XXL ASA said its revenues declined in January by around 20 percent to 720 million Norwegian kroner (€71.5m-$81.7m), after a “record-breaking” January 2021, as the Nordic sports retailer’s monthly sales performance was conditioned by less favorable winter sport conditions in most of the Nordic region as well as an earlier start in moving seasonal merchandise between December and January.

The dip in sales came after XXL resumed growth in the fourth quarter of 2021. Led by gains in the Swedish market, the recovery came amid good winter conditions and improvements in the supply chain after delays in deliveries of bicycles had hit the company’s results in previous quarters. Total revenues grew in the latest quarter by 6.3 percent to 2,734 million Norwegian kroner (€271.6m-$310.4m), with an increase on a comparable basis of 9.4 percent.

The quarterly net income fell sharply to NOK 3 million (€297,996-$340,557) from NOK 13 million the year earlier, following write-downs of NOK 123 million (€12.2m-$14.0m) on XXL’s Austrian operations and NOK 13 million (€1.3m-$1.5m) on two Swedish stores that are expected to close shortly. Excluding the write-downs, the company’s net profit would have risen to NOK 139 million (€13.8m-$15.8m).

XXL - Consolidated Income
Q4 (NOK millions)
  2021 2020 % Change
Norway 1,359 1,297 4.8
Sweden 801 704 13.8
Finland 444 442 0.5
Denmark 5 6 -16.7
Austria 125 124 0.8
NET REVENUES 2,734 2,572 6.3
Cost of goods 1,583 1,532 3.3
Personnel expense 508 470 8.1
Other operating expense 240 243 -1.2
Depreciation 226 194 16.5
Net financial expense 37 76 -51.3
Pre-tax 5 57 -91.2
Tax 2 44 -95.5
NET 3 13 -76.9
NOK/share (diluted) 0.01 0.05 -80.0
Source: XXL

Revenues from e-commerce went up by 8.6 percent to NOK 696 million (€69.1m-$79.0m), representing 25.5 percent of total revenues. E-commerce is “where the growth is to come – and big – in the years to come,” said Pål Wibe, CEO, in a conference call on the results. XXL claims to be the No. 1 site for sports and outdoor products in the Nordics, citing 150 million visits to its websites in the course of 2021 and noting that its online turnover has been growing at an average annual rate of 34 percent since 2014.

At the same time, XXL has been striving to improve the in-store experience, for example by completing the launch of Fit Stations and the first stage of a program of installing electronic shelf labels, combined with the rollout of RFID chips. The company has signed leases for one more store in Norway and two in Sweden.

Wibe also predicted a better inflow of certain products going forward. “This year we will have enough bikes. There are still some disruptions in supply chains, but the situation is under control,” he said. Shoes were also among the categories that have been affected by lingering supply chain strains, but “it is nothing near bikes,” he added.

In the fourth quarter, XXL’s gross margin widened by 1.7 percentage points to 42.1 percent, with the management crediting good price management as well as “disciplined and optimized” Black Week campaigns. The Ebitda margin expanded to 14.7 percent from 12.7 percent, with all segments posting a positive development.

XXL - Revenues & EBITDA margin by country
Year ended Dec. 31 (NOK millions)
  2021 2020 % Change
Revenues 4,873 4,987 -2.3
EBITDA margin 23.7% 21.3% 2.4 pp
Revenues 2,961 2,974 -0.4
EBITDA margin 14.2% 10.6% 3.6 pp
Revenues 1,744 1,950 -10.6
EBITDA margin 16.9% 13.8% 3.1 pp
Revenues 20 27 -25.9
EBITDA margin 5.9% -1.3% 7.2 pp
Revenues 409 484 -15.5
EBITDA margin -7.7% -1.8% -5.9 pp
Revenues 10,006 10,423 -4.0
EBITDA margin 13.4% 10.7% 2.7 pp
Source: XXL

Sweden was the standout market for XXL in the fourth quarter, with sales jumping by 13.7 percent to NOK 801 million (€79.5m-$90.9m) and rising 18.9 percent on a comparable basis as the winter season started strongly with snow and cold weather early in December. The local Ebitda margin jumped to 15.0 percent from 11.1 percent in the year-earlier period.

