Good morning, guys and girls as well. Welcome to the Q2 presentation, Björn Borg. We're back at Penser, and we are happy to be here as well. Looking back, the summer was simply exceptional. Well, perhaps a bit of rain at the end, depending on who you're asking, of course, and where you were. But, no matter where I went, so Real Padel in Marbella, my Sunday run at Kungsholmen, Action Padel at the Haninge, the CrossFit box in Visby, I saw Björn Borg apparel simply everywhere, and that is absolutely fantastic. And the part that I saw almost everywhere was our Borg Tee. So it's a recycled polyester with a Borg logo on both of the arms. I'm sure you've seen it as well. And to my surprise, now back to vacation, reading the newspaper Fokus, and what do I see?
Well, the finance guy, Tommy Jacobson, on an Epic Tide Box as well, doing the entire interview in a recycled polyester Björn Borg T-shirt. We're simply taking over the world, in a good way, because, of course, we want to inspire people that you can be a bit more. That if you only pick one thing today, that's training. It will make you laugh more, live longer, and be happier, and be better at whatever else you want to be better at. Training is just so much more important than just winning gold medals. You can do that, too, of course, but train to live. That's what we preach. So looking at Q2, it's a strong quarter.
There are some super strong highlights, other things, of course, still more work to be done, but overall, of course, the major highlight is our sports apparel growth, and also, of course, our ongoing momentum in our own channels. So both own on e-com, but also, of course, our own stores. The comparable one versus last year, you know, on a very, very good growth mode, indicating that the brand is in a very, very strong position. And of course, you know, looking around us, it's clear that the circumstances are tough, and I can feel that as well. You know, I have less money today than what I had a year ago, and a year ago, I had less money than I had the year before. And of course, there's a lot of things indicating that things will be tougher, also looking into the future.
But in terms of our business and our ambitions, we believe that this is the perfect time to continue to talk about our key message that if you should only do one thing today, go training or walk instead of taking the elevators. Whatever you choose to do, move. That's the best gift you can give yourself. So looking at some of the highlights then. So overall, net sale was growing 3% to SEK 166 million, and that's a, a record Q2, so we've never sold more. And yet, of course, 3% is not much, but a record is a record. Looking at the channels, we had a very, very strong momentum in own e-com, as we've said, also own retail stores.
If we look at comparable stores, even though, of course, retail is declining a bit, and that's due to store closures. As you know, since 2019, we've been evaluating our retail presence, and we believe we made the right decision to close down full-price stores because they're simply not profitable enough, continue to drive factory outlets, and also, of course, you know, work with pop-up stores where that is relevant. Looking at our wholesale business, we see fantastic momentum with our e-tailers, but a few of the physical doors are still struggling, and we see that there's still high inventories across many customers in Europe, which indicates, of course, that the fall will continue to be pressured by, you know, off-price business with a lot of clearance. But let's see.
At least we can indicate that our reorder business is picking up a bit, which is a first sign of a recovery in terms of the sports market getting back into growth mode again. But let's see. Our distributors is declining, and that's due to partly timing, but also, of course, their customer in their markets. So U.K. and Austria are sitting with quite high inventories. So that's the reason why we have a rather poor order book there. But overall, you know, there's net sale growth in the quarter. We never sold more, and given the circumstances, we're, of course, super happy with that. Looking at gross margin, we continue to increase the margin, so we've been doing that for now, you know, four or five quarters in a row.
So despite, of course, the currency working a bit against us, we still managed to through reduced discounts, you know, smart trade terms, you know, the channel mix to continue to improve our gross margin. And looking at currency neutral, it's actually increased with 2.2 percentage point. Another sign, of course, that the brand is in really good shape. Profit is increasing with 55%, so of course, very good at SEK 8.1 million. And last, of course, you know, the financial solidity is, you know, still very, very strong. So that's the main highlights. But again, of course, we have a long-term vision, so this is not about the, you know, Q2 or Q3.
We're here to do something long-term, and that's gonna take a bit of time, of course, but we are on a good road, and we're making progress every quarter. So the first one, of course, our mission is really then to inspire people, that you can be, you know, whoever you want, and the key thing, the key activity is training. So of course, what we want you to see when you look at the Björn Borg logo is a brand, a, you know, a best friend that is reaching out and pushing you those days when you're thinking that, well, this is not the day where I want to be my best version. So that's the intention of the entire brand.
