Quarterly Report • Jul 14, 2023
Quarterly Report
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1) Please refer to definitions at the end of the report for descriptions of alternative performance measures that are used in highlights and key figures
2) All figures in the report are referring to XXL's Continuing Operations, unless otherwise stated. Please refer to Disclosure Note 10 for figures related to Austria Discontinued Operations
| (Amounts in NOK million) | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | FY 2022 |
|---|---|---|---|---|---|
| GROUP Continuing Operations (Reported Figures) | |||||
| Operating revenue | 1,946 | 2,090 | 3,930 | 3,956 | 8,426 |
| Growth (%) | -6.9 % | -10.6 % | -0.7 % | -10.5 % | -12.2 % |
| Gross profit | 538 | 791 | 1,159 | 1,503 | 2,721 |
| Gross margin (%) | 27.6 % | 37.8 % | 29.5 % | 38.0 % | 32.3 % |
| OPEX % | 30.6 % | 28.1 % | 32.1 % | 30.8 % | 29.5 % |
| EBITDA | -57 | 203 | -102 | 286 | 237 |
| EBITDA margin (%) | -2.9 % | 9.7 % | -2.6 % | 7.2 % | 2.8 % |
| EBIT | -249 | -0 | -488 | -114 | -467 |
| EBIT margin (%) | -12.8 % | 0.0 % | -12.4 % | -2.9 % | -5.5 % |
| Net Income | -246 | 4 5 | -472 | -85 | -411 |
| **Basic Earnings per share (NOK) | -0.63 | 0.18 | -1.37 | -0.34 | -1.63 |
| **Average number of shares (1 000 shares) | 387,932 | 252,437 | 344,979 | 252,437 | 252,437 |
| Cash provided by operating activities | 193 | 111 | 168 | 6 4 | 682 |
| Like for like revenue growth | -12.9 % | -10.2 % | -5.4 % | -9.0 % | -12.1 % |
| Number of stores at period end | 8 5 | 8 3 | 8 5 | 8 3 | 8 4 |
| New stores in the period | - | 1 | 1 | 1 | 2 |
| Closed stores in the period | - | 1 | - | 2 | 2 |
**Earnings per share: See Note 5.
| Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | FY 2022 |
|---|---|---|---|---|
| 963 | 1 074 | 1 967 | 2 054 | 4 394 |
| -10,2 % | ||||
| 282 | 429 | 612 | 821 | 1 535 |
| 34,9 % | ||||
| 19,9 % | ||||
| 9 0 | 240 | 185 | 406 | 661 |
| 9,3 % | 22,3 % | 9,4 % | 19,8 % | 15,1 % |
| 3 8 | 3 7 | 3 8 | 3 7 | 3 8 |
| - | - | - | - | 1 |
| - | - | - | - | - |
| 2 488 | ||||
| -16,0 % | ||||
| 713 | ||||
| 28,7 % | ||||
| 27,4 % | ||||
| 3 2 | ||||
| 1,3 % | ||||
| 2 9 | ||||
| - | 1 | 1 | 1 | 1 |
| - | 1 | - | 2 | 2 |
| 390 | 388 | 771 | 732 | 1 543 |
| 0,5 % | -15,8 % | 5,3 % | -11,2 % | -11,5 % |
| 112 | 141 | 237 | 271 | 474 |
| 28,6 % | 36,2 % | 30,8 % | 37,0 % | 30,7 % |
| 27,6 % | 25,6 % | 28,4 % | 27,4 % | 25,4 % |
| 4 | 4 1 | 1 8 | 7 0 | 8 2 |
| 1,1 % | 10,6 % | 2,4 % | 9,6 % | 5,3 % |
| 1 7 | 1 7 | 1 7 | 1 7 | 1 7 |
| - | - | - | - | - |
| - | - | - | - | - |
| -10,3 % 29,3 % 20,0 % 594 -5,6 % 144 24,3 % 30,8 % -39 -6,6 % 3 0 |
-4,5 % 39,9 % 17,6 % 629 -16,3 % 221 35,2 % 28,2 % 4 4 7,0 % 2 9 |
-4,3 % 31,1 % 21,7 % 1 193 2,0 % 311 26,1 % 29,9 % -46 -3,8 % 3 0 |
-8,4 % 40,0 % 20,2 % 1 169 -13,5 % 411 35,2 % 29,2 % 7 0 5,9 % 2 9 |
| EBITDA | -112 | -122 | -260 | -260 | -538 |
|---|---|---|---|---|---|
| EBITDA margin (% of Group revenues) | -5,7 % | -5,8 % | -6,6 % | -6,6 % | -6,4 % |
*As of Q1 2022 Denmark Segment is incorporated in the Norway Segment (comparative numbers have also been changed)
Oslo, 13 July 2023: The sport retail market continued to be challenging in the second quarter 2023 impacted by reduced demand, heavy discount activities and high inventory levels in the value chain. All Nordic markets are currently in contraction. Under such conditions XXL delivered a negative growth of 6.9 per cent and total operating revenue equaled NOK 1.9 billion (NOK 2.1 billion). XXL has prioritized liquidity and inventory control leading to continued high campaign activities and lower gross margin. XXL has impaired its inventory of capital goods resulting in an additional write down with a net effect of around NOK 67 million. Consequently, EBITDA ended at negative NOK 57 million (NOK 203 million). The inventory is back to normalized levels providing benefits for higher gross margin over time. Total liquidity reserve ended at NOK 722 million (NOK 691 million) and the net interest-bearing debt amounted to NOK 923 million (NOK 1 109 million).
XXL is currently working on several short-term actions and a longer-term strategic plan, called "Reset&Rethink", in order to improve profitability. Five must win battles are expected to deliver an EBITDA run-rate uplift of NOK 500-750 million the next 12-24 months. The longer-term strategic plan and targets are in process and will be further detailed during 2023.
