XXL ASA experienced decelerating sales and waning consumer sentiment for sporting goods in its Scandinavian markets from mid-May, which continued through June, a typically important month for the category. With CEO Pål Wibe slated to step down from the executive position today over disagreements regarding the company’s strategic direction, CFO Stein Eriksen takes XXL ASA’s helm as interim CEO.
Second quarter net income declined by 81 percent to 30 million Norwegian kroner (€2.9m) from NOK 159 million, as Ebitda slid by 51 percent to NOK 191 million (€18.6m) from NOK 392 million. The gross margin fell to 37.6 percent from 41.8 percent. Total period revenues fell 9.4 percent to NOK 2,194 million (€213.8m) from NOK 2,420 million as three of four countries in the group reported lower local currency sales growth. Norway, which represents 49 percent of total revenues, had an 11.5 percent drop in sales. Sweden (-11.4%) and Finland (-5.9%) were down lower percentages. In Austria, where a strategic review of operations will continue during the remainder of 2022, period revenues were 17.1 percent higher in local currency. XXL has already decided to close one Austrian store in Q1/23 and exit its central warehouse near Vienna next year. E-commerce revenues fell 26.5 percent in the period, compared to a year ago when the company free shipping in areas where stores were closed, to account for 20.1 percent of total operating revenue or an implied NOK 441 million (€43.0m).
XXL is implementing several strategic initiatives and projects aimed at improving profitability and operational efficiency. The group says it is taking steps to adjust costs and purchasing volumes to sales by significantly reducing orders for upcoming seasons. Other key initiatives include the expansion of e-commerce, an improved category strategy and better marketing efficiency. The group’s current annual capital expenditure budget for 2022 is in the NOK 200 to 250 million (€19.5m to €24.4m) range, lowered NOK 50 million from a previous estimate. On the store front, yearly expansion plans are currently pegged at 2 to 3. Additionally, XXL has plans to downsize several stores, mostly in Sweden, where it operates 28 doors, from its current fleet of 91 locations.
The first half net loss was NOK -121 million (-€11.8m) compared to a profit of NOK 194 million as the Ebitda margin slipped to 6.4 percent from 13.0 percent in H1/21, Six-month total operating revenues declined 8.9 percent to NOK 4,178 million (€407.0m) from NOK 4,587 million.
| XXL - Revenue by region | |||
|---|---|---|---|
| Half ended June 30 (NOK million) | |||
| 2022 | 2021 | % Change | |
| Norway | |||
| Operating revenue | 2,054 | 2,243 | -8.4% |
| Gross profit | 821 | 967 | -15.1% |
| EBITDA | 406 | 547 | -25.8% |
| Operating income | 237 | 417 | -43.2% |
| Sweden | |||
| Operating revenue | 1,169 | 1,351 | -13.5% |
| Gross profit | 411 | 532 | -22.7% |
| EBITDA | 70 | 177 | -60.5% |
| Operating income | -45 | 73 | – |
| Finland | |||
| Operating revenue | 732 | 825 | -11.3% |
| Gross profit | 271 | 337 | -19.6% |
| EBITDA | 70 | 142 | -50.7% |
| Operating income | 10 | 83 | -88.0% |
| Austria | |||
| Operating revenue | 223 | 168 | 32.7% |
| Gross profit | 77 | 53 | 45.3% |
| EBITDA | -10 | -29 | 65.5% |
| Operating income | -22 | -56 | 60.7% |
| HQ & logistics | |||
| Operating revenue | – | – | – |
| Gross profit | – | – | – |
| EBITDA | -269 | -239 | -12.6% |
| Operating income | -326 | -298 | -9.4% |
| Total | |||
| Operating revenue | 4,178 | 4,587 | -8.9% |
| Gross profit | 1,580 | 1,889 | -16.4% |
| EBITDA | 267 | 598 | 55.4% |
| Operating income | -146 | 218 | 167.0% |
| Source: XXL | |||
| XXL - Revenue by region | |||
|---|---|---|---|
| Quarter ended June 30 (NOK million) | |||
| 2022 | 2021 | % Change | |
| Norway | |||
| Operating revenue | 1,074 | 1,217 | -11.8% |
| Gross profit | 429 | 535 | -19.8% |
| EBITDA | 240 | 338 | -29.0% |
| Operating income | 156 | 272 | -42.6% |
| Sweden | |||
| Operating revenue | 629 | 705 | -10.8% |
| Gross profit | 221 | 280 | -21.1% |
| EBITDA | 44 | 105 | -58.1% |
| Operating income | -18 | 54 | – |
| Finland | |||
| Operating revenue | 388 | 416 | -6.7% |
| Gross profit | 141 | 170 | -17.1% |
| EBITDA | 41 | 70 | -41.4% |
| Operating income | 11 | 41 | -73.2% |
| Austria | |||
| Operating revenue | 104 | 83 | 25.3% |
| Gross profit | 35 | 27 | 29.6% |
| EBITDA | -8 | -12 | 33.3% |
| Operating income | -14 | -26 | 46.2% |
| HQ & logistics | |||
| Operating revenue | – | – | – |
| Gross profit | – | – | – |
| EBITDA | -126 | -109 | -15.6% |
| Operating income | -154 | -139 | -10.8% |
| Total | |||
| Operating revenue | 2,194 | 2,420 | -9.3% |
| Gross profit | 826 | 1,013 | -18.5% |
| EBITDA | 191 | 392 | 51.3% |
| Operating income | -19 | 202 | 109.4% |
| Source: XXL | |||
| XXL - Consolidated income | |||
|---|---|---|---|
| 2022 | 2021 | % Change | |
| Half ended June 30 (NOK million) | |||
| Total operating revenue | 4,178 | 4,587 | -8.9% |
| Cost of goods sold | 2,598 | 2,698 | -3.7% |
| Personnel expenses | 871 | 870 | 0.1% |
| Other operating expenses | 443 | 420 | 5.5% |
| Depreciation | 413 | 380 | 8.7% |
| Impairment losses | – | – | – |
| Total operating expenses | 4,324 | 4,368 | -1.0% |
| Operating income | -146 | 218 | – |
| Net financial income (+) / expense (-) | -7 | -82 | 91.5% |
| Pre-tax | -152 | 137 | – |
| Tax | -31 | 16 | – |
| Net | -121 | 121 | – |
| Diluted earnings per share | -0.48 | 0.48 | – |
| Quarter ended June 30 (NOK million) | |||
| Total operating revenue | 2,194 | 2,420 | -9.3% |
| Cost of goods sold | 1,368 | 1,408 | -2.8% |
| Personnel expenses | 406 | 402 | 1.0% |
| Other operating expenses | 229 | 219 | 4.6% |
| Depreciation | 210 | 190 | 10.5% |
| Impairment losses | – | – | – |
| Total operating expenses | 2,213 | 2,218 | -0.2% |
| Operating income | -19 | 202 | – |
| Net financial income (+) / expense (-) | 41 | -28 | – |
| Pre-tax | 22 | 174 | -87.4% |
| Tax | -8 | 15 | – |
| Net | 30 | 159 | -81.1% |
| Diluted earnings per share | 0.12 | 0.63 | -81.0% |
| Source: XXL | |||
