XXL ASA reported on Wednesday, Feb. 25, a 26 percent sales increase in the fourth quarter to 1,520 million Norwegian kroner (€176.7m-$200.7m), with increases of 7.9 percent in Norway and 29.3 percent in Sweden. The Norwegian sports retailer, whose new name stands for XXL All Sports United, reached quarterly revenues of NOK 143 million (€16.6m-$18.9m) in Finland, a market that it entered last April.

The group's growth was driven by the addition of new stores, by a same-store sales increase of 1.7 percent across the Nordic countries, and by an 88 percent increase in e-commerce, which came to represent 7.2 percent of the total turnover during the quarter. XXL ended the year with 44 mega-stores including 23 in Norway, 17 in Sweden and the first four in Finland.

Sales and margins improved in the quarter in spite of mild weather conditions in the Nordic countries. The gross margin rose by 0.6 percentage points to 42.5 percent of sales, thanks in part to synergies in purchasing across the region and the establishment of a new distribution center in Sweden. The operating margin before amortization and one-off costs (Ebitda) went up to 13.5 percent from 12.4 percent in the same quarter a year earlier.

XXL - Consolidated Income Statement

('000 NOK, Year Ended December 31)

2014

2013

% Change

Norway Revenues

3,341

2,883

15.9

Sweden Revenues

1,582

1,125

40.6

Finland Revenues

292

0

-

REVENUES

5,215

4,010

30.0

Cost of Goods Sold

3,083

2,399

28.5

Personnel Expenses

799

606

31.8

Depreciation

80

59

35.6

Other Operating Expenses

732

544

34.6

Net Financial Expense

182

225

-19.1

Profit Before Tax

339

176

92.6

Income Tax

81

51

58.8

Net Profit

258

125

106.4

The entry into Finland contributed 45 percent of the total growth of XXL in the last three months of the year. The group achieved positive Ebitda of NOK 5 million (€0.58m-$0.66m) for the first time in the country during the quarter, and it is already planning to add another store there in the spring.

In Sweden, the opening of four new stores in the course of last year led XXL to book a 28.6 percent sales increase in the latest quarter, but on a same-store basis, sales were down by 0.1 percent because of cannibalization from a new store opened in Stockholm. The new opening fostered new synergies in marketing, leading to an improvement in the Ebitda margin to 7.4 percent in Sweden for the quarter. For the full year, XXL's sales in Sweden were up by 38.2 percent in the local currency and by 1.7 percent on a same-store basis.

XXL opened only one new store in Norway last year, but the chain improved its leadership in its home market with a 15.9 percent sales increase for the year, including growth of 6.5 percent on a comparable store basis. The gross margin improved by a full percentage point to 43.4 percent. Adding one-off costs, the Ebitda margin increased by 1.3 percentage points to 21.7 percent.

The net profit of the company, which went public last October, doubled in the fourth quarter as well as for the full year. Based on preliminary figures, the consolidated net profit increased to NOK 258 million (€30.0m-$34.1m) for the year on 30.1 percent higher operating revenues of NOK 5,215 million (€606.6m-$689.1m). The Ebitda margin increased by 0.7 percentage points to 12.2 percent including one-off costs.

XXL started the new year well with a 22.2 percent sales increase in January, a month in which it was affected the late arrival of winter in Norway and lack of snow in Sweden and Finland. The group plans to add between eight and nine new stores in 2015, but the management feels that its operating results will not grow at the same pace as in 2014.