Björn Borg announced lower sales and operating profit for the quarter ended on Dec. 31, 2017, but managed to significantly grow its gross margin. Revenues declined by 0.7 percent to 170.3 million Swedish kronor (€16.7m-$20.9m). Adjusted for the acquisition of its former Benelux distributor, they decreased by 7.2 percent.
The management said that it experienced few store visits and strong growth in online shopping. A large part of the decline is due to weak sales in its distributor markets of Denmark and Norway. Finland, Sweden, Germany and England. E-commerce, performed better.
The gross margin jumped by a whopping 10.3 percentage points to 58.3 percent. Adjusted for currency effects, mainly the weaker dollar, the gross margin was 55.4 percent. The company's management said this increase was mainly due to the fact that earn-out payments for the brand are no longer paid since 2017. Higher costs, mainly related to the acquisition in the Benelux countries, led the operating profit to drop by 21.0 percent to SEK 16.9 million (€1.7m-$2.1m), while net income fell by 38.5 percent to SEK 11 million (€1.1m-$1.4m).
For the full year, sales went up by 10.3 percent to SEK 696.5 million (€69.4m-$85.6m). The gross margin increased by 3.7 percentage points to 54.0 percent, while the operating margin declined by 2.3 percentage points to 7.9 percent and net income decreased by 20.2 percent to SEK 37.4 million (€3.7m-$4.6m).