XXL ASA managed to generate positive operating earnings (Ebitda) of 207 million Norwegian kroner (€20.6m-$24.9m) on relatively flat revenues of NOK 2,166 million (€215,916-$260,212) in the first quarter of 2020, compared with an Ebitda loss of NOS 36 million (€3.6m-$4.3m) in the same period a year ago.

The gross margin went up by 10.3 percentage points to 40.4 percent and the Ebit margin switched from a negative ratio of 10.0 percent to a positive ratio of 0.7 percent. The company ended up with a net loss of NOK 39 million (€3.9m-$4.7m) in the latest quarter, down sharply from NOK 186 million in the corresponding period of 2020, but the management expressed confidence in better figures for the balance of this year.

XXL Revenues & EBITDA margins per country
(Million NOK, Quarter Ended March 31)
  2021 2020 % Change
Revenues 1,021 951 7.4
EBITDA margin 20.5% 9.0% 11.5 pp
Revenues 646 646 0.0
EBITDA margin 11.2% -0.2% 11.4 pp
Revenues 409 456 -10.3
EBITDA margin 17.6% 3.4% 14.2 pp
Revenues 6 5 20.0
EBITDA margin 7.2% -20.0% 27.2 pp
Revenues 85 104 -18.3
EBITDA margin -19.6 % -8.6% -11.0
Revenues 2,166 2,162 0.2
EBITDA margin 9.5% -1.7% 11.2 pp
Source: XXL

For the leading sporting goods retailer in the Nordic countries, the comparable figures are distorted by the fact that it carried out the biggest clearance in its history during the first quarter of 2020, which boosted sales while depressing margins. Furthermore, many of its stores in Norway and Austria were closed during the latest period due to Covid-related restrictions.

Furthermore, many of its stores in Norway and Austria were closed during the latest period due to Covid-related restrictions. On the other hand, XXL benefitted from better weather conditions throughout the Nordic markets.

XXL’s sales of NOK 1,021 million (€101,734-$122,577) in the domestic Norwegian market were 7.3 percent higher than in the year-ago period. The closure of an average nine out of its 37 Norwegian stores in the course of the quarter was compensated by higher online sales, which accounted for more than half of the regular turnover in some weeks. The Ebitda margin in Norway improved to 20.5 percent from 9.0 percent in the first quarter of 2020.

XXL Consolidated Income Statement
(Million NOK, Quarter Ended March. 31)
  2021 2020 % Change
Norway 1,021 951 7.4
Sweden 646 646 0.0
Finland 409 456 -10.3
Denmark 6 5 20.0
Austria 85 104 -18.3
NET REVENUES 2,166 2,162 0.2
Cost of Goods 1,290 1,511 -14.6
Personnel Expense 468 460 1.7
Other Operating Expense 201 227 -11.5
Depreciation 190 179 6.1
Net Financial Expense 54 6 800.0
Pre-tax -38 -221 82.8
Tax -1 35 -
NET -39 -186 79.0
NOK/Share (Diluted) -0.15 -1.11 86.5
Source: XXL

XXL continues to gain market shares in the Nordics

XXL has been capturing new market shares in Norway, as its sales have grown by 21.1 percent over a rolling 12-month basis in the country through the end of March, compared with an estimated market growth of 14.2 percent. The same goes for XXL’s operations in Sweden, which grew by 5.7 percent against an increase in the market of 4.7 percent during the same 12-month period. In Finland, however, where the market grew by an estimated 6.9 percent, XXL suffered a decline of 2.8 percent, as more consumers are choosing hypermarkets as a “one-stop destination.”

In Sweden, where XXL operates 29 physical stores, sales declined by 0.1 percent to NOK 646 million (€46.4m-$77.8m), but they generated a positive Ebitda margin of 11.2 percent against a negative margin of 0.2 percent a year ago.

In Finland, where the company remained with 17 stores, sales declined by 10.3 percent to NOK 409 million (€40.8m-49.3m), but the Ebitda margin rose to 17.6 percent from 3.4 percent.

The number of XXL stores in Austria increased from five to seven last year, but the retail lockdown in the country led to a sales decline of 18.0 percent to the equivalent of NOK 85 million (€8.5m-$10.2m), leading to a negative Ebitda margin of 19.6 percent against a negative margin of 8.6 percent in the year-ago period. XXL has installed a new central warehouse in Austria. On a same-store basis, XXL’s sales fell by 26.7 percent in the country, but they were partly compensated by higher online sales.

XXL continued to trade exclusively online in Denmark, and this allowed the company to book a 14.4 percent sales increase to still minor level of NOK 6 million (€598,330-$722,898). It was sufficient for the company to generate a positive Ebitda margin of 7.2 percent in the country, compared with a negative margin of 20.0 percent a year ago.

XXL says it used the last months to rebuild 61 out of its 90 stores across Europe to turn them into “a more inspiring destination,” with better store layouts, the use of RFID chips and electronic price labels. It has also been implementing more analytical and fact-based planning and pricing processes.

More staycations are expected

Another positive factor, according to the company, is that many sports enthusiasts are planning for a “staycation summer with a lot of sports and outdoor activities in the menu.” Therefore, XXL has purchased higher volumes of products such as kayaks, camping tents and home gyms to satisfy the expected demand better than last year, when many Scandinavian retailers saw their inventories of these products depleted.

The company has set aside a capital investment budget of between NOK 250 million (€24.9m-$30.1m) and NOK 300 million (€29.9m-$36.1m) for this year. As part of a plan to roll out between three and five new stores per year, XXL has signed two new leases for an opening in Sweden and another one in Austria. At the same time, it will be downsizing several existing stores as it concentrates on few product offerings, while boosting its e-commerce.

XXL will carry out a share buy-back program worth around NOK 70 million (€7.0m-$8.4m) between April 26 and June 1.