XXL, the Scandinavian sporting goods retail group, is beginning to experience some recovery in the Swedish market due to recent interest rate cuts there, but once again reported a quarterly loss on lower sales. XXL ASA, meanwhile, is in the process of securing new financing in the amount of 600 million Norwegian kroner (€50.1m) for both short-term liquidity needs and working capital investments. The company has not progressed in its talks with Frasers Group about a possible strategic partnership.
In Q3 ended Sep. 30, group Ebit was NOK -191 million (-€16.0m) versus NOK -155 million in the year-ago period. Net income slipped 87 percent year-over-year to NOK -262 million (-€21.9m). Period revenues were down by 7.3 percent to NOK 1,837 million (€153.5m) as limited product availability hampered sales. Soft goods and products with lower price points drove the topline while hardware products such as outdoor and hunting equipment gross margin improved by 50 basis points year-over-year to 33.9 percent but were impacted negatively by a higher percentage of sales from advertised products. E-commerce represented 33.9 percent of revenues in the period.
XXL continued to prioritize liquidity and inventory control in Q3, resulting in a year-over-year inventory reduction of NOK 258 million (€21.6m). The company continues to work on several short-term turnaround strategies and a longer-term initiative called, Reset & Rethink. Key elements of that plan include resetting category strategies, ecommerce profitability, and securing products. The two-pronged plan, projected to deliver an Ebitda uplift of NOK 500-700 million by Q2/2026, has seen its financial objectives delayed approximately one year due to challenging market conditions and limited product availability.
A closer look at regional results in Q3
In Sweden, the region delivered a 17 percent year-over-year gain in Ebitda to NOK 35 million (€2.9m) on flat revenues of NOK 591 million (€49.4m) and gross margin improvement of 70 basis points to 32.5 percent on healthier inventory levels. The gross margin was negatively impacted by advertising for higher-price products such as bicycles. The country’s retail sporting goods market is described as showing “early signs of improvement’ due to sales growth in consumables and soft goods.
In Finland, Q3 Ebitda tumbled by 62 percent to NOK 11 million on an 11 percent decline in revenues to NOK 337 million (€28.2m). Gross margin slipped by 50 basis points to 33.7 percent as the region ended the quarter with 16 stores. XXL ASA described the market’s conditions as challenging “with weak consumer sentiment and low demand” that was being magnified by lower product availability.
In Norway, year-over-year Ebitda declined by 17 percent to NOK 88 million (€7.4m) on a 10 percent revenue decline to NOK 909 million (€76.0m). But gross margin improved by 90 basis points to 34.9 percent. Higher sales of lower-price-point apparel and shoes were offset by lower demand for higher-priced items such as hunting and outdoor equipment.
XXL ended the period with 85 retail stores, including 39 in Norway, 30 in Sweden, and 16 in Finland.
