Persistent weak consumer demand, resulting in a need for aggressive pricing and promotions, continues to plague Norwegian retailer XXL ASA. The multi-country operator, slated to formally report Q2 results on July 14, is forecasting lower Ebitda, gross margin, and revenues for the period.
Second quarter Ebitda is forecast to come in between negative 25 and 75 million Norwegian kroner (-€2.16 to -€6.5m) from NOK 205 million in the year-ago period. Revenues are predicted to slip by 9.5 percent to NOK 1.9 billion (€164.1m) from NOK 2.1 billion due to weak consumer sentiment and lower demand for sporting goods. Period gross margin, meanwhile, is expected to decline by 590 to 790 basis points to a range of 30 to 32 percent from 37.9 percent in the year-ago quarter.
XXL, which expects to be in compliance with financial covenants on June 30, is in ongoing discussions with its lenders. The retailer has received a temporary deferral on owed tax payments in Sweden, boosting its cash position by nearly €30 million. The tax payments will be made in monthly installments in 2024.
In Q1, the retailer, which is exiting the Austrian market this year, reported a revenue gain of 6.4 percent despite heavy discounting. The group has plans in place to generate at least NOK 120 million (€10.2m) in cost savings this financial year. A new CEO, Freddy Sobin, started last month.