You know, long term, of course, we have clear financial goals of annual growth, 5%, you know, operating margin of 10%, and continue, of course, with a fairly high dividend. Our business strategy is to continue then to focus on the online business predominantly, and of course, you know, focus and grow our sports apparel business together with, of course, building the brand even stronger as a sports fashion brand. We believe that that's gonna be the key to also drive growth in all other categories. Our main focus is Europe, but also, of course, we're making, you know, good inroads in Amazon U.S. and see, you know, fantastic growth numbers, yet, though, on a very low number, but looks very, very promising. So, looking at Q2 then, so brand awareness, we have a very good momentum in Sweden, so up 100% versus last year.
Looking at brand awareness for Her, so we've done a lot of work with the local influencers. Our marketing team has really managed to reach out to very, very strong, you know, local ambassadors, so that's increased our women's business, not only in terms of awareness, but also in terms of what we're selling. So very, very strong. And then brand preference in Holland is up 83%. The brand preference, of course, is a very, very important KPI, because that's the brand that you would prefer. So, overall, the brand is going in the right direction. We're super happy with how the brand is evolving. We measure that every week in all of our markets, and those are the KPIs you're looking at right now.
But also, of course, a much clearer indication is the sellout pace in own channels, is the ability to reduce discount and still, of course, grow the business. That is clear signals of a very, very strong brand. Not to talk about, of course, everyone wearing Björn Borg wherever I look. Looking at our two major categories, so from a brand perspective, underwear has continued to increase, so purchase intent is now at 46%. So it's super important for us that we continue to manage and maintain our market leadership in men's underwear in the Nordic regions and in Benelux, and at the same time, of course, you know, tap in and drive further growth in apparel. So both are, are increasing versus last year.
So a strong sign that the whole idea of building a sports fashion brand will allow us to be relevant in many, many different categories. Looking at the quarter, so, here you see, you know, Q1 and Q2. So again, you know, we are looking at record sales, both in terms of Q1 but also Q2. And of course, if you put them together, you know, a record first half year, so very, very strong momentum, even though, of course, the growth ratio is, is a bit low. Of course, we're aiming to grow even more than 3% in a quarter, but, again, a record is a record. The country perspective is, is very, very different, and of course, partly it's due to a bit of timing, but a very strong momentum in Germany, which is predominantly due to a strong, strong recovery with Zalando.
So the German market is up 39%. You know, Netherlands and Finland and also Denmark is doing really, really well. We're struggling a bit in Belgium. We know that Belgium, you know, is a tough market for physical retail. A lot of the European e-tailers are selling in into Belgium. So of course, both our own e-com, but also Zalando, they're growing, you know, double digit versus last year in the quarter in Belgium. But physical retail in Belgium is struggling. Also, looking at Sweden, you know, here is a bit of a timing impact. We see that a few of the customers in Sweden are sitting on a bit too much inventories. And also, of course, in general, the sporting trade in Sweden is, you know, on a falling trend, if you will.
So there's no underlying growth, in sport distribution currently in Sweden, but we hope that to change, of course. The distributors, as we've said, is having a very, very tough quarter. So here then, running through all the channels. So wholesale, you know, +7%, own e-com, +39%, own retail, -2%, but looking at comp stores, +21%. And, you know, if you wanna, experience, you know, super strong customer service, just go down to our Söder store here in Stockholm, and you will be welcomed by a simply an exceptional team. And not only that, you will also leave the store with a few of our fantastic products. All, you know, very, very strong fit. We have find this unique expression with the Borg logo and our different elements.
It's very good quality, and also, of course, they're all long-lasting, have a very high sustainability. We're super proud over that. And again, of course, the negative thing from the quarter is our poor business with our distributors. So, with that said, as you know, you know, since a long time now, we believe that the true traction for the brand is online. So that's where we're focusing most of our efforts, both when it comes to building the brand and communication, but also when it comes to fueling growth. So of course, that's own e-com, it's e-tailers, marketplaces. And here, of course, we continue to grow our online share as a total of our overall business. So a plan of a long-term strategy that is working out really well for us. And again, just running through the categories, so underwear, - 4%.
If you exclude the distributors, then we're growing 4%, so we see growth in all other channels. Sports apparel, +14%, so that's now the sixth quarter in a row we have double-digit sports apparel growth. You know, bags is growing, and footwear is declining. And of course, here we can do a lot better. But overall, of course, I think we've showcased again that we can manage numerous different categories and driving growth from all of them, meaning that we managed to build a very relevant brand with a lot of different entry points. So I think with that said, as Jens will showcase as well, not only the top line is evolving good, but also the rest of the lines in the P&L. So of course, we're happy with that.
