth is not where we want it to be. And yes of course we've been elaborating a bit with actually decreasing discounts, so more full price business, and of course we know when the world is a bit worried the consumer gets even more price focus, you want to make a good deal, and of course that has impacted us a lot when it comes to driving growth. We see that the gross margin is actually better than last year, but we also see that marketing investments is higher than last year, so it actually even though we're growing top line, profitability is actually slightly lower than the year before. So it's clear that also driving e-com is changing, we now have AI, there's a lot of stuff happening around us, so what you need to do to be successful driving D2C tomorrow is going to be completely different from what was required only a year ago. But we have a strong team in place, very AI savvy, so I'm confident that we can grow above and beyond what we saw in this past quarter.

All right. Thank you so much, Henrik and Jens, and congratulations on a strong quarter. I'll leave it to you for any concluding remarks.

Thank you. Thank you, Hjalmar, and again of course it goes up and down, we're super happy with a strong start of the year. I think our key message, one that we want to say, is what is on the screen right now, Train to Live is really what we want to talk about, so whatever you do today make sure you get your workout done, and it could be walking up the stairs or taking a run, doesn't really matter, but that's going to be the best gift you can give you. And if you want to top that up, well, do that then in a pair of Bjorn Borg products and it's going to make your day fantastic. So I think with that said, looking forward to seeing you guys soon again. So have a great Wednesday. Thank you, Hjalmar, and thank you for being in this beautiful office here as well.

Thank you.