Norwegian sporting goods retailer XXL has finally gotten the go-ahead from its major shareholders, including UK-based Frasers Group, to carry out a rights issue that will raise NOK 600 million (€60m) for the company.
Finally, XXL can breathe a sigh of relief. What started in mid-November when XXL first launched the idea of carrying out a rights issue as part of the turnaround of the ailing company was stopped by the major shareholder Frasers Group during the extraordinary general meeting in early November. On December 6, Frasers, which owns 25.8 percent of XXL, announced that it would instead consider buying all of XXL and succeeded in stopping the issue.
The parties seem to have buried their hatchets during the Christmas and New Year’s holidays. Instead, they have discussed and agreed on the next step for XXL together.
According to a press release, the two extraordinary general meetings have been canceled after Frasers withdrew its earlier demand to review XXL’s share issue, which will now be carried out in its entirety.
An Extraordinary General Meeting (EGM) will be held around January 28-29, 2025, to approve the share issue. According to XXL, this issue enables a comprehensive financing solution that allows XXL to continue executing its turnaround and improve liquidity and growth opportunities.
XXL’s Chairman of the Board Håkan Lundstedt was happy with the outcome.
“The Board of Directors is pleased with this solution, which involves all major shareholders and allows the company to strengthen the execution of its strategy”, Mr Lundstedt said. “The proposed share issue represents a holistic financing solution that the board believes is in the interest of all shareholders. We are grateful for the shareholders’ and banks’ continued support and belief in the company’s long-term opportunities. This will provide a solid platform to deliver on the Reset & Rethink plan.”
Even with Christmas and Black Week sales summarized, XXL’s challenges continuous. Revenue for Q4 2024, NOK 2.01 billion in Q4, decreased by 2 percent compared to last year, with sales recovery in Sweden and Norway but continued challenges in Finland. The gross margin for the company was estimated at 33-34 percent and the liquidity reserve was over NOK 300 million at the end of the year, XXL communicated.
XXL’s CEO Freddy Sobin is still optimistic about the future:
“In the fourth quarter of 2024, we experienced increased customer traffic and improved sales performance”, said Mr Sobin. “In a challenging and competitive market, our reset of assortment and price, combined with attractive Black Week and Christmas campaigns, is well received by customers. Completing the rights issue will enable us to strengthen our total customer offering, consolidate our position as a leading player in the Nordic mass market, and drive top-line growth. By regaining our value-for-money position, we are well equipped to meet the needs of our customers while strengthening our competitiveness.”
SGI Europe has asked XXL’s representatives further questions, who have chosen to refer to the press release and the “silent period” that is now leading up to the Extraordinary General Meeting at the end of January.
