Norway-based sporting goods retailer XXL ASA said it delivered total operating revenue of NOK 7.2 billion in 2024 in a Nordic sporting goods market that persisted to be challenging. The company said that record-low inventory had a negative impact on product availability and, hence, on top-line sales growth.
XXL ASA reports in the Norwegian kroner (NOK)) currency.
Consequently, XXL said it is executing a rights issue of NOK 600 million, with adjustments to its current loan agreements, to support efforts in regaining top-line growth and continue to deliver on XXL’s “Reset & Rethink“ plan. XXL said it sees positive effects of the cost-out program and a strengthened gross margin.
The year-end report comes after UK-based Sports Direct parent Frasers Group Plc reportedly made a buy-out offer for all shares of the struggling Norwegian sporting goods retailer in early December. The move came after a reported shareholder revolt over management’s plans to fund a turnaround.
XXL said it continued to see sales recovery quarter-over-quarter but still posted a sales decline of 1.8 percent to NOK 2.0 billion in the fourth quarter of 2024 on a year-over-year basis.
The overall Nordic market reportedly remained challenging, especially in Finland, but XXL said it experienced continued sales recovery and growth in Sweden and improved sales development in Norway throughout the period.
The company said revenue recovery has been consistent quarter-over-quarter since Q1 2024. Sales development reportedly started with a negative trend in October but improved in Black Weeks and Christmas despite muted winter conditions. XXL said it experienced lower demand for winter products but was able to successfully compensate by activating more non-seasonal products and consequently generating growth in core categories within running, training and biking. However, important winter products like cross-country skis, baselayer clothing and skates declined.
E-Commerce
XXL experienced growth of 1.1 percent in the E-commerce sales channel in the quarter, now representing 25.9 percent of total operating revenue for the Group, up 150 basis points from 24.4 percent in Q4 2023.
Norway
The Norwegian operations delivered total operating revenue of NOK 1,048 million in the fourth quarter of 2024 compared to NOK 1,068 million in the fourth quarter last year, representing a 1.8 percent decline year-over-year (y/y).
XXL said it experienced growth in low price points as well as nonseasonal categories like running, training, and bikes, partly counteracting lower sales within higher price points and winter categories.
Gross margin in Norway improved 70 basis points y/y to 36.7 percent of sales in Q4, reportedly driven by healthier inventories and increased Private Label share and lower provision for bonus points in XXL’s loyalty program — “XXL Reward”.
Operating expenses came in at 23.1 percent of sales in the fourth quarter. The company reported that a 40 basis-point decline was due to cost reductions more than offsetting negative sales development.
Norway market EBITDA amounted to NOK 143 million in Q4, compared to NOK 134 million in Q4 2023.
Sweden
XXL reported total Swedish market operating revenue grew 3.4 percent to NOK 627 million in Sweden in Q4 2024, compared to NOK 604 million in Q4 2023.
The company said the Swedish market is improving, and XXL has growth in several categories but is still “somewhat hampered“ by lower demand and sales of winter-related products. The sales growth was reported to be driven further by strong execution of Black Weeks and Christmas.
Gross margin improved sharply to 34.5 percent of sales, compared to 28.7 percent of sales in q4 2023, driven by healthier inventory levels, good campaign execution and the lower provision for bonus points in the XXL Reward loyalty program.
Operating expenses, as a percentage of sales, ended at 25.9 percent (30.7 percent) due to cost reductions and growth, improving scale in the operations.
Sweden EBITDA swung to NOK 54 million in Q4, compared to negative NOK 12 million in Q4 2023, reportedly driven by growth, strengthened gross margin and cost efficiency.
Finland
Total Finnish market operating revenue in the quarter declined 11.3 percent to NOK 337 million in local currency terms, compared to NOK 377 million in the prior-year Q4 period. XXL said Finland is still a challenging market with weak consumer sentiment and low demand.
In March 2024, XXL closed its store in Redi, Helsinki, explaining around NOK 8 million of the sales shortfall in Q4 versus the 2023 fourth quarter.
Gross margin came in at 35.0 percent of net sales in Q4, a 70 basis-point improvement y/y, due mainly to the lower provision for bonus points in the XXL Reward program.
Operating expenses, as a percentage of sales, ended at 31.0 percent in Q4 2024, compared to 29.2 percent in Q4 2023 due to negative growth hurting scale in the operations.
Finland EBITDA amounted to NOK 14 million in Q4 2024 (NOK 19 million).
Image courtesy XXL ASA
