XXL (XXL) Q3 2024 earnings summary

Executive summary

• The Nordic sporting goods market has experienced 10 consecutive quarters of negative growth, with recovery now expected in 2025, led by early improvements in Sweden.

• Sales remain soft due to low inventory availability, but the "Reset & Rethink" turnaround plan is progressing, focusing on cost reductions, operational efficiencies, and omnichannel capabilities.

• The company is consolidating to three core Nordic markets, optimizing inventory, and leveraging a growing loyalty program.

• Strict liquidity and inventory control reduced inventory value by 13%, but this constrained product availability and topline growth.

• A holistic financing solution, including a NOK 600 million rights issue, loan facility extension, and bridge loan, is being pursued to support working capital and turnaround efforts.

Financial highlights

• Q3 2024 operating revenue declined 7.3% year-over-year to NOK 1,837 million.

• EBITDA dropped to NOK 5 million (0.3% margin) from NOK 35 million (1.8%) in Q3 2023, mainly due to lower sales and adverse currency effects.

• Gross margin improved to 33.9% from 33.4% year-over-year, up 5.2 percentage points year-to-date.

• Inventory reduced by 13% year-over-year to NOK 1,757 million.

• Net income was negative NOK 262 million, compared to negative NOK 140 million in Q3 2023.

Outlook and guidance

• Market recovery is now anticipated in 2025, with continued focus on cost savings, operational improvements, and modest CAPEX of NOK 100 million for 2024.

• Early signs of improved revenues and EBITDA in Sweden, supported by interest rate cuts.

• No new store openings signed for 2024; mid- to long-term plan is 2-3 new stores per year, with selective closures.