XXL today announces disappointing results development in the fourth quarter 2018. Volumes in all markets have been low in the periods before and after the Black Friday campaigns. As a result a large part of the sales moved into this campaign, with significantly lower gross margins. XXL had sales growth on the Black Friday campaign compared to last year but poor execution resulted in negative development in gross profit, leading to a considerable drop in the gross margins. The company has improved relevant routines to ensure that this will not occur again.
XXL has been too aggressive with price discounts and not adjusted and followed up price strategies sufficiently, especially in Norway. Unfortunately this lasted too long without corrective actions, hampering the gross margins into December as well.
As earlier communicated XXL is still achieving lower supplier volume bonuses, partly due to downscaling of inventory, which also affects gross margins negatively.
During the fourth quarter XXL had several internal management changes, including change of CEO and Group Marketing Director, both with long experience in retail and the XXL concept. This had negative effects on the daily operations, with some setback of important competence in the transformation of roles and routines.
As a consequence of the poor Q4 XXL now estimates total operating revenues for the Group in 2018 to be around NOK 9.4 billion and EBITDA in the range of NOK 530 – 560 million (as set out in the quarterly reports APM descriptions). This could change as the last weeks of December are important sales weeks. XXL will present the actual fourth quarter 2018 figures on 12 February 2019. Due to the lower results XXL has been in positive dialogue with its lending consortium and obtained a waiver with new agreed covenants.
The previous communicated strategy remains unchanged and XXL will deliver on this plan making the company more competitive as an omni-channel player. As part of this XXL has extensive initiatives in place of delivering on the digital transformation and results from this is expected to be seen gradually starting in 2019. XXL will continue to invest in growth and technological improvements with a clear ambition to become the omni-channel champion.
After building a robust strategic plan, CEO Ulf Bjerknes has decided to leave his position in XXL after 11 months with the company. Chairman Øivind Tidemandsen will take up an operational and strategic role heading the daily operations. He founded XXL and is the largest shareholder in the company with broad retail experience from establishing and developing several market leading retail concepts. Tolle Grøterud, Strategy and Investor Relations Director, will act as interim CEO and XXL will initiate a process of recruiting a new CEO.
XXL will host an investor, analyst and press conference tomorrow morning, Wednesday 19 December 2018 at 08:00 CET. The conference will take place at our headquarters in Oslo, Strømsveien 245, Alna Senter (entrance on the right side of Maxbo). XXL will also host an international conference call at 11:00 CET with the following dial-in details: +47 21 56 33 19 (Norway) and +44(0) 20 3003 2701 (International), passcode – 4372248#
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, Denmark and Austria. It is the largest among the major sports retailers in the Nordics and the fastest growing among the major sports retail chains in the World. 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.