XXL ASA, which reiterated its objective to deliver 500-750 million Norwegian kroner (€43.9-65.8m) in Ebitda improvement over the next 12 to 15 months, delivered stronger gross margins but lower sales in Q1. It was the ninth consecutive quarter with negative growth for the Norwegian group that faced a difficult year-over-year comparison due to inventory clearance initiatives in the year-ago period.
Total Q1 sales declined by 21.5 percent to NOK 1,558 million (€133.1m) as sales of seasonal alpine and cross-country skis increased, but non-seasonal products and higher-priced items were described as challenging. Additionally, limited availability for key price points and products in high demand negatively impacted sales. E-commerce revenues fell by nearly 40 percent to account for 21.7 percent of group sales versus 27.8 percent in the year-ago period. Revenues declined in all three of the company’s primary markets. In Norway, Ebitda improved by 12 percent to NOK 106 million (€9.1m), and gross margin expanded 680 basis points to 39.7 percent despite a 20 percent sales drop to NOK 802 million (€68.5m). In Sweden, where 30 doors are open, Ebitda was NOK 25 million (€2.1m) against a loss of NOK 7 million on a 20 percent revenue decline to NOK 481 million (€41.1m). Ebitda tumbled 57 percent in Finland to NOK 6 million on a 28 percent sales dip to NOK 275 million (€23.5m) but margin improvement of 420 basis points to 37.1 percent.
Aggregate Ebitda improved to NOK 12 million (€1.0m) from a loss of NOK 45 million, but XXL reported a net loss of NOK 209 million (€17.9m) against a loss of €225 million. Gross margin improved by an impressive 740 basis points to 38.8 percent, with 190 basis points of the gain attributed to an obsolete inventory reversal of NOK 30 million (€2.6m). Year-over-year inventory declined by 13 percent.
XXL, which appointed Dawid Gosiniakas as COO earlier this month and raised NOK 500 million (€43m) in a March share issue, is in the middle of a NOK 300 million (€25.6m) cost-cutting plan that includes exiting Austria and Denmark and shuttering its mobile app. Going forward, the group will focus on lower-priced merchandise through a category reset and squeezing more profitability from its e-commerce business.