So, Jens, please guide us through the bottom line for quarter two.
I will do. Thanks a lot, Henrik. Good start. Very welcome from me as well. Fantastic to be back at Björn Borg. I had a great summer. Also saw a lot of Björn Borg sports apparel down in the south of Sweden, where I spent my summer. Fantastic to see, and it's so good to be back to meet all my fantastic colleagues. Beatrice, still there, making everyone smile at the office, so I just love coming back to work. Looking at the bottom line of our P&L, the gross margin, we talked about already a little bit. So it's still quite strong at 56%. Looking at the... If we exclude the currency effects, that's working a bit against us, it's 57%, in fact.
So, so quite, quite strong operational gross margin, if you will. In terms of the operating income or the EBIT, again, a very strong quarter of SEK 8 million compared to SEK 5 million, the quarter before, the year before. So that brings us to, to a quite a good year to date or first half year in terms of profitability on the EBIT line. Net income follows the same, same trend, if you will. So provide small numbers in Q2 compared to, for instance, Q1 and Q3. That just follows our seasonality. So Q2 is normally where we have the, the, let's say, the, the smallest numbers, if you will, but very proud of the profitability that we can show in a, in a, in a quarter like a Q2.
If we focus a bit on the balance sheet items, just to show that we believe we're still a very solid company. The equity of assets is remaining on a high level of 54%, same as when we closed 2022, and we've climbed up from the pandemic years, if you will, to a very solid level. Our net debt is increasing and now stable on a fairly low level of SEK 26 million, compared to way above SEK 100 million only a few years ago. So we've managed to reduce the debt quite a lot in the last few years. When looking at the working capital, stable again, I would say around just above 20%, 23% when we closed the Q2.
We've been down to 20%-21%, and that's really where we wanna be, but clearly that depends on which month you're in and how the seasonality fluctuates a little bit as well. But the average, we aim to be somewhere just above 20%. So quite happy on where we are when it comes to the working capital and how that's employed in the company. So with that, we close the quarter. That makes me very, very proud. Good profitability, good sales, and also solid financial items in the balance sheet. So I'm very pleased and happy to turn over to you again, Henrik.
Brilliant, brilliant.
Some takeaways.
Thank you. Thank you, Jens. So of course, there's no doubt that we also feel that the market circumstances are changing. So from an end consumer, you know, pull in the market, we see on one hand a very, very strong momentum for the brand. And of course, as you saw, super good momentum for our own channels. But, you know, talking to a lot of our wholesale partners, we see that they're... Many of them are struggling with, you know, high inventory levels, you know, low gross margins due to a lot of clearance. And most likely, you know, we at least anticipate the fall to be, you know, even tougher.
But we can see, though, that, throughout tough times, we have managed to grow the business, you know, to add profitability, and to continue to take market share. That was the case during COVID, and that's the case, you know, so far during 2023. So for us, you know, I think it's, of course, on one hand, understanding that the markets are changing, but at the same time, you know, stay consistent and true to our long-term goal, which is to build a global, iconic sports fashion brand with one strong mission: that is to inspire people that you can be more. And that continues, no matter, you know, the market circumstances around us. There's a couple of highlights, of course, that we have now repeated in circles, so bear with me.
But of course, the first, the brand is really continuing to gain traction in all of our markets, and the brand, of course, together with the team, that's our biggest asset. That's what makes us unique. So that's, you know, very, very promising. So not only sports apparel or the sports brand side of it, but also we're managing to maintain, you know, our very strong position in men's underwear, so that's very, very good. Secondly, of course, we do record sales. Yes, of course, you know, 3% is not much, but then digging deeper, you know, 39% almost 40% growth in own e-com, both in the quarter and also year to date, of course, indicates that there, there's a very strong momentum for the brand. And also together well with, you know, the comp stores, you know, growing 21% in the quarter.
So there's a lot of consumers out there that really, you know, likes what we're doing, and of course, that makes me super, super proud. And I think it's just a combination and of having a brand with a compelling story, but also making, you know, great products at accessible price points with a very high sustainability focus. And I think that combination is really working for us and will continue to work for us. Last, of course, you know, the, the whole idea with this journey that now was started out many, many years ago, was really to prove to, you know, not only ourselves, but also to everyone else, that you can, you know, you can make a brand transition. You can move from something very nice into something even better.
