Second quarter 2016 was characterized by many important operational events to contribute to future growth for the Group. XXL delivered a growth rate of 24 per cent for the second quarter 2016, driven by new stores and a like-for-like growth of 11 per cent. Both Norway and Sweden experienced record sales on the opening day of a new store. In addition XXL expanded into Denmark late in May with an E-commerce offering only. EBITDA for the Group amounted to NOK 222 million in the quarter with a corresponding margin of 11.7 per cent, where the Swedish operation delivered the strongest improvement compared to last year.
Highlights Q1 2016
- Total revenues of NOK 1 898 million (NOK 1 535 million), up 24 per cent
- Like-for-like growth of 11 per cent
- EBITDA of NOK 222 million (NOK 201 million)
- Five new stores – three in Norway, one in Sweden and one in Finland
- Launched E-commerce offering in Denmark
- Total upgrade of ERP-platform and new front-end website
Outlook
XXL has signed 12 new lease agreements for store openings for 2016 where of 7 in Norway, 2 in Sweden and 3 in Finland. This includes 5 stores that XXL has opened so far in 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.
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 Q2.
A replay will be available on www.xxlasa.com soon after the live presentation.
For further queries, please contact:
Tolle O. R. Grøterud, Head of 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.