Oslo, 25 October 2016: XXL delivered a growth of 19 per cent for the third quarter 2016, driven by new stores and E-commerce. September was challenging with unseasonal warm weather in all regions, impacting like-for-like growth and gross margin. However, XXL is gaining market shares and both Norway and Sweden improved the cost position in the quarter. EBITDA for the Group amounted to NOK 214 million in the quarter with a corresponding margin of 10.3 per cent, where the Norwegian operation is standing out with the strongest improvement compared to last year.
XXL has signed its first two lease contracts in Austria with an intention to open at least one store late 2017. Austria is an attractive market with four distinctive seasons, brand and service minded consumers, and with a competitive landscape similar to the Nordic markets.
Highlights Q3 2016:
- Total revenues of NOK 2 080 million (NOK 1 753 million), up 19 per cent
- Like-for-like growth of 4 per cent
- EBITDA of NOK 214 million (NOK 201 million)
- Opened one new store in Norway
- Signed first two lease contracts in Austria
Outlook
XXL has signed 12 new lease agreements for store openings in 2016 where of 7 in Norway, 2 in Sweden and 3 in Finland. This includes 6 stores that XXL had opened by the end of Q3 2016.
In addition, XXL launched an E-commerce offering in Denmark in May 2016. The launch is colored by aggressive pricing and high marketing spending and will return negative profits the first years of operation. The business case has minor initial CAPEX but the total investment should be considered as a small store outside Norway with 4-5 years of pay-back.
Due to more stores and growth in E-commerce in Norway XXL will invest in the central warehouse. The central warehouse in Norway will increase from approximately 24 000 square meters to 32 000 square meters. In addition, XXL will increase the capacity of the Autostore system in Sweden. Total infrastructure investments will be in the range of NOK 50-65 million in 2016.
The distribution channels for XXL marketing material is under substantial change where the existing print and TV marketing is under pressure. XXL will focus more on digital marketing channels in addition to the existing channels. The new strategy will increase the marketing cost in per cent of sales in all countries in a transition period by approximately 0.5 percentage points year over year.
The Group maintains the following long term objectives (on full year basis):
- Like-for-like growth of mid-single digits over time including E-commerce
- Gross margins to be stable. In Norway at low 40’s, high 30’s in Sweden and between mid and high 30’s in Finland. Due to the demanding macro in Finland the lift to high 30’s may take longer time than in Sweden
- EBITDA-margin stable as a result of stable gross margins and operating expenses. In Norway at low 20’s, in Sweden low double digits and in Finland high single digits. Due to the demanding macro in Finland the lift to high single digits may take longer time than in Sweden.
XXL has already signed 9 new lease agreements for new store openings including 2 stores in Austria and aims for 9-12 new stores in total for 2017.
XXL has signed two lease contracts for store openings in Austria, whereof one is subject to authorities approvals. XXL intends to open at least one store in Austria, and possibly two stores, late 2017 and to launch E-commerce from the same date as the first store opening. XXL has ongoing negotiations for more lease contracts and has received offers in several cities. The launch will be colored by aggressive pricing and high marketing spending and will return negative profits the first years of operations. CAPEX per store will be in the range of EUR 1.7 -1.9 million and an average pay-back per store of 4-5 years. XXL will also establish a local team for buying and support and will at least employ five more employees in central functions than in Sweden and Finland. This organization will be scaled for the whole DACH-region (Germany, Austria and Switzerland). Average sale per store is expected to be around EUR 12 million, while the gross margin and EBITDA-profile will be as in Sweden over time when excluding for the build up of a centralized organization. Hence the start-up in Austria will have higher costs than the launch in Sweden or Finland. XXL expects between 15-20 stores in total in the Austrian market.
For further information please find attached the quarterly report and the presentation material.
The results will be presented at 08:30 CET by CEO Fredrik Steenbuch and CFO Krister Pedersen. The presentation will take place at our headquarters in Oslo, Strømsveien 245, Alna Senter (entrance on the right side of Maxbo). The presentation will be held in English and will be webcasted at www.xxlasa.com. You may also follow the presentation live by telephone. Dial-in details: +47 21 56 33 18 (Norway) and +44(0) 20 3003 2666 (International), passcode – XXL Q3.
A replay will be available on www.xxlasa.com soon after the live presentation.
For further queries, please contact:
Tolle O. R. Grøterud,
Investor Relations, XXL ASA
Tel: +47 90 27 29 59
E-mail: ir@xxlasa.com
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act
About XXL ASA
XXL is a leading sports retailer with stores and e-commerce in Norway, Sweden, Finland and Denmark. It is the largest and the fastest growing among the major sports retailers in the Nordic. XXL pursues a broad customer appeal, offering a one stop shop experience with a wide range of products for sports, hunting, skiing, biking and other outdoor activities. XXL’s concept is to have the largest stores with the lowest prices and the widest assortment of products, focusing on branded goods.