So not too long ago, we were only underwear, only men's underwear, and only printed underwear, and of course, now the brand is something completely different. So of course, it makes me, you know, super happy just opening up Dagens Industri. You know, a few years back it was, you know, the underwear company, the underwear company, the underwear company. You know, last quarter, I talked about the sports and underwear company, and of course, you know, the perception of us, you know, from the outside world is also changing, you know, in terms of us then building the brand into this new position. So that makes me super happy as well.
So, a challenging quarter, but still, I think we managed to handle all those challenges in a very, very good way, and of course, thanks to an exceptionally talented team, of course. So with that said, I'm sure that Hjalmar is gonna have tons of questions, so you know, hang with us for a few more seconds, and then we'll run through them as well. So thank you for tapping in and listening.
Perfect. Thank you so much, Henrik. I was wondering if we could start off with the own e-com, which of course had a great contribution in the quarter. Could you just remind us again of the drivers here, and are you satisfied with the average pricing level by that channel in the quarter?
No, absolutely. I think there's many different things that is working, you know, very, very good for our own e-com side. So on one hand, of course, we see that, you know, almost all of our channels are working really well, so everything from, you know, paid search to paid social, you know, newsletters, you know, organic search, all of that is really working, you know, very, very well, versus competitors and of course, also versus last year. You know, the main explanation is really that we invested, you know, quite a lot into the e-com organization, well, a year and a half and two years ago, with having internal competencies, and I think it's really, really paying off.
So we're doing more and more of our own e-com business, you know, completely on our own with less consultants, of course, helping out, and of course, that makes us much more agile. And of course, e-com is a, you know, very, very quick business, where if you just read the data right, you can, you know, adjust the business, you know, on a minute, minute, hour, hour basis, and then, of course, make it even better. So I think that's probably the main reason for our fantastic growth, together, of course, with a strong cooperation with the, with the brand and marketing team that has built a, you know, very, very strong brand.
Thank you. If we look at the market for sports apparel, during the pandemic, there were lots of mentions of athleisure. Could you just remind us, where are we in terms of athleisure right now? Is this still a driver of, of the sales of sports apparel in the market?
Well, it depends a bit, of course. It was clear, of course, during the pandemic, you know, our behaviors completely changed. So as no one went to the office, instead, of course, you were wandering around in your own home, and of course, then you will wear different things than if you go to office. I don't know, or perhaps a few, but not too many are, you know, dressing up in a suit if they're just gonna be at home. They simply would wear something else. So, of course, you know, we know that the way you create sports apparel is, of course, you know, much more fitted to being comfortable and being, you know, nice to wear, whilst other things that you might wear is potentially also a bit more for looks, like a suit, for example.
So of course, that we saw under the pandemic, but that was, you know, due to, you know, change of behavior. And of course, now we're more back to what it was before, but we still see, of course, there's a massive trend with using, you know, sports apparel, you know, also when you don't train. So whether that's, you know, at leisure or if you wanna call it something else, I'm not sure if you wanna box it in, though. But we see, of course, predominantly, again, amongst, you know, the female consumer, that. You know, for example, we had a fantastic success with our seamless tights. You know, if you haven't bought them yet, you know, buy one for your daughter, your wife, your girlfriend, and, you know, she will love you even more. I'm certain of that.
They're simply amazing. But we also know that, you know, half of the consumers, you know, they use the seamless tights for running, for yoga, you know, for all kinds of trainings. But the other half, you know, they have them when they go to work. So of course, that is a, you know, that is a big mix. And I think, for us, it means that the distribution could also change. Because, of course, if you go to a Stadium in XXL, you're more looking perhaps for apparel that will make you sport or train. But if you go into an NK or a Volt , perhaps then you might look for apparel that will do other stuff for you.
For us, of course, it means that we need to be, you know, represented with our entire apparel collection, both in, you know, sports stores and in fashion stores.
Mm-hmm.
Of course, that's the beauty with the online business, of course, then you can have sort of the full range.
Yeah.
And then simply let the consumer, you know, pick what they would want to pick and use it for whatever they wanna use it for.
Yes. Yeah, so then, I mean, if you... Since you keep growing the sports apparel, then, I mean, that, I guess that means you're taking market share. Are you confident that you can keep on doing this?