(Figures in brackets = same period previous year, unless otherwise specified)
Total operating revenue in the second quarter 2023 ended at 1 946 million (NOK 2 090 million) which represented a decline of 6.9 per cent. XXL's markets continued to be challenging in the second quarter 2023 driven by low consumer confidence and reduced demand for sporting goods in general. The sales started off with negative growth in April that decelerated further in May but picked up in June when XXL launched more aggressive campaign activities. Ecommerce decreased by 2.0 per cent from Q2 2022 to Q2 2023, representing 21.1 per cent (20.0 per cent) of total operating revenue for the Group. Overall XXL delivered a negative like for like growth of 12.9 per cent in the quarter.
The market is characterized by high inventory levels in the whole value chain, resulting in aggressive pricing and excessive campaigns. Higher campaign activities also for XXL impacted the gross margin, which ended at 27.6 per cent (37.8 per cent). Due to significantly decline in sales of capital goods XXL has impaired its inventory resulting in an additional write down with a net effect of around NOK 67 million in the quarter. This impacted the gross margin negatively by around 3.4 percentage points. The current market demands strict focus on inventory levels and liquidity control, which will lead to fluctuations in the gross margin between quarters and seasons.
Operating expenses as percentage of sales increased to 30.6 per cent in the second quarter this year (28.1 per cent) impacted by the negative like for like growth hampering scale in the operations. However, operating expenses are lower than last year when adjusting for negative currency translation effects of around NOK 33 million despite new stores and increased marketing spend.
The Group EBITDA in the second quarter 2023 was negative of NOK 57 million (NOK 203 million), mainly explained by significantly lower gross margin as described above.
XXL had total liquidity reserves of NOK 722 million (NOK 691 million) and a net interest-bearing debt of NOK 923 million (NOK 1 109 million) by the end of Q2 2023. In the quarter XXL received a temporary deferral of tax payments for 2021 which has resulted in a tax repayment for that year in the amount of SEK 345 million and improved the liquidity reserves accordingly. The deferred tax amount will become payable on 12 September 2023. XXL may apply to the Swedish tax authorities for a further deferral until 12 September 2024, and intends to make such application. The Swedish deferred tax payment rules were introduced to provide an opportunity for companies affected by the pandemic, to postpone tax payments. The rules have subsequently been extended due to the economic situation in general and as a result of the uncertainty in the electricity market. XXL has booked the deferred tax payment as net interest-bearing debt.
XXL is currently working on adjusting costs and purchasing volumes to sales. XXL has flexibility in its agreements with suppliers and the inventory decreased to NOK 2 123 million
(NOK 2 802 million) mainly due to reduced incoming goods. In addition, XXL targets to reduce CAPEX, expected to be around NOK 150-200 million per year going forward.
XXL is currently working on several short-term actions and a longer-term strategic plan, called "Reset&Rethink", in order to improve the profitability. Short term actions are based on resetting the operating model and way of working. Five must win battles are identified and is currently in execution
The identified must win battles are expected to deliver an EBITDA run-rate uplift of NOK 500-750 million the next 12- 24 months.
In addition, the group continues to work on securing liquidity, exiting Austria and strengthening the loyalty program.
Rethink is related to detailing out a longer-term strategic plan that will transform XXL into a sustainable, profitable and a winning concept in the market. The four long-term strategic pillars are
The longer-term strategic plan and targets are in process and will be further detailed out during 2023.
(Figures in brackets = same period previous year, unless otherwise specified)
The Group's reporting structure comprises three operational segments based on XXL's operations in Norway, Sweden and Finland, in addition to the HQ and Logistics segment.
The Norwegian operations delivered total operating revenue of NOK 963 million in the second quarter 2023 compared to NOK 1 074 million in the same quarter last year, representing a negative growth of 10.3 per cent. According to market figures from SSB as of May 2023, the sales of sporting goods in Norway decreased by 4.0 per cent. The corresponding figure for XXL was negative of 4.2 per cent.
Gross margin was impacted by high campaign activities under challenging market conditions as well as higher sourcing costs. In addition, XXL has taken a write down of its inventory with a net effect of around NOK 22 million. Due to these effects the gross margin decreased from 39.9 per cent in Q2 2022 to 29.3 per cent in Q2 2023.
Operating expenses as percentage of sales ended at 20.0 per cent (17.6 per cent) impacted by a negative like for like growth of 11.7 per cent hurting scale in the operations. The absolute cost level was on par with last year.
EBITDA amounted to NOK 90 million (NOK 240 million). The main reason for the lower EBITDA was the decline in total operating revenue and the gross margin development as described above.
According to market figures from SCB as of May 2023 the sale of sporting goods in Sweden decreased by 2.3 per cent, while the corresponding negative growth for XXL was 0.8 per cent in local currency.
Total operating revenue for XXL in Sweden in Q2 2023 amounted to NOK 594 million (NOK 629 million). The driver was a negative like for like growth of 14.4 percent in local currency under weak and volatile market conditions with lower overall demand.
Gross margin decreased to 24.3 per cent (35.2 per cent) explained by high campaign activity, both in the market and by XXL, under challenging conditions as well as increased sourcing costs. In addition, XXL has taken a write down of its inventory with a net effect of around NOK 29 million.
Operating expenses as percentage of sales ended at 30.8 per cent (28.2 per cent) explained by the negative like for like growth hampering scale in the operations. XXL has also executed several cost reductions related to store personnel counteracted by increased marketing costs. Negative currency translation effects amount to around NOK 14 million in the quarter.
EBITDA was negative of NOK 39 million (NOK 44 million), driven by weak sales development and the lower gross margin.
