On Friday morning, XXL provided numbers for the second quarter, which was another period marked by weak demand, heavy sales campaigns, and low profitability.
The company made a profit before tax minus NOK 310 million. Analysts had predicted in advance a loss of NOK 220 million.
Turnover ended at NOK 1.9 billion, as announced by XXL itself a month earlier. Analysts had a median estimate of 2 billion kroner. In Norway, which accounts for half of the group’s sales, revenue fell by ten percent.
In the first quarter, XXL lost NOK 284 million. In doing so, the company has lost nearly NOK 600 million since the beginning of the year.
Adds a new profit plan
In the report, XXL explains that there is a demanding market for sporting equipment, and that the company has prioritized liquidity management. High campaign activity resulted in a low crisis gross margin of 27.6 percent. XXL previously had a target of being closer to 40 percent.
According to the report, XXL has implemented several short-term measures to strengthen the company financially, operationally and commercially. At the same time, the company is introducing a long-term strategic plan called “Reset and Rethink”, which will ensure profitability.
The long-term plan handles purchase pricing, product availability, pricing, store operations, and online shopping. Details will be provided at a later time.
It’s been a hectic two months since I started XXL in May. We’re well on the way to putting together a strong and experienced Nordic management team, and we’ve agreed on some important priorities for the next few quarters, says XXL CEO Freddy Sobin.
Unfortunately, the market remains challenging and highly competitive, as we also talked about in June. We think it will continue to be a challenge in the coming quarters. However, the sports and outdoors market continues to be supported by strong megatrends, which we will capitalize on over the long term, says Sobin.
Losses and change of leaders
2022 ended with a total pre-tax loss of NOK 531 million and will be a year that XXL shareholders would prefer to forget. The company lost market share and became a loser in the stock market. The company now has a market capitalization of 700 million shares.
It all came to a head just before Christmas, when the sporting equipment chain announced a crisis-driven capital raise, a drop in profits, new agreements with banks and an exit from Austria.
The only major source of loss for XXL was Austria, with estimates the sports equipment chain causing a total loss for the sports equipment chain of NOK 700 million since its entry into 2017. The plan is for the business to close by the end of 2023.
XXL also made significant changes to the group’s management. Last summer, Pål Wibe stepped down as CEO after disagreements with the board over how to move forward. He was eventually replaced by Freddy Sobin, who made his first report as President of XXL on Friday.(conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We’d like you to share our statuses using links that lead directly to our pages. Reproduction or other use of all or part of the Content may be made only with written permission or as permitted by law. For more terms see here.
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