Wibe said XXL had begun to take “massive market share” in Sweden towards the end of the year, benefiting from efforts carried out in the areas of category development and seasonal assortments in the country, combined with cost reduction efforts including the downsizing of stores that are considered to be too large for the market and closing unprofitable ones. In the quarter, the market for sporting goods is estimated to have risen in Sweden by 5.9 percent, while the corresponding growth for XXL in the local currency amounted to 20.8 percent.

In its domestic Norwegian market, XXL’s quarterly revenues rose by 4.8 percent to NOK 1,359 million (€134.9m-$154.3m), with a growth of 5.5 percent on a comparable basis. The management highlighted strong Christmas sales, improved campaign execution and growth on a par with the overall Norwegian market after an underperformance earlier in the year. The Ebitda margin in Norway inched down to 24.2 percent from 24.6 percent the year earlier.

For its operations in Finland, XXL reported revenues of NOK 444 million (€44.1m-$50.4m), up by a reported 0.6 percent and by 8.1 percent on a comparable basis, with the Ebitda margin improving to 17.1 percent from 15.1 percent.

In Austria, XXL’s revenues edged up to NOK 125 million (€12.4m-$14.2m) from NOK 124 million in the fourth quarter of 2020, but the company reached comparable sales growth of 3.4 percent, despite the closure of all eight stores in the country from Nov. 22 to Dec. 13 due to new Covid-19 restrictions. The local Ebitda margin improved to a positive 3.5 percent from a negative 1.4 percent.

In Denmark, where XXL continues to operate solely through e-commerce, revenues fell to NOK 5 million (€496,493-$567,680) from NOK 6 million and the Ebitda margin narrowed to 1.4 percent from 6.5 percent.

XXL’s figures for the full year showed total revenues declining by 4.0 percent to NOK 10,006 million (€993.6m-$1,135.9m), with a drop of 2.6 percent on a comparable basis. The company indicated that sales would have been NOK 700 million higher without store closures and late bike deliveries, resulting in a small sales increase for the year excluding these negative factors. The contribution from e-commerce increased to about NOK 2.4 billion (€238.3m-$272.4m) from NOK 2.1 billion in 2020.

XXL - Consolidated Income
Year ended Dec. 31 (NOK millions)
  2021 2020 % Change
Norway 4,873 4,987 -2.3
Sweden 2,961 2,974 -0.4
Finland 1,744 1,950 -10.6
Denmark 20 27 -25.9
Austria 409 484 -15.5
NET REVENUES 10,006 10,423 -4.0
Cost of goods 5,923 6,519 -9.1
Personnel expense 1,886 1,863 1.2
Other operating expense 860 924 -6.9
Depreciation 810 753 7.6
Net financial expense 146 172 -15.1
Pre-tax 246 191 28.8
Tax 52 66 -21.2
NET 194 126 54.0
NOK/share (diluted) 0.77 0.57 35.1
Source: XXL

For the full year, XXL booked a net profit of NOK 330 million (€32.8m-$37.5m), up strongly from a net profit of NOK 126 million in 2020. The retailer’s gross margin improved by 3.3 percentage points to 40.8 percent, thanks in part to healthier inventories. The Ebitda margin increased by 2.7 percentage points to 13.4 percent, with XXL reporting its best-ever Ebitda for its operations in Norway and Finland and the second-best ever in Sweden. The company turned around slightly in Austria and reported continued flat results in Denmark for the year.

Compared to the year earlier, XXL lost market share last year in Norway, Sweden and Finland, reflecting adverse impacts from supply chain problems, particularly for bikes, and an extraordinary clearance campaign that had boosted sales in the previous year. XXL’s revenues in Norway for the 12-month period were off by 2.3 percent compared with an estimated rise of 5.2 percent for the market as a whole. In Sweden, XXL’s sales grew by 1.7 percent versus estimated market growth of 5.9 percent, while in Finland, XXL saw a 6.0 percent sales decrease as compared to a 10.8 percent rise for the overall market.

On the other hand, XXL has outperformed the market in Norway and Sweden over the last two years. The market expanded by 15.8 percent in Norway between 2019 and 2021, yet XXL recorded a 17.5 percent gain over the same period. In Sweden, XXL sales have risen 12.1 percent since 2019, well above the 8.5 percent estimated gain for the market as a whole. On the other hand, in Finland, where the management says its performance is still not satisfactory, XXL’s sales decreased by 4.5 percent over the two-year span, although the market as a whole grew by 9.1 percent.