Total operating revenue in the quarter amounted to NOK 390 million (NOK 388 million). This corresponded to a negative like for like growth of 13.9 per cent in local currency in a challenging market with weak consumer sentiment and low demand. According to market figures from TMA as of May 2023, the sale of sporting goods in Finland decreased by 3.1 per cent while XXL had a decline of 7.3 per cent in the same period.
Gross margin ended at 28.6 per cent (36.2 per cent) impacted by higher campaign activities in a challenging market as well as increased sourcing costs. In addition, XXL has taken a write down of its inventory with a net effect of around NOK 16 million.
Operating expenses as percentage of sales ended at 27.6 per cent in Q2 2023 (25.6 per cent) due to negative like for like growth hurting scale in the operations. During the quarter XXL has focused on cost efficiencies mostly related to store staffing but counteracted by negative currency translation effects of around NOK 19 million.
EBITDA ended at NOK 4 million in Q2 2023 (NOK 41 million)
driven by negative sales growth and the lower gross margins.
The HQ and Logistics segment consists of costs related to the Group's headquarter and logistics operations including two central warehouses.
Operating expenses were NOK 112 million (NOK 122 million) in Q2 2023. XXL has seen increased inflation on large cost elements like salaries and IT-licenses partly counteracted by a severance accrual in Q2 last year. XXL is addressing the HQ cost base to adopt to the current sales development and commenced a reorganization of the HQ functions during Q1 2023. This is expected to give positive effects in H2 2023 and onwards.
(Figures in brackets = same period previous year, unless otherwise specified)
Total operating revenue decreased by 6.9 per cent to NOK 1 946 million (NOK 2 090 million).
Total operating expenses excluding depreciation, impairment losses and cost of goods sold equaled NOK 595 million (NOK 587 million) in the second quarter. As percentage of total operating revenue of the Group, operating expenses increased from 28.1 per cent in the second quarter last year to 30.6 per cent in the second quarter this year.
Operating income amounted to negative NOK 249 million (negative NOK 0.1 million). The change is mainly explained by the significantly lower total operating revenue and gross margin as described above.
Net financial expense amounted to NOK 62 million for the second quarter (positive NOK 36 million) whereof NOK 22 million is related to IFRS 16 effects compared to NOK 21 million in Q2 2022. Net interest expenses ended at NOK 25 million (NOK 10 million). Net financial expenses included a negative currency effect of NOK 12 million compared to a positive currency effect of NOK 70 million last year. Other financial expenses of NOK 3 million were related to amortization of loan costs and other financial costs.
Income tax expense for the second quarter was negative NOK 64 million (negative NOK 9 million).
Profit for the period from continuing operations ended at negative NOK 246 million (NOK 45 million).
Profit for the period from discontinued operations ended at negative NOK 56 million (negative NOK 15 million).
Profit for the period ended at negative NOK 343 million (NOK 30 million)
Consolidated income statement – First half year
(Figures in brackets = same period previous year, unless otherwise specified)
Total operating revenue declined by 0.6 per cent to NOK 3 930 million (NOK 3 956 million).
Total operating expenses excluding depreciation, impairment losses and cost of goods sold equaled NOK 1 262 million (NOK 1 217 million) in the first half year. As percentage of total operating revenue of the Group, operating expenses increased from 30.8 per cent in the H1 last year to 32.1 per cent in H1 this year.
Operating income amounted to negative NOK 488 million (negative NOK 113 million). The change is mainly explained by the significantly lower gross margin as described above and increased cost inflation.
Net financial expense amounted to NOK 106 million for the first half year (NOK 8 million) whereof NOK 43 million is related to IFRS 16 effects compared to NOK 40 million in H1 2022. Net interest expenses ended at NOK 55 million (NOK 18 million). Net financial expenses included a negative currency effect of NOK 2 million compared to a positive currency effect of NOK 58 million last year. Other financial expenses of NOK 6 million were related to amortization of loan costs and other financial costs.
Income tax expense for the first half year was negative NOK 123 million (negative NOK 36 million).
Profit for the period from continuing operations ended at negative NOK 472 million (negative NOK 85 million).
Profit for the period from discontinued operations ended at negative NOK 98 million (negative NOK 36 million).
Profit for the period ended at negative NOK 569 million (negative NOK 121 million).
(Figures in brackets = same period previous year, unless otherwise specified)
Cash provided by operating activities was at NOK 168 million (NOK 64 million) in H1 2023. The high campaign activity have resulted in a higher build-down of inventory year-over-year offset by poor results and build down of accounts payables.
Cash used by investing activities was NOK 44 million (NOK 92 million) for H1 2023. This is mainly related to opening of a new store in Skellefteå, investments in existing stores and Ecommerce platform.
Cash used by financing activities amounted to NOK 160 million (cash provided of NOK 376 million) in H1 2023. The change is mainly related to drawdowns of the loan facility in H2 2022 vs none in H1 2023 and higher interest rates in H1 2023. In H1 2023 XXL also received the settlement of a private placement of NOK 500 million, which was fully used to pay down debt.
(Figures in brackets = same period previous year, unless otherwise specified)
As of 30 June 2023, total assets amounted to NOK 8 963 million (NOK 9 660 million). Total equity was NOK 3 3003 million (NOK 3 632 million), resulting in an equity ratio of 33.5 per cent (37.6 per cent). Net interest bearing debt (NIBD) ended at NOK 923 million (NOK 1 109 million).
The Group had cash and cash equivalents of NOK 572 million (NOK 521 million) as of 30 June 2023. The Group's liquidity reserves include total credit facilities of NOK 1 300 million where of NOK 1 150 million was used as of 30 June 2023. Available liquidity reserves as of 30 June 2023 were NOK 722 million (NOK 691 million). In June XXL received a temporary deferral of tax payments for 2021 which has resulted in a tax repayment for that year in the amount of SEK 345 million and improved the liquidity reserves accordingly.
