The Scandinavian retail operator, facing historically low consumer confidence and lower demand for sporting goods in its markets, is taking major actions to improve its balance sheet.
This year, XXL ASA will be working to exit the Austrian market, where it still operates five stores and a central warehouse; has begun liquidating excess inventory in its remaining markets of Norway, Finland and Sweden after taking an inventory write-down of 301 million kroner (€29.0m); and is raising at least NOK 500 million (€48.1m) in new equity through a private placement and possible subsequent offering. All net proceeds from the private placement will be used to pay down debt, the company said.
XXL ASA Q4 reportings
In Q4 ended Dec. 31, group EBIT was a negative NOK 107 million (€10.3m) versus NOK 174 million. EBITDA was negative NOK 236 million (€22.7m) against a profit of NOK 403 million as the EBIT margin sank to -18.0 percent from 6.2 percent. Gross margin came in at 19.8 percent against 42.3 percent in the year-ago period. Operating revenues fell by 13.2 percent to NOK 2,264 million (€217.8m) from NOK 2,609 million, and e-commerce sales were 7.0 percent lower year-over-year to represent 25.9 percent of operating revenues.
| XXL ASA | |||
|---|---|---|---|
| Key figures (adjusted) (NOK million) | |||
| 2022 | 2021 | Change | |
| Q4 | |||
| Operating revenue | 2,264 | 2,609 | -13.2% |
| Growth | -13.2% | 6.5% | -19.7 pt |
| Gross profit | 749 | 1,105 | -32.2% |
| Gross margin | 33.1% | 42.3% | -9.2 pt |
| Additional write-down of inventory | 301 | – | – |
| OPEX % | 30.2% | 26.9% | 3.3 pt |
| EBITDA | 65 | 403 | -83.9% |
| EBITDA margin | 2.9% | 15.5% | -12.6 pt |
| Ìmpairment losses | 0 | 13 | -100.0% |
| EBIT | -107 | 174 | – |
| EBIT margin | -4.7% | 6.7% | -11.4 pt |
| Net income | -72 | 165 | – |
| Earnings per share | -0.28 | 0.66 | – |
| FY | |||
| Operating revenue | 8,426 | 9,597 | -12.2% |
| Growth | -12.2% | -3.4% | -8.8 pt |
| Gross profit | 3,022 | 3,949 | -23.5% |
| Gross margin | 35.9% | 41.1% | -5.2 pt |
| Additional write-down of inventory | 301 | – | – |
| OPEX % | 29.5% | 26.7% | 2.8 pt |
| EBITDA | 538 | 1,386 | -61.2% |
| EBITDA margin | 6.4% | 14.4% | -8.0 pt |
| Impairment losses | 1 | 13 | -92.3% |
| EBIT | -165 | 615 | – |
| EBIT margin | -2.0% | 6.4% | -8.4 pt |
| Net income | -109 | 453 | – |
| Earnings per share | -0.43 | 1.80 | – |
| Source: XXL ASA | |||
Norway represented most of the sales, at 53 percent or an implied €115.4 million. Sweden represented 29 percent or an implied €63.2 million, and Finland equaled 18 percent of revenues or an implied €39.2 million. All three regions realized shrinking EBITDA margins and lower revenues in Q4, led by a 19.3 percent sales decline to NOK 646 million (€62.2m) in Sweden, where the adjusted EBITDA loss was NOK 8 million. Norway, where XXL operates 38 stores, saw its gross margin percentage decline to 36.6 percent from 44.6 percent, and its adjusted EBITDA fall 39 percent to NOK 201 million (€19.3m). In Finland, revenues dipped by 6 percent to NOK 416 million (€40.0m) and gross margin shrunk to 15.6 percent from 40.8 percent, as the group took an additional inventory write-down of NOK 62 million (€6.0m).
Financial year 2022 and beyond
For the full FY22, XXL ASA reported a net loss of NOK 411 million (€39.5m) versus a profit of NOK 440 million on a 12.2 percent drop in revenues to NOK 8,426 million (€810.6m) from NOK 9,597 million. The annual EBIT loss was NOK 467 million (€44.9m), as the gross margin contracted to 32.3 percent from 41.1 percent in FY21.
The group has flexibility in its supplier agreements and is currently significantly reducing volumes for upcoming seasons. XXL is also moving to lower costs through less store staffing and reductions at its headquarters, aimed at saving at least NOK 120 million (€11.5m) this year. XXL is also shrinking its annual capital expenditure budget for FY23 to a range of NOK 150 to 200 million (€14.4m - €19.2m) but will face higher rents and energy prices this year.
