Oslo, 8 February 2023: XXL will exit Austria in 2023 and is working on several different solutions, including sale of the Austrian entity. Consequently, the Austrian operations are classified as a disposal group held for sale in the balance sheet and presented as discontinued operations in the income statement. It is already decided to close 3 of the 8 stores as well as the central warehouse facility. XXL has an ambition of having no negative cash effect in 2023 from the Austrian operations and exit.
XXL delivered total operating revenue of NOK 2.3 billion (NOK 2.6 billion) in the fourth quarter 2022 driven by low consumer confidence and reduced demand for sporting goods in general. The industry sees a buildup of inventory and heavy discount activities. XXL has prioritized strict liquidity management with sales and inventory actions over gross margins. The results are also significantly impacted by an additional write-down of inventory of NOK 301 million.
Under these conditions XXL has launched a massive clearance campaign in all markets.
XXL has obtained a waiver agreement with its bank consortium, following which only liquidity covenants will apply from December 2022 to November 2023 before returning to leverage covenant in December 2023. At least NOK 500 million in new equity will be raised in Q1 2023, through a private placement and a potential subsequent offering, where the net proceeds from the private placement will be applied to repay loan facilities.
Highlights:
- Historically low consumer confidence, reduced demand for sporting goods
- Additional write-down of inventory of NOK 301 million
- Exiting Austria during 2023
- EBITDA of minus NOK 236 million (NOK 403 million)
- New equity and waiver agreement with bank consortium
CFO and Interim CEO Stein Eriksen says:
- “The retail market is still tough and sport is no exception. Many customers have less money to spend on sports and outdoor equipment because prices on "everything else" are rising. As we also reported before Christmas, this has led to weaker results in the fourth quarter.
- Our answer is to step on the gas to secure liquidity and win back market shares in the Nordics. We are currently in the market with our biggest campaign in three years where we will sell out goods worth NOK 500 million.
- We have also implemented several other measures to adapt to the market situation: We have cut purchases and investments, reduced costs, secured equity from our owners and negotiated a new loan agreement with the banks. These measures will also support XXL in challenging markets”.
Outlook
Total operating revenues for the Group in January 2023 decreased around 5 per cent to around NOK 650 million. All markets have continued to be challenging with low consumer confidence and reduced demand for sporting goods in general. The heavy campaign activities continue due to the buildup of inventory in the sporting goods industry. Under these conditions XXL has launched a massive clearance campaign last days of January for the benefit of all our customers.
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.
XXL is in the phase of implementing several strategic initiatives and projects to improve profitability and operational efficiency going forward. The longer-term target is “40-30-10” on gross margin, OPEX and EBITDA respectively and when excluding IFRS 16 effects.
In line with the existing strategy, XXL will continue to invest in operational efficiency, selective new store openings, E-commerce platform, existing stores, 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. 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.
XXL will exit Austria in 2023 and is working on several different solutions, including sale of the Austrian entity. It is already decided to close 3 of the 8 stores as well as the central warehouse facility. XXL has an ambition of having no negative cash effect in 2023 from the Austrian operations and exit.
Restricted share units program for employees
In accordance with the guidelines of remuneration in XXL ASA, as approved by the Annual General Meeting in XXL ASA, the Board has decided to implement a program of restricted share units for around 50 key employees. The amount of the program is around NOK 10 million worth of restricted shares to be distributed in total. The allocation price will be equal to the volume weighted average market price the next five trading days, starting today 8 February 2023 and ending 14 February 2023. The shares will vest after three years subject to the holder at the time of exercise is employed in XXL.
For further information please find attached the quarterly report and the presentation material.
For APMs please see the quarterly report for further definitions and reconciliations.
The results will be presented at 08:30 CET by CFO and Interim CEO 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 90 27 29 59
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 8 February 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.