The Annual General Meeting of XXL ASA was held on 6 June 2023. All items were resolved in accordance with the proposals from the Board and the Nominations Committee's recommendations.
Emelie Friis has been appointed the new EVP Brand & Marketing in the XXL Group and will be part of the Executive Management Team from late August 2023. Previously Emelie held the position as Chief Marketing Officer (CMO) in Kronans Apotek, being responsible for a turn-around of the marketing department from analogue to unified commerce. She has also been working with both E-commerce, digital transformation and CRM. Emelie started her career as art director and creative director in several communication agencies and has also worked in V&S Group and Pernod Ricard with strong brands like Absolut Vodka, Malibu and Kahlua.
XXL has signed a new permanent EVP Category and Buying in the XXL Group who will be communicated at a later stage. Current interim EVP Category and Buying, Jarle Bråten, will continue in the position until end of year.
Espen Terland, EVP IT, will step down late this fall to pursue opportunities outside XXL. XXL has started the recruitment process for his replacement. XXL is currently also in process of recruiting the position as COO.
XXL is in the phase of implementing several strategic initiatives and projects to improve profitability and operational efficiency going forward, called "Reset&Rethink". Five must win battles are expected to deliver an EBITDA uplift of NOK 500-750 million the next 12-24 months. The longer-term strategic plan and targets are in process and will be further detailed out during 2023.
XXL's target and goal going forward is to over time gain market shares in all markets and continue the growth in the E-commerce channel.
In line with the existing strategy, XXL will continue to invest in operational efficiency, store optimizing projects, Ecommerce platform, infrastructure and IT. Total CAPEX for XXL Group in 2023 is expected to be around NOK 150-200 million.
Going forward XXL expects the pace of the store roll-out to be 2-3 new stores per year including relocations of stores. XXL has signed 2 new lease agreements for store openings in 2023, whereof 1 in Norway and 1 in Sweden. At the same time XXL will be downsizing several existing stores. The Group will continue to focus on optimizing the store portfolio, including evaluation of selective closures of low performing stores with limited turnaround abilities.
XXL will exit Austria in 2023 and is working on several different solutions, including sale of the Austrian entity. XXL has already closed 3 of the 8 stores, as well as the Ecommerce operation and the central warehouse facility, and agreed to close two stores in September 2023. XXL has an ambition of having no negative cash effect in 2023 from the Austrian operations and exit.
We confirm, to the best of our knowledge, that the condensed set of financial statements for the period 1 January to 30 June 2023 has been prepared in accordance with IAS 34 – Interim Financial Reporting, and gives a true and fair view of the Group's assets, liabilities, financial position and profit or loss as a whole. We also confirm, to the best of our knowledge, that the interim management report includes a fair review of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, a description of the principal risks and uncertainties for the remaining six months of the financial year, and major related parties' transactions.
Oslo, 13 July 2023 Board of Directors, XXL ASA
Håkan Lundstedt Ronny Blomseth Kjersti Hobøl
Chairman Board member
Board member
Tom Jovik Kari Ekelund Thørud Freddy Sobin Board member Board member CEO
Board member Employee representative
Tor Andrin Jacobsen Cristina Moreno Kai Arne Nordhaug Board member Employee representative
Board member Employee representative
Unaudited for the period ended June 30, 2023
| (Amounts in NOK million) | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | FY 2022 (Audited) |
|---|---|---|---|---|---|
| Total Operating Revenue | 1,946 | 2,090 | 3,930 | 3,956 | 8,426 |
| Cost of goods sold | 1,408 | 1,300 | 2,770 | 2,453 | 5,705 |
| Personnel expenses | 373 | 382 | 809 | 820 | 1,665 |
| Other operating expenses | 222 | 205 | 454 | 397 | 819 |
| Depreciation | 192 | 203 | 386 | 398 | 703 |
| Impairment losses | - | - | - | 1 | 1 |
| Total Operating Expenses | 2,195 | 2,090 | 4,418 | 4,068 | 8,893 |
| Operating Income | -249 | -0 | -488 | -113 | -467 |
| Net Financial Income (+) / Expense (-) | -62 | 3 6 | -106 | -8 | -64 |
| Profit before income tax | -310 | 3 6 | -594 | -121 | -531 |
| Income tax expense | -64 | -9 | -123 | -36 | -120 |
| Profit from Continuing Operations | -246 | 4 5 | -472 | -85 | -411 |
| Profit from Discontinued Operations | -56 | -15 | -98 | -36 | -130 |
| Profit for the Period | -302 | 3 0 | -569 | -121 | -542 |
| Basic and diluted Earnings per share from continuing operations (NOK) |
-0.63 | 0.18 | -1.37 | -0.34 | -1.63 |
| Basic and diluted Earnings per share from discontinued | |||||
| operations (NOK) Basic and diluted Earnings per share (NOK) |
-0.14 -0.78 |
-0.06 0.12 |
-0.25 -1.47 |
-0.14 -0.48 |
-0.52 -2.15 |
| Other comprehensive income | |||||
| Items that may be subsequently reclassified to profit or loss: | |||||
| Foreign currency rate changes | 1 3 | - | -35 | - | -7 |
| Total Other Income and Expense | 1 3 | - | -35 | - | -7 |
| Total comprehensive income for the period | -289 | 3 0 | -604 | -121 | -549 |
| Total comprehensive income attributable to: | |||||
| Equity holders of the company | -280 | 2 9 | -587 | -118 | -534 |
| Non-controlling interest | -9 | 1 | -17 | -3 | -15 |
| 31.12 2022 | ||||
|---|---|---|---|---|
