XXL delivered total operating revenue of NOK 2.2 billion (NOK 2.4 billion) in the second quarter 2022 driven by weakening consumer sentiment and reduced demand for sporting goods in general. XXL experienced a decelerating sales development and June proved to be a challenging month. Higher campaign activity and increased freight costs impacted the gross margin which ended at 37.6 per cent (41.8 per cent). EBITDA in the quarter amounted to NOK 191 million (NOK 392 million).
XXL is not satisfied with the results and has initiated several short-term actions to adjust costs and purchasing volumes to the sales trend. The strategic review of the Austrian operations continues and XXL has decided to close one store in Q1 2023 as well as the intention to move out of the central warehouse facility outside Vienna during 2023.
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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.
Highlights:
- Lower revenue and profit driven by weakening consumer sentiment and reduced demand for sporting goods
- Operating revenue of NOK 2 194 million (NOK 2 420 million)
- Gross margin of 37.6 per cent (41.8 per cent)
- EBITDA of NOK 191 million (NOK 392 million)
CEO Pål Wibe says:
• Like many other retail companies we experience a challenging market at the moment. Our customers are more uncertain about the future and more cautious when spending money. This affects especially demand for more expensive capital goods.
• We are acting quickly to adapt to the new market situation. To cut costs, we reduce purchases and adjust staffing in stores to the reduced customer traffic. We will turn every stone to save money where we can across the whole company.
• At the same time, the work to develop XXL continues in the next phase. In addition to ensure that we are cost efficient, we will also prioritize to strengthen our margins. Among other things, we seek to increase the proportion of private label brands from 10 to 30 percent. This will make a positive contribution to margins. In a normalized market, we aim for a gross margin of 40 percent.
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 CEO Pål Wibe and CFO 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 15 July 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.
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