I absolutely, absolutely. Of course, you know, I have a background from Peak Performance and also Adidas and Reebok, and so of course, I know the volumes that you can create in Europe and in Nordic. And of course, even though we're growing double-digit, you know, we're not even close. So, there's massive potential to continue to drive sports apparel growth in already existing markets. And then, of course, together with the, you know, the push that we do in Amazon U.S., and also in Germany, where we have, you know, almost no presence at all. So that, of course, gives me, you know, reassurance that in terms of growth opportunities, while there's plenty, then, of course, to realize them, that's gonna be a challenge, of course.
But, there's plenty of room to, well, you know, quadruple the sports apparel business without opening up any new markets.
Mm-hmm. Thank you. And if we look at the gross margin, I mean, if you set aside the FX component, could you just remind us the impact from, for example, input prices, shipping, and so forth?
Yeah. No, but there's a lot of things, of course, impacting, you know, the, our gross margins, and as you say, one is the currency, but let's take that out then. So we have made a lot of work to improve it, and on one hand, of course, it comes down to discounts and channel mix. So of course, driving our business with own e-com and own retail stores, that will, you know, lift the gross margin. Reducing discounts or fueling the brand, so it becomes worth more for the end consumer. That means you can reduce discounts, both against wholesalers, but also, of course, in our own channels. So that's increasing our gross margins.
Also, of course, if you look at, you know, what is happening on container prices, and, you know, a few other components, that's also, of course, you know, helping our gross margin. But overall, of course, we believe that the gross margin can continue to be improved a bit, but also it depends on channel mix and, of course, also, you know, our product mix. So of course, we know that depending on which product category you're looking at, the margin looks a bit different. And we also know, of course, that our sustainability work that we focus a lot of, you know, will even increase. That's most likely gonna have a, you know, a negative impact on the gross margin.
So then we need to find other means to, you know, to mitigate that, so we can continue to work with a gross margin of around, you know, 55%, you know, 56%, which is the, which is the main objective, at least from a midterm perspective.
Mm-hmm. Thank you. You mentioned that many actors have quite high inventory levels in the market right now. Do you think that this, looking forward, will affect the campaign pressure that you will face? And how has the campaign pressure been this summer in terms of pricing that you face in the market?
Now, if you look back over the summer, but of course, in the first, you know, half of 2023, I think we can see that most of the customers have been, you know, driving volume with discounts. So almost everyone, of course, is reporting, you know, lower margins, and that, of course, is due to very, very aggressive, you know, sales periods. And, most likely, I believe that trend will also, you know, continue into the fall. But here, you know, of course, it depends on which product categories you're in.
And I think we believe that where we are, so, mid, you know, price point, sports apparel, very accessible, you know, price points in all of our categories, being the market leader in underwear, we believe that in those categories, I think the pressure for, you know, off price or discounts are gonna go down a bit. But of course, also depending how the fall evolve, you know, will it be a cold winter in the Nordics? That's gonna have a massive impact on the sporting, goods market, for example. Will it be a warm winter? Well, then it's gonna have a different impact.
So, it's hard to see how the fall will be, but we see still, you know, fairly high inventory levels across Europe, which indicates that there will also be, you know, a lot of clearance activities, you know, throughout the fall. But with that said, we also see a couple of accounts actually starting to reorder, which of course indicates that they need to, you know, refuel their stock with, with newness and new products. To maintain, you know, relevance in the market, you can't just sell old stuff at discounted prices if you wanna continue to, to grow the business.
Mm-hmm. Thank you. And then finally, could you just remind us again on the drivers of the good development that we see in Germany now in the second quarter?
I mean, in Germany, it's, you know, it's purely down to Zalando. So we do work with, you know, a number of other accounts on the German market. We have a very strong country manager based in Berlin. We do tests all the time, so we can get traction also in sort of physical retail. But the brand is still, you know, fairly weak in the German market, and here we've said we need to focus even more to build a strong online presence. If you look at, you know, influencer marketing and discount code, that's fairly strong in Germany, so I think we can probably do more there.
But the answer to the German development in Q2 is purely related to Zalando, and you know, very you know, strong sort of bounce back from a fairly weak Q1. So that's one of the most important accounts that we have in the group.
Mm-hmm. Thank you so much, Henrik.
Thank you.
For coming in today.
Thank you. Good to be here. Excellent! Have a great Friday. See you at the Sports Hour.