| (Amounts in NOK million) | Note | 30.06.2023 | 30.06.2022 | (Audited) |
| NON CURRENT ASSETS | ||||
| Intangible Assets | ||||
| Goodwill | 2 744 | 2 744 | 2 744 | |
| Other Intangible Assets | 268 | 264 | 265 | |
| Deferred tax asset | 286 | 9 8 | 166 | |
| Total Intangible Assets | 3 298 | 3 105 | 3 175 | |
| Fixed Assets | 563 | 799 | 613 | |
| Right of Use Assets | 9 | 2 021 | 2 114 | 1 842 |
| Total Non Current Assets | 5 883 | 6 018 | 5 630 | |
| CURRENT ASSETS | ||||
| Inventory | 2 123 | 2 802 | 2 328 | |
| Trade and Other Receivables | 250 | 319 | 260 | |
| Cash and Cash Equivalents | 539 | 521 | 552 | |
| Total Current Assets | 2 912 | 3 642 | 3 140 | |
| Total assets of disposal group held for sale | 1 0 | 168 | - | 263 |
| TOTAL ASSETS | 8 963 | 9 660 | 9 034 |
| 31.12 2022 31.12 2022 |
||||
|---|---|---|---|---|
| (Amounts in NOK million) | Note | 30.06.2023 | 30.06.2022 | (Audited) |
| SHAREHOLDERS' EQUITY | ||||
| Paid-in Capital | 3 535 | 3 187 | 3 052 | |
| Other equity | 9 | -532 | 445 | 1 4 |
| Total Shareholders' Equity | 3 003 | 3 632 | 3 066 | |
| LIABILITIES | ||||
| Deferred Tax Liability | 0 | -0 | 0 | |
| Total Provisions | 0 | -0 | 0 | |
| Other non-current liabilities | ||||
| Interest Bearing Non-Current Liabilities | 483 | 489 | 494 | |
| Lease Liabilites | 9 | 1 682 | 1 943 | 1 568 |
| Total other non-current liabilities | 2 165 | 2 432 | 2 062 | |
| Total non-current liabilities | 2 165 | 2 432 | 2 062 | |
| Current liabilities | ||||
| Accounts Payable | 1 310 | 1 030 | 1 214 | |
| Lease Liabilities | 9 | 602 | 582 | 533 |
| Current Interest Bearing Liabilities | 1 012 | 1 141 | 1 135 | |
| Tax payable | -0 | 6 3 | 9 | |
| Public duties payable | 295 | 314 | 360 | |
| Other current liabilities | 439 | 466 | 494 | |
| Total current liabilities | 3 658 | 3 596 | 3 745 | |
| TOTAL LIABLILITIES | 5 822 | 6 028 | 5 808 | |
| Total liabilities of disposal group held for sale | 1 0 | 137 | - | 160 |
| TOTAL EQUITY AND LIABILITIES | 8 963 | 9 660 | 9 034 |
| FY 2022 | |||||
|---|---|---|---|---|---|
| Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | (Audited) | |
| Operating Activities | |||||
| Income before tax from continued operations | (310) | 3 7 | (594) | (121) | (531) |
| Income tax paid | - 192 |
(19) 204 |
- 386 |
(37) 400 |
(38) 703 |
| Depreciation and amortization | - | - | 1 | ||
| Impairment losses Net financial expense |
6 2 | (0) (36) |
106 | (0) 9 |
6 4 |
| Changes in inventory | 131 | (326) | 206 | (538) | (374) |
| Changes in accounts receivable | (51) | (32) | (6) | 306 | 337 |
| Changes in accounts payable and supplier financing | 298 | 248 | 118 | 401 | 572 |
| Other changes | (140) | 1 1 | (80) | (404) | (96) |
| Cash provided (used) by operating activities from discontinuing operations | 1 2 | 2 4 | 3 3 | 4 7 | 4 4 |
| Cash provided (used) by operating activities | 193 | 111 | 168 | 6 4 | 682 |
| Investing Activities | |||||
| Investment in fixed assets | (13) | (50) | (44) | (85) | (132) |
| Cash provided (used) by investing activities from discontinuing operations | - | (0) | - | (7) | (7) |
| Cash provided (used) by investing activities | (13) | (50) | (44) | (92) | (139) |
| Financing Activities | |||||
| Capital Increase (gross proceeds) | 1 | - | 501 | - | - |
| Transaction costs | (7) | - | (18) | - | - |
| Sales/purchase of own shares/other equity transactions Dividends |
- | - | - | (2) | (8) |
| - | - - |
- | - - |
(145) | |
| Payments on long/short term debt Proceeds from long/short term debt |
(46) 342 |
353 | (546) 342 |
741 | (150) 883 |
| Interest payments | (26) | (10) | (56) | (19) | (61) |
| Interest on lease liabilities | (22) | (20) | (43) | (39) | (78) |
| Total leasing payments for the lease liability | (157) | (129) | (313) | (262) | (560) |
| Cash provided (used) by financing activities from discontinuing operations | (12) | (22) | (26) | (44) | (45) |
| Cash provided (used) by financing activities | 7 2 | 172 | (160) | 376 | (164) |
| Net Change in Cash and Cash Equivalents | 252 | 233 | (36) | 348 | 379 |
| Cash and cash equivalents - beginning of period | 288 | 277 | 575 | 173 | 173 |
| Effect of foreign currency rate changes on cash and equivalents | - | 1 1 | - | - | - |
| Cash and Cash Equivalents (AHS) - End of period | 3 2 | - | 3 2 | - | 2 3 |
| Cash and Cash Equivalents - End of period | 572 | 521 | 572 | 521 | 575 |
| Foreign | |||||||
|---|---|---|---|---|---|---|---|
| Currency | Non | Total | |||||
| Share | Share | Other Paid | Retained | Rate | Controlling | Shareholders' | |
| (Amounts in NOK million) | capital | premium | in Equity | earnings | Changes | Interest | Equity |
| Shareholders' Equity 31.12.2021 | 101 | 3,049 | 3 6 | 583 | -47 | 3 0 | 3,753 |
| Net income 2022 | - | - | - | -522 | - | -20 | -542 |
| Foreign currency rate changes | - | - | - | - | - | - | 0 |
| Transactions with owners: | |||||||
| Employee share incentive program | - | - | 4 | - | - | - | 4 |
| Dividends | - | -145 | - | - | - | - | -145 |
| Purchase of own shares | - | -3 | - | - | - | - | -3 |
| Shareholders' Equity 31.12.2022 | 101 | 2,900 | 4 0 | 6 1 | -47 | 1 0 | 3,066 |
| Net income HI 2023 | - | - | - | -549 | - | -20 | -569 |
| Foreign currency rate changes | - | - | - | - | 1 3 | 1 3 | |
| Transactions with owners: | 0 | ||||||
| Employee share incentive program | - | - | 3 | - | - | - | 3 |
| Share issue | 5 4 | 436 | - | - | - | - | 491 |
| Purchase of own shares | - | - | - | - | - | - | 0 |
| Shareholders' Equity 30.06.2023 | 155 | 3,337 | 4 3 | -488 | -47 | 3 | 3,003 |
XXL ASA and its subsidiaries' (together the "company" or the "Group") operating activities are related to the resale of sports and leisure equipment in the Nordic countries.
