Nordic sporting goods chain XXL will continue to wander a financial desert. An attempt to raise NOK 600 million (€60m) to address an acute liquidity crisis was stopped by the UK-based Frasers Group at the recent extraordinary general meeting. A bloc of around 37 percent voted against all proposals put forward. Frasers Group controls 32.5 percent of the votes in XXL.
In a stock exchange announcement, XXL writes that it will now proceed with a fallback solution, its plan B. The company will be carrying out the new issue in a new wholly owned subsidiary that will take over XXL’s assets, rights and liabilities. With this plan, XXL hopes to raise between NOK 375 million (€32m) and NOK 600 million (€60m), with the minimum amount guaranteed.
According to data provided to SGI Europe, XXL is currently losing around NOK 100 million (€10m) per month. In Q3, ended Sep. 30, group Ebit for XXL was a negative NOK 191 million (-€16.0m), versus a negative NOK 155 million in the year-ago period. Net income slipped 87 percent year-over-year to a negative NOK 262 million (-€21.9m).
SGI Europe has reached out to XXL CEO Freddy Sobin for comment.
SGI Europe: How do you view the rejection of the new mission? If you don’t need to reduce stores or staff, how can you save money or raise new funds to turn the XXL ship around?
Sobin: We take note of the general meeting’s decision. Our priority is a good overall solution for further company financing, including the alternative rights issue where NOK 375 million (€32m) has already been guaranteed. We continue to work on this and are optimistic that it will be fully subscribed up to NOK 600 million (€60m). The short-term part of the financing, a bridge loan, is already in place. This will ensure that XXL is ready for the peak season in the run-up to Christmas, with stores full of equipment and products that customers demand.
XXL has significant financial challenges. Will you need to close stores or lay off any staff?
We will continue to operate as normal and have full focus on ensuring that the stores are full of products our customers need in the lead-up to Christmas and in 2025.
