Back to growth, margin expansion continues - Q3 review

Q3 was solid, with organic growth of 3% Y/Y (we estimated 1%) and group EBIT up 18% Y/Y (1% above our estimate) and an EBIT margin of 17% (up 2% Y/Y). While the financials were strong, with underwear driving a large share of the growth, the product mix reflected some softness in focus areas (mainly footwear and to some extent sports apparel). The channel mix was positive, with own e-commerce up 16% Y/Y, helping to drive the strong EBIT margin, which we believe should be the main headline. The CEO stepping down was a surprise to us and, in our view, will create some uncertainty ahead. We have a new fair value range of SEK57–70 (56–60).

Return to growth. Q3 organic growth was 3% Y/Y, with revenue at SEK308m (we forecast SEK306m). This was an improvement from the soft growth in H1 (currency neutral c0%), underpinned by growth in underwear, which marked a growth recovery in expansion of 5% Y/Y. Considering the focus areas, sports apparel saw a sequential return to growth (6% Y/Y) following the Q2 decline, but with growth below the long-term trend. The footwear segment was -9% Y/Y, and own online was up 16% Y/Y, with an EBIT margin of 20%, in our view a strong performance.

Minor forecast revisions, FX key ahead. We raise our 2026–28e EPS by up to 2%, mainly on the Q3 numbers, which we believe support our 2027–28 growth forecasts. FX remains a key item for margins ahead; we adjust our 2027–28 estimates to reflect the recent USD/SEK and EUR/SEK movements in the Q3 preview.

CEO stepping down. In connection with the report, CEO Henrik Bunge announced he will step down. Until a new CEO is announced, and given the company’s strong financial performance during Mr Bunge’s tenure, we expect some uncertainty. We value Björn Borg using a peer-based valuation method, based on forward-looking P/E and EV/EBIT multiples. Our new fair value range of SEK57–70 mainly reflects our estimate adjustments.