All amounts in the interim financial statements are presented in NOK million unless otherwise stated. Due to rounding, there may be differences in the summation columns.
These condensed interim financial statements have not been audited.
These condensed interim financial statements for the three months ended 30 June 2023 have been prepared in accordance with IAS 34, 'Interim financial reporting'. The condensed interim financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2022, which have been prepared in accordance with IFRS as adopted by the European Union ('IFRS').
The accounting policies applied in the preparation of the condensed consolidated interim financial statements are consistent with those applied in the preparation of the annual IFRS financial statements for the year ended 31 December 2022.
The preparation of interim financial statements requires Management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income, and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant judgments made by Management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements for the year ended 31 December 2022.
| FY 2022 | |||||
|---|---|---|---|---|---|
| Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | (Audited) | |
| Profit for the period from continuing operations (NOK million) | -246 | 4 5 | -472 | -85 | -411 |
| Profit for the period from discontinued operations (NOK million) | -56 | -15 | -98 | -36 | -130 |
| Weighted average number of ordinary shares in issue | 387,932,412 | 252,436,658 | 344,979,269 | 252,436,658 | 252,436,658 |
| Number of shares outstanding | 387,944,706 | 252,436,658 | 387,944,706 | 252,436,658 | 252,436,658 |
| Adjustment for: | |||||
| Effect share options | 3,685,466 | 1,156,437 | 2,989,333 | 1,034,633 | 885,466 |
| Weighted number of ordinary shares in issue for diluted earnings per share | 391,617,878 | 253,593,095 | 347,968,602 | 253,471,291 | 253,322,124 |
| Basic and diluted Earnings per share from continuing operations (NOK) | -0.63 | 0.18 | -1.37 | -0.34 | -1.63 |
| Basic and diluted Earnings per share from discontinued operations (in NOK) | -0.14 | -0.06 | -0.28 | -0.14 | -0.52 |
Basic and diluted Earnings per share (NOK) -0.78 0.12 -1.65 -0.48 -2.15
1) Please refer to definitions at the end of the report for descriptions of alternative performance measures
The Group's business is the sale of sports and leisure equipment. Segment performance is reviewed by Management and the Board of Directors as three reportable geographical segments and HQ & Logistics segment. The following presents the Group's revenue by operating segment:
| Q2 2023 | |||||
|---|---|---|---|---|---|
| HQ & | Total | ||||
| Amounts in NOK million | Norway* | Sweden | Finland | Logistics | Cont'Ops |
| Operating revenue | 963 | 594 | 390 | - | 1,946 |
| Gross profit | 282 | 144 | 112 | - | 538 |
| EBITDA | 90 | -39 | 4 | -112 | -57 |
| Operating Income | 22 | -95 | -34 | -141 | -249 |
| HQ & | Total | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | Norway* | Sweden | Finland | Logistics | Cont'Ops |
| Operating revenue | 1,074 | 629 | 388 | - | 2,090 |
| Gross profit | 429 | 221 | 141 | - | 791 |
| EBITDA | 240 | 44 | 41 | -122 | 203 |
| Operating Income | 156 | -18 | 11 | -149 | - 0 |
| HQ & | Total | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | Norway* | Sweden | Finland | Logistics | Cont'Ops |
| Operating revenue | 1,967 | 1,193 | 771 | - | 3,931 |
| Gross profit | 612 | 311 | 237 | - | 1,160 |
| EBITDA | 185 | -46 | 18 | -260 | -102 |
| Operating Income | 48 | -160 | -57 | -319 | -488 |
| HQ & | Total | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | Norway* | Sweden | Finland | Logistics | Cont'Ops |
| Operating revenue | 2,054 | 1,169 | 732 | - | 3,956 |
| Gross profit | 821 | 411 | 271 | - | 1,503 |
| EBITDA | 406 | 70 | 70 | -260 | 286 |
| Operating Income | 237 | -45 | 10 | -314 | -113 |
| HQ & | |||||
|---|---|---|---|---|---|
| Amounts in NOK million | Norway* | Sweden | Finland | Logistics | Total |
| Operating revenue | 4,394 | 2,488 | 1,543 | - | 8,426 |
| Gross profit | 1,535 | 713 | 474 | - | 2,721 |
| EBITDA | 661 | 32 | 82 | -538 | 237 |
| Operating Income | 393 | -168 | -48 | -644 | -467 |
*As of Q1 2022 Denmark Segment is incorporated in the Norway Segment (all historical numbers for the Norway segment are also restated)
The Group's related parties include its associates, key Management, members of the Board of Directors and majority shareholders.
