For a company named after a Swedish tennis champion, Bjorn Borg AB is surprisingly known more for colorful cotton briefs than sports gear.
At a time when fashion and sports have fused so much that yoga pants are acceptable work attire, Chief Executive Officer Henrik Bunge wants to inject more performance-driven features into its products, some of which were unveiled during a show Monday night at Stockholm’s Fashion Week. Underwear represented 57 percent of the company’s 640 million kronor ($77 million) of brand sales in the six months through June, while products such as bags and footwear made up 43 percent.
“We need to make sure we have more of a theme between our product groups so it becomes more sports inspired,” Bunge said in an interview at the retailer’s headquarters in Stockholm. “All quarters since I started have gone in the right direction so I feel we are on the right track.”
Bunge joined Bjorn Borg a year ago, and has since named a new chief financial officer, removed the role of chief operating officer and relocated the company’s sportswear operations to Stockholm from the Netherlands. The overhaul is still a work in progress: The company posted a second-quarter loss from investments in marketing and e-commerce on Aug. 12, sending the shares down 7.8 percent that day.
The stock soared as much as 7.1 percent Tuesday amid a rally in European shares, the steepest intraday increase in more than four months, and was up 2.9 percent at 24.70 kronor at 10:52 a.m. in Stockholm.
Bjorn Borg -- which bought the Swedish tennis player’s brand in 2006 and makes annual royalty payments to Borg that cease after 2016 -- will finish this year in better shape than last, according to Bunge.
“2015 will be better than 2014 on all our key metrics,” including sales and operating profit, the CEO said. “That’s the picture for all years up to 2019.”
In November, Bjorn Borg introduced a strategy called “Northern Star,” aiming for 1 billion kronor in sales by 2019 and an operating margin of 15 percent. In 2014, sales were about 539 million kronor and the margin 10.4 percent.
Along with broadening its distribution base to sell through more sports retailers, the company will expand its offering of underwear for athletes, using fabrics that keep moisture away from the skin. Workout gear that can be worn outside the gym has proved successful for the likes of Under Armour Inc.
The increasing popularity of health and fitness among consumers is “opening up a window for brands like Bjorn Borg,” Bunge said. Yet the company is coming late to the party -- Hennes & Mauritz AB, for one, already offers its own sportswear range.
“Competition has become considerably tougher within that segment,” said Magnus Dagel, an equity strategist at Nordea Bank AB. “They have been a bit unclear earlier, so it’s positive that they have a clear plan.”