EQT, the Scandinavian equity fund that acquired a controlling stake of 70 percent in XXL Sport & Villmark in 2010, is said to be considering cashing out of the Norwegian sporting goods retail chain, which has successfully expanded to Sweden under its ownership, with excellent results. It is now moving into Finland.

Executives of XXL and EQT declined to comment on the possible new change of ownership, which would be quite usual for such an equity fund after four years. The unconfirmed rumor comes at the same time as an announcement by Lion Capital, which took over the international A.S. Adventure chain of specialty outdoor stores four years ago, that it has mandated its house bank, Rothschild, to review strategic options including its possible sale or a public offering of shares (more information on this group in The Outdoor Industry Compass). 

XXL continues on a good growth path. After queuing for up to 1.7 kilometers, more than 10,000 people entered the first XXL store in Finland on the opening day earlier this month, and around 4,000 on the second day, reminding executives of the throngs that stormed into its first Swedish store three years ago. Significantly, the store, which has a net retail surface of 4,500 square meters and will employ between 50 and 80 people, is located in the Vantaa shopping center near Helsinki's airport, close to the first Budget Sport store opened by Kesko Oy, the Finnish licensee of Intersport International.

Its vicinity is sure to stir a lot of competition in the price-driven Finnish market, but XXL's chief executive, Fredrik Steenbuch, is confident that it will succeed because of its everyday low prices of branded products, coupled with high service levels. His confidence is supported by the fact that about 3,900 people applied to work for the company when it entered the Swedish market, and 2,800 people applied for work at XXL in Finland, believing in its future development. Using the same encirclement strategy that it has adopted for its expansion in Norway and Sweden, XXL plans to add two other stores in the Helsinki area this year, following up next year with two units in another large Finnish city, Tampere, and one in Turku.

XXL plans to continue to open about ten stores a year in the Nordic countries – it already has commitments for one more store in Norway and four in Sweden. It already opened four new stores in Sweden last year. In a move that could create a lot of competition for the numerous sports and outdoor stores in the area, one of XXL's new stores that will spring up this year will be located in the center of Stockholm, near the NK department store. Aside from its flagship in Oslo, most of XXL's stores are located in suburban areas.

XXL's management is reluctant for the moment to enter the Danish market, where Gresvig came in and retreated after a while many years ago and where Stadium is still struggling. One option that XXL is considering is to target Danish price-conscious consumers with its new online store, which is expected to generate around 5 percent of its sales in Norway this year and is now making a soft launch in Sweden.

The new store openings are expected to help the company to book sales increases of around 12 percent in Norway and 35 percent in Sweden this year. The chain ended up with 22 stores in Norway and 13 in Sweden last December. Its total sales increased to 4,010 million Norwegian kroner (€486.67m-$671.87m) in 2013, up by 29.1% from the previous year.

As previously reported, XXL reached the leading position in its domestic market, posting a sales increase of 20.7 percent last year to 2,876 million NOK (€349.13m-$481.91m). Its same-store sales rose by more than 6 percent in Norway, including a 7 percent increase at its original flagship store in downtown Oslo. Sales in Sweden grew by 53 percent to SEK 1,250 million (€137.2m-$190.1m), driven by the new store openings.

The company generated a nice operating profit of NOK 404 million (€49.06m-$67.72m) last year, up from NOK 330 million in the prior year, in spite of its low prices and its investments in a new distribution center in Sweden and the preparation of its Finnish market entry. It managed to make an operating profit of 9 million Swedish kronor (€1.0m-$1.4m) even in Sweden, after less than three years of operation in the country, and in spite of heavy start-up costs for its new stores and its new logistic facilities.

The Swedish distribution center, which was opened last autumn, will also service Finland. It is 20,000 square meters in size and can be expanded to 60,000 m². The Norwegian distribution center of the group has a surface of 24,000 m².

Meanwhile, XXL has filed an appeal against the verdict of a Norwegian court that rejected its complaint against Gresvig over a price matching campaign where it pretended that prices were lower at its G-Max and G-Sport stores than at XXL for the same products, including end-of-season discounts. As reported in the previous issue of SGI Europe, Gresvig informed customers that, if they found an identical product in a neighboring store being offered at a lower price, it would pay back the difference within 30 days and give the customers a 20 percent rebate on their next purchase from a G-Sport or G-Max store. The customer had to prove the lower price with an advertisement, a public newsletter, a product catalog or a similar announcement. He or she also had to present the original payment receipt for the item.

Officials of XXL point out that their company has a lower cost base than Gresvig and that it has a team monitoring prices at neighboring stores to ensure its competitiveness.