Björn Borg’s distributor in the Netherlands has applied for a corporate reconstruction of its retail operations in the country. The plan is to implement a substantial reduction of the retail network, currently comprising 24 Björn Borg stores, against the backdrop of long-term weakness in the Dutch market, because of which several stores have underperformed expectations.
The distributor’s wholesale operations, which generate the large part of brand sales in the country, are managed by a separate company that is not included in the reconstruction.
“We can see that this is a result of a tough macroeconomic situation in the Netherlands, where the performance of retail possessed one of the lows among EU countries in early 2013, according to Statistics Netherlands.
This has strongly affected local demand and hurt opportunities for our distributor’s retail operations. The wholesale operations are profitable, however, and the brand maintains a strong position in the country, even if the Dutch economy is struggling with major problems,” says Arthur Engel, CEO of Björn Borg.
Björn Borg estimates that a reconstruction of the retail network in the Netherlands, according to the current plan, will reduce annual consolidated sales by approximately 3-4 percent based on 2012 sales.
Lower purchases from the Dutch distributor for its retail network affected Björn Borg’s sales as early as the second quarter of 2013. A portion of sales from closed stores could eventually be shifted to other channels, including e-commerce.