In its Q2 2024 report, released on July 12, XXL ASA showed that it managed to reduce losses compared with the previous comparable period but has not eliminated them. The company has continued to take large losses in an increasingly competitive market.
SGI Europe has spoken to CEO Freddy Sobin about the company’s future. Sobin is hopeful that the strategy the company has recently developed will bear fruit. He has told us that the XXL’s plan, called Reset & Rethink, divides the business into four key areas: ”Restructuring of physical stores, acceleration of existing e-commerce, doubling of own-brands and utilization of the department stores’ service offer [such as bicycle and alpine equipment workshops].” Sobin believes the company is on the right track with this strategy.
“We believe in Reset & Rethink and it continues to be implemented,” he said. ”This means that we continue to improve our online business, which will drive a positive change in profitability. In addition, we now have strong price control, giving us a better underlying gross margin. We are also buying more in lower price categories, resulting in goods with significantly fewer inventory days. In addition, the inventory value for us is currently at a record low, and the number of units in stock has decreased less than the inventory value, which is positive. However, the mix can always be improved. In addition, we continue restructuring our entire group, which provides both realized cost reductions and an optimization of the stores’ areas.”
Today, the XXL group operates 85 doors in the Nordic countries: 39 in Norway, 30 in Sweden and 16 in Finland.
On March 10 of this year, XXL was forced to close one of its Finnish stores, one of the five located around the capital, Helsinki. In May of this year, the group achieved new savings when it moved three of its Swedish department stores – in Västerås, Uppsala and Växjö – to new premises. At the time, XXL stated that this was an effect of an unreasonable rise in rents (up 20%) and of a reduction in the Swedish people’s purchasing power.
Sobin could not say whether further closures or relocations are imminent. “We continuously evaluate our store portfolio,” he said. ”Opening, closing, relocating, reducing or expanding space is part of everyday life. We currently have no planned closures but several other optimization projects to strengthen our stores. In 2024, we will reduce our total floor space by 15,000 square meters, corresponding to about 5 percent of our total commercial space. This is mainly about relocations and space downsizing to counteract the rent inflation of recent years and to enable a more modern store experience for our customers.”
A week before this interview, Decathlon announced it would be leaving Sweden after 13 years. Sobin welcomes Decathlon’s au revoir for several reasons, not only because competition will be easier: “In general,” he said, ”competition is good. It sharpens us and keeps us on our toes. That said, Decathlon’s Swedish exit has been expected since before. We believe that it is healthy to have fewer players in the Swedish and Nordic sports markets, as we see that the market has been and still is over-established.”