There are no major related party transactions for XXL Group in Q2 2023. Further, none of the Board members have been granted loans or guarantees in the current year or are included in the Group's pension or bonus plans. All related party transactions are concluded on an armlength basis.
A description of main risk factors in XXL is included in Note 20 in the Annual Report for 2022.
The movements of the Group's right-of-use assets and lease liabilities during the year are presented below:
| Buildings, machinery and |
|
|---|---|
| (Amounts in NOK million) | vehicles |
| Aquisition cost 01.01.2023 | 4 115 |
| Additions and adjustments | 414 |
| Change incentives | -10 |
| Net exchange differences | 144 |
| Aquisition costs 30.06.2023 | 4 663 |
| Accumulated depreciation and impairment losses 01.01.2022 | -2 174 |
| Depreciation | -321 |
| Impairment losses (-) Reversal of losses (+) | 0 |
| Disposals | - |
| Transfers and reclassifications | - |
| Currency exchange differences | -73 |
| Accumulated depreciation and impairment 30.06.2023 | -2 568 |
| Total Right-of-Use Assets at 30.06.2023 including assets held for sale | 2 095 |
| Right of Use Assets | 2 021 |
| Right of Use Assets Held for Sale | 74 |
| (Amounts in NOK million) | |
|---|---|
| Summary of the lease liabilities in the financial statements | |
| Total lease liabilities 01.01.2023 | 2 203 |
| New lease liabilities recognised in the period and adjustments | 403 |
| Leasing payments for the principal portion of the lease liability | -338 |
| Interest expense on lease liabilities | 45 |
| Reassessment of the discount rate on previous lease liabilities | 0 |
| Currency exchange differences | 71 |
| Lease liabilities at 30.06.2023 | 2 284 |
| Lease liabilities Held for Sale 30.06.2023 | 100 |
| Current lease liabilities < 1 year | 602 |
|---|---|
| Non-current lease liabilities > 1 year | 1 682 |
The board of XXL concluded its strategic review process of XXL's operations in Austria 21.12.2022
The decision is to exit the Austrian market during 2023 and the management considers that the disposal group is available for immediate sale in its present condition. Austria is consequently classified as a disposal group held for sale in the balance sheet and presented as discontinued operations in the income statement as of 31.12.2022. The comparative condensed consolidated income statement has been restated to show the discontinued operation separately from the continuing operations.
| FY 2022 | |||||
|---|---|---|---|---|---|
| (Amounts in NOK million) | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | (Audited) |
| Total Operating Revenue | 51 | 104 | 166 | 223 | 454 |
| Cost of goods sold | 49 | 69 | 139 | 145 | 366 |
| Personnel expenses | 19 | 24 | 45 | 51 | 98 |
| Other operating expenses | 24 | 23 | 49 | 46 | 112 |
| Depreciation | 21 | 7 | 46 | 13 | 48 |
| Impairment Losses (+) Reversal of losses (-)* | - | 0 | - | 0 | -14 |
| Total Operating Expenses | 113 | 122 | 279 | 256 | 610 |
| Operating Income | -62 | -19 | -113 | -33 | -156 |
| Net Financial Income (+) / Expense (-) | 3 | 5 | 11 | 2 | -6 |
| Profit before income tax | -59 | -14 | -103 | -31 | -162 |
| Income tax expense | -3 | 2 | -5 | 5 | -31 |
| Profit from Discontinued Operations | -56 | -15 | -98 | -36 | -130 |
| Net cash flow from operating activites | 12 | 24 | 33 | 47 | 44 |
| Net cash flow from investing activities | - | -7 | - | -7 | -7 |
| Net cash flow from financing activities | -12 | -22 | -26 | -44 | -45 |
| Net change in cash and cash equivalents | - | -5 | 7 | -4 | -8 |
*Impariment losses includes reversal of Right-of-Use assets due to fair value assesment
| 31.12 2022 | ||
|---|---|---|
| (Amounts in NOK million) | 30/06/2023 | (Audited) |
| NON CURRENT ASSETS | ||
| Intangible Assets | ||
| Other Intangible Assets | 2 | 2 |
| Deferred tax asset | 6 | 3 |
| Total Intangible Assets | 9 | 5 |
| Fixed Assets | 9 | 20 |
| Right of Use Assets | 74 | 99 |
| Total Non Current Assets | 92 | 123 |
| CURRENT ASSETS | ||
| Inventory | 26 | 96 |
| Trade and Other Receivables | 17 | 21 |
| Cash and Cash Equivalents | 32 | 23 |
| Total Current Assets | 76 | 140 |
| TOTAL ASSETS | 168 | 263 |
| 31.12 2022 | ||
| (Amounts in NOK million) | 30/06/2023 | (Audited) |
| LIABILITIES | ||
| Other non-current liabilities | ||
| Lease Liabilites | ||
| 69 | 69 | |
| Total other non-current liabilities | 69 | 69 |
| Total non-current liabilities | 69 | 69 |
| Current liabilities | ||
| Accounts Payable Lease Liabilities |
7 | 12 |
| 31 | 33 | |
| Tax payable | -0 | -0 |
| Public duties payable Other current liabilities |
-4 | 9 |
| Total current liabilities | 35 68 |
37 91 |
| TOTAL LIABLILITIES | 137 | 160 |
This report includes forward-looking statements which are based on our current expectations and projections about future events. All statements other than statements of historical facts included in this notice, including statements regarding our future financial position, risks and uncertainties related to our business, strategy, capital expenditures, projected costs and our plans and objectives for future operations, including our plans for future costs savings and synergies may be deemed to be forward-looking statements. Words such as "believe," "expect," "anticipate," "may," "assume," "plan," "intend," "will," "should," "estimate," "risk" and similar expressions or the negatives of these expressions are intended to identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. You should not place undue reliance on these forward-looking statements. In addition any forward-looking statements are made only as of the date of this notice, and we do not intend and do not assume any obligation to update any statements set forth in this notice.
