Oslo, 27 October 2022 - XXL delivered total operating revenue of NOK 2.3 billion (NOK 2.7 billion) in the third quarter 2022 driven by sudden historically low consumer confidence and reduced demand for sporting goods in general. Under such retail conditions XXL has prioritized strict liquidity management with sales and inventory actions over gross margins. Normally July is one of the largest sales periods of the year, but this time the sales were also hampered by increased consumption of travel and services after the pandemic. Higher campaign activity and sourcing costs impacted the gross margin which ended at 35.0 per cent (38.9 per cent). EBITDA in the quarter amounted to NOK 186 million (NOK 336 million). XXL is not satisfied with the results but has executed several short-term actions to adjust costs and purchasing volumes to the sales trend.
Under challenging retail conditions with rising inflation and lower household spending XXL believes it will benefit from its concept of offering great assortment of great brands at the lowest prices in the market. XXL is working on 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.
Highlights:
- Historically low consumer confidence, reduced demand for sporting goods
- Operating revenue of NOK 2 313 million (NOK 2 686 million)
- Gross margin of 35.0 per cent (38.9 per cent)
- EBITDA of NOK 186 million (NOK 336 million)
XXL had total liquidity reserves of NOK 817 million (NOK 1 407 million) and a net interest-bearing debt of NOK 983 million (NOK 393 million) by the end of Q3 2022. XXL is compliant with the defined covenants in the loan agreements with the bank consortium.
CFO and Interim CEO Stein Eriksen says:
- “The market is challenging and will be challenging for a while. Higher energy and food prices, and increasing interest rates, means that customers have less money left for everything else. This affects the whole retail sector, and sports is no exception.
- We need to adapt our business to sales trends and customer traffic. Already during spring and summer we implemented measures to reduce costs and incoming volumes of goods. It has already had a significant effect.
- We believe that the XXL concept with strong brands and the lowest prices will be attractive also in a challenging market when customers become more price sensitive.
- Health, training and well-being are megatrends in the society and we believe these trends will last. Long-term we expect a normalization in the market and our ambition is to strengthen XXL’s efficiency and profitability. We aim for 40-30-10 percent for gross margin, operating costs and EBITDA margin respectively”.
Outlook
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 2022 is expected to be around NOK 200-250 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 2022, whereof 1 in Norway and 1 in Sweden. XXL has closed two outlet stores, Töcksfors and Nordby in Sweden, during 2022. In Austria a store will be closed during Q1 2023 at the latest and XXL intends to move out of the central warehouse facility during 2023. At the same time XXL will be downsizing several existing stores, mainly in Sweden. The Group will continue to focus on optimizing the store portfolio.
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 27 October 2022 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.