Oslo, 14 July 2023: The sport retail market continued to be challenging in the second quarter 2023 impacted by reduced demand, heavy discount activities and high inventory levels in the value chain. All Nordic markets are currently in contraction. Under such conditions XXL delivered a negative growth of 6.9 per cent and total operating revenue equaled NOK 1.9 billion (NOK 2.1 billion). XXL has prioritized liquidity and inventory control leading to continued high campaign activities and lower gross margin. XXL has impaired its inventory of capital goods resulting in an additional write down with a net effect of around NOK 67 million. Consequently, EBITDA ended at negative NOK 57 million (NOK 203 million). The inventory is back to normalized levels providing benefits for higher gross margin over time. Total liquidity reserve ended at NOK 722 million (NOK 691 million) and the net interest-bearing debt amounted to NOK 923 million (NOK 1 109 million).
XXL is currently working on several short-term actions and a longer-term strategic plan, called “Reset&Rethink”, in order to improve profitability. Five must win battles are expected to deliver an EBITDA run-rate uplift of NOK 500-750 million the next 12-24 months. The longer-term strategic plan and targets are in process and will be further detailed during 2023.
Highlights:
- Challenging markets with lower demand for sporting goods
- Total operating revenue of NOK 1 946 million (2 090 million)
- High share of campaign activities and additional write down of inventory with a net effect of NOK 67 million impacting the gross margin
- EBITDA of minus NOK 57 million (NOK 203 million)
CEO Freddy Sobin says:
- “It has been two hectic months since joining XXL in May. We are well underway in shaping a strong and experienced Nordic management team and have agreed on some important priorities for the next quarters.
- Unfortunately, the market is still challenging and characterized by tough competition, as we also communicated in June. We believe it will continue to be challenging for the next few quarters. However, the sports and outdoor market is still backed by strong megatrends which we will capitalize on in the longer run.
- Short-term we have started several initiatives to strengthen XXL, both financially, commercially and operationally. We have a clear ambition to improve profitability, and are focusing on five “must win battles”. These include purchasing prices, product availability, pricing, store operations and E-com”.
Outlook
XXL is in the phase of implementing several strategic initiatives and projects to improve profitability and operational efficiency going forward, called “Reset&Rethink”. Five must win battles are expected to deliver an EBITDA uplift of NOK 500-750 million the next 12-24 months. The longer-term strategic plan and targets are in process and will be further detailed out during 2023.
XXL’s target and goal going forward is to over time gain market shares in all markets and continue the growth in the E-commerce channel.
In line with the existing strategy, XXL will continue to invest in operational efficiency, store optimizing projects, E-commerce platform, infrastructure and IT. Total CAPEX for XXL Group in 2023 is expected to be around NOK 150-200 million.
Going forward XXL expects the pace of the store roll-out to be 2-3 new stores per year including relocations of stores. XXL has signed 2 new lease agreements for store openings in 2023, whereof 1 in Norway and 1 in Sweden. At the same time XXL will be downsizing several existing stores. The Group will continue to focus on optimizing the store portfolio, including evaluation of selective closures of low performing stores with limited turnaround abilities.
XXL will exit Austria in 2023 and is working on several different solutions, including sale of the Austrian entity. XXL has already closed 3 of the 8 stores, as well as the E-commerce operation and the central warehouse facility, and agreed to close two stores in September 2023. XXL has an ambition of having no negative cash effect in 2023 from the Austrian operations and exit.
For further information please find attached the quarterly report.
For APMs please see the quarterly report for further definitions and reconciliations.
The results will be presented at 08:30 CET by CEO Freddy Sobin and CFO Stein Eriksen. The presentation will be held in English and will be webcasted at www.xxlasa.com.
For further queries, please contact:
Investor Relations:
Tolle O. R. Grøterud
Phone: +47 902 72 959
E-mail: ir@xxlasa.com
Press contact:
Andreas Nyheim
Phone: + 47 952 11 779
Email: presse@xxl.no
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. This stock exchange announcement was published by Tolle O. R. Grøterud, Investor Relations Officer at XXL ASA, on 14 July 2023 at 07:00 CEST.
About XXL ASA
XXL is a leading sports retailer with stores and e-commerce in Norway, Sweden, Finland, Denmark and Austria. It is the largest among the major sports retailers in the Nordics. 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 best prices and the widest assortment of products, focusing on branded goods.