XXL ASA – Third quarter 2018 results - Strong growth from E-commerce under difficult retail conditions

Oslo, 24 October 2018 - Third quarter 2018 was impacted by limited demand and traffic to the stores in the summer months while September represented a more normal month. E-commerce continued to deliver solid results with a growth of 40 per cent in the quarter. XXL introduced several omni-channel solutions during the quarter with positive effects and continues to invest in this model. EBITDA for the Group amounted to NOK 190 million in the quarter, corresponding to a margin of 7.6 per cent. This is driven by negative like-for-like growth under challenging retail conditions and lower supplier volume bonuses received partly due to downscaling of inventory. The latter amounted to around NOK 20 million in the quarter or 0.7 percentage points on margins.

Highlights Q3 2018

-              Total revenues of NOK 2 504 million (NOK 2 417 million)

-              Negative like-for-like growth of 6 per cent

-              Strong E-commerce growth of 40 per cent

-              EBITDA of NOK 190 million (NOK 252 million)

-              Introducing new omni-channel solutions

Outlook

XXL has signed 7 new lease agreements for store openings in 2018 where of 4 in Norway, 1 in Sweden and 2 in Austria. This figure includes 6 stores that are opened by the end of Q3 2018.

XXL has already signed 5 new lease agreements for future store openings in 2019 and aims for 7-9 new stores in total for 2019. XXL will at all times evaluate the trend of E-commerce growth compared to opening of new stores.

To continue the growth strategy, within both stores and E-commerce, and in new markets as well as existing markets, XXL will invest in infrastructure, IT and training facilities. These investments are expected to be in the range of NOK 70-90 million for 2018. In addition XXL will refurbish at least two stores with CAPEX in the range of two new stores.

The Group has the following long term objectives (on full year basis):

-              Group like-for-like growth of low single digits over time including E-commerce

-              Competition and E-commerce growth to put pressure on Group gross margin over time

-              Group OPEX% as percentage of total operating revenues to gradually trend down towards 25 per cent in a five year period starting from 2019

-              Group EBITDA-margin stable as a result of lower gross margin and OPEX% over time. In Norway around 20 per cent, in Sweden and Finland low double digits, in Denmark and Austria high single digits

-              New market entries affect both Group gross margin and Group EBITDA-margin in the establishing period of 1-3 years

The Austria average sale per store is expected to be around EUR 10 million, while the gross margin and EBITDA-profile will be as in Sweden over time when excluding for the build up of a centralized organization for buying and support. Hence, the start-up in Austria will have higher costs than the launch in Sweden, Finland and Denmark. CAPEX per store will be in the range of EUR 1.7-1.9 million and the average pay-back per store is estimated to 4-5 years including net working capital. The average pay-back time is after being some time in the market, following an establishing period. XXL expects around 10-15 stores in total in the Austrian market.

Change in the executive management team

Mr. Fredrik Steenbuch, CEO in the XXL Group, will hand over the position as CEO to Mr. Ulf Bjerknes. Bjerknes has been the COO in XXL Group since February 2018 and has extensive experience from the sporting goods industry. He was the CEO in Swix from 2008 until 2017 and CEO in Rottefella from 2003 until 2008. As of 1 December 2018 Fredrik Steenbuch will take on an operational role outside of the executive management team, changing XXL, according to the rapid and fundamental changes going on in retail.

Mr. Jarle Bråten, Buying and Marketing Director, will leave XXL in December 2018 to go back to a centralized function at the Dolphin Management Group (company controlled by the chairman of the board). This is according to plan as he has reorganized the buying department for the last two years. Mr. Tom Erik Kjønø, Buying Director Europe, will take over the responsibilities and be the new Buying and Marketing Director and be a part of the executive management team in XXL ASA as of today.

Mr. Tom Erik Kjønø has been the Buying Director Europe in XXL since 2010 and assumed the role as Purchasing Director for shoes from 2005 till 2010. Prior to joining XXL he served as Key Account Manager in Rockport/Reebook and Product Manager/Buyer in Löplabbet. Kjønø holds a Bachelor degree from the Norwegian School of Economics and Business Administration. Tom Erik Kjønø is a Norwegian citizen and resides in Norway. He currently owns 159,031 shares and 162,623 share options in XXL ASA including ownerships of closely related parties.

Program to repurchase own shares

In accordance with the authorization to acquire own shares given at the Annual General Meeting on 6 June 2018, the Board of Directors of XXL ASA initiates a program to buy-back own shares. With reference to the resolution made by the Annual General Meeting on 6 June 2018 the share buy-back program is to cover for share incentive programs or to be deleted in connection with a later reduction of the registered share capital. The total number of shares to be acquired is of a value of up to NOK 50 million. The highest price to be paid per share will be NOK 65, but shall in no event exceed the prevailing market price at the Oslo Stock Exchange on the relevant trading day. The shares will be purchased from the open market. The share buy-back program will commence on 25 October 2018 and will continue until mid December 2018.

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, COO Ulf Bjerknes and CFO Stein Eriksen. 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 Q3

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.