XXL ASA saw its revenues decline by 15.5 percent in the second quarter to 2,420 million Norwegian kroner €232.6m -$274.8m), as temporary store closures due to the Covid-19 pandemic and delays in the delivery of bicycles hit its top line. On a like-for-like basis, sales were down by 13.4 percent.
Despite the headwinds, Ebitda held up well for the leading Nordic sporting goods retailer in the quarter, coming in at NOK 392 million (€37.7m-$44.5m) compared with NOK 404 million the year earlier and representing its second-best Ebitda performance for the second quarter ever. The Ebitda margin widened to 16.2 percent from 14.1 percent a year earlier and the Ebit margin rose to 8.4 percent from 7.8 percent.
The gross margin jumped to 41.8 percent from 37.0 percent in the second quarter of 2020, with the management crediting improved campaign execution as compared to the year earlier, which had been marked by several clearance campaigns, as well as healthy inventories and positive category mix effects.
In the second quarter, XXL also carried out a refinancing of its debt, securing NOK 1,80 million (€204.4m-$173.0m) in total bank loan facilities at improved terms, increasing financial flexibility and paving the way for a resumption in dividends. The company’s board will propose that a dividend of NOK 500 million (€48.1m-$56.8m) be paid out in the second half of the year, equally split between the third and fourth quarters.
Second-quarter results were negatively affected to the tune of about NOK 200 million (€19.2m-$22.7m) by temporary store closures while a further NOK 250 million (€24.0m-$28.4m) in lower sales was attributed to late bike deliveries, as volumes in some selected bike sub-categories declined by over 50 percent.
Bicycles accounted for 20 percent of the retailer’s total turnover in the quarter, down from 26 percent a year earlier. XXL said the supply situation for bikes is improving on a weekly basis but still remains challenging.
In its domestic Norwegian market, XXL’s sales fell by 13.0 percent to NOK 1,211 million (€116.4m-$137.5m), as up to 22 out of its 37 stores in the country were closed in April and May and six stores were closed during the whole quarter. The Ebitda margin in the country increased to 27.9 percent from 25.7 percent in the second quarter of 2020.
| XXL Consolidated Income Statement | |||
|---|---|---|---|
| (Million NOK, Quarter Ended June 30) | |||
| 2021 | 2020 | % Change | |
| Norway | 1,211 | 1,392 | -13.0 |
| Sweden | 705 | 798 | -11.7 |
| Finland | 416 | 546 | -23.8 |
| Denmark | 6 | 10 | -40.0 |
| Austria | 83 | 119 | -30.3 |
| NET REVENUES | 2,420 | 2,865 | -15.5 |
| Cost of Goods | 1,408 | 1,805 | -22.0 |
| Personnel Expense | 402 | 427 | -5.9 |
| Other Operating Expense | 219 | 229 | -4.4 |
| Depreciation | 190 | 182 | 4.4 |
| Net Financial Expense | 28 | 64 | -56.3 |
| Pre-tax | 174 | 158 | 10.1 |
| Tax | 15 | 25 | -40.0 |
| NET | 159 | 133 | 19.5 |
| NOK/Share (Diluted) | 0.63 | 0.66 | -4.5 |
| Source: XXL | |||
XXL has lost new market share in Norway, as its sales have grown by 12.3 percent over a rolling 12-month basis in the country through the end of May, compared with an estimated market growth of 15.8 percent. The same is also true in Sweden, where XXL saw growth of 2.2 percent as compared to an increase in the market of 7.2 percent, and in Finland, where XXL suffered a decline of 6.7 percent compared to growth of 11.5 percent for the market as a whole.
In Sweden, where XXL operates 29 physical stores, sales declined by 11.6 percent to NOK 705 million (€67.8m-$80.1m) in the quarter, but the Ebitda margin widened to 14.9 percent from 11.9 percent.
In Finland, where the company runs 17 stores, sales fell by 23.9 percent to NOK 416 million (€40.0m-$47.2m), while the Ebitda margin edged up to 16.8 percent from 16.7 percent.
Five out of seven XXL stores in Austria were closed throughout April, all in the greater Vienna area. The lockdown and a shortage of bicycles led sales to decline by 30.6 percent to NOK 83 million (€8.0m-$9.4m) in Austria, leading to a negative Ebitda margin of 14.4 percent versus a negative 2.6 percent the year earlier.
XXL continued to trade exclusively online in Denmark, but sales nonetheless tumbled by 41.9 percent there to NOK 6 million (€576,829-$681,296). The Ebitda margin swung to a positive 12.7 percent from a negative 0.2 percent the year earlier, however. Th”e company plans to continue to run Denmark with limited resources, using it as a “tactical” sales channel.
XXL said it was unsatisfied in its sales and market share performance in the quarter. Looking ahead, it aims to regain market share in all its markets and to stabilize its gross margin over 39 percent.
It also intends to continue with investments in operational efficiency, selective new store openings and its existing store network, along with its e-commerce platform, infrastructure and information technology (IT). Total capital expenditures are expected to come in at NOK 250 million (€24.0-$28.4m) to NOK 300 million (€28.8m-$34.1m) this year.
For 2021, XXL has signed two new lease agreements for store openings, one in Austria and a one in Sweden. Going forward, the company anticipates the opening of three to five new stores per year, but as previously reported, it will also downsize several existing stores as it goes more omnichannel.