Certain financial measures and ratios related thereto in this quarterly report, including growth, gross profit, gross margin, EBIT, EBIT margin, EBITDA, EBITDA margin, working capital and Net Interest-Bearing Debt (collectively, the "Non-GAAP Measures"), are not specifically defined under IFRS or any other generally accepted accounting principles. These measures are presented in this quarterly report because they are among the measures used by Management to evaluate the cash available to fund ongoing, longterm obligations and they are frequently used by other interested parties for valuation purposes or as a common measure of the ability of a company to incur and meet debt service obligations. These measures may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, and you should not consider such items as alternatives to profit for the year, total operating revenues, operating income, or any other performance measures derived in accordance with IFRS, and they may be different from similarly titled measures used by other companies. All amounts in tables below are in NOK million.
All APMs are related to Continuing Operations. We refer to note 10 for details on Discontinued Operations.
Our EBIT represents operating income.
Earnings before interest, tax, depreciation and amortisation (EBITDA) is a key financial parameter for XXL. Our EBITDA represents operating income plus depreciation
Reconciliation
| Q2'23 | Q2'22 | H1'23 | H1'22 | FY22 | |
|---|---|---|---|---|---|
| Operating Income | -249 | 0 | -488 | -113 | -467 |
| + Depreciation | 192 | 203 | 386 | 398 | 703 |
| = EBITDA | -57 | 203 | -102 | 286 | 237 |
Like for Like include comparable stores and E-commerce. Comparable stores are stores that have been open all months of the current year and all months of the previous year. Stores that have been relocated or significantly expanded are excluded from Like for Like stores. Like for Like for the total Group is calculated with FX constant year over year to eliminate the FX effect.
Gross profit represents operating revenue less cost of goods sold. Gross margin is gross profit in per cent of revenue.
Reconciliation
| Q2'23 | Q2'22 | H1'23 | H1'22 | FY22 | |
|---|---|---|---|---|---|
| Operating revenue | 1 946 | 2 090 | 3 930 | 3 956 | 8 426 |
| ÷ Cost of goods sold |
1 408 | 1 300 | 2 770 | 2453 | 5 705 |
| = Gross profit | 538 | 791 | 1 160 | 1503 | 2 721 |
| Gross margin | 27.6% | 37.8% | 29.5% | 38.0% | 32.3% |
Working capital consists of trade and other receivables, accounts payables, inventory, public duties payable and other current liabilities.
OPEX is defined as other operating expenses including personnel expenses, but excluding depreciation and amortization.
Reconciliation
| Q2'23 | Q2'22 | H1'23 | H1'22 | FY22 | |
|---|---|---|---|---|---|
| Other operating expenses |
222 | 205 | 454 | 397 | 819 |
| + Personnel expenses |
373 | 382 | 809 | 820 | 1 655 |
| = OPEX | 595 | 587 | 1 262 | 1 217 | 2 484 |
Net interest-bearing liabilities is defined as non-current interestbearing debt and current interest-bearing liabilities less cash and cash equivalents. NIBD does not include lease liabilities due to IFRS 16. Net debt is a measure of the Group's net indebtedness that provides an indicator of the overall balance sheet strength.
| H1'23 | H1'22 | FY22 | |
|---|---|---|---|
| Non-Current Interest Bearing liabilities |
483 | 489 | 494 |
| + Current Interest Bearing liabilities |
1 012 | 1 141 | 1 135 |
| ÷ Cash and Cash Equivalents |
539 | 521 | 552 |
| ÷ Cash and Cash Equivalents (AHS) |
32 | - | 23 |
| = Net Interest Bearing Debt |
923 | 1 109 | 1 054 |
Capital expenditure is the sum of purchases of fixed assets and intangible assets as used in our cash flow. Capex is a measure of investments made in the operations in the relevant period and is useful to users of XXL's financial information in evaluating the capital intensity of the operations.
Our liquidity reserve is defined as our available cash and cash equivalents plus available liquidity through overdraft and credit facilities.
Reconciliation
| H1'23 | HI'22 | FY22 | |
|---|---|---|---|
| Cash and Cash Equivalents | 539 | 521 | 552 |
| Cash and Cash Equivalents (AHS) | 32 | - | 23 |
| + Undrawn Credit Facilities | 150 | 170 | 171 |
| = Liquidity reserve | 722 | 691 | 746 |
Ecommerce is sales through online sales channels in comparison to sales through retail stores that are physical stores. Inventory per store
Total inventory divided on number of stores and number of Ecommerce markets at end of period.
= ( + )
IFRS 16 was implemented for the Group 1 January 2019. EBITDA ex IFRS 16 effects and EBIT ex IFRS 16 effects represent our EBITDA and EBIT if IFRS 16 had not been implemented, respectively
| Q2'23 | XXL Group |
NOR | SWE | FIN | HQ & logistics |
|---|---|---|---|---|---|
| EBITDA reported |
-57 | 90 | -39 | 4 | -111 |
| IFRS 16 effects OPEX |
-157 | -62 | -48 | -33 | -14 |
| EBITDA ex IFRS 16 effects |
-214 | 28 | -87 | --29 | -125 |
| EBIT Reported |
-248 | 22 | -95 | -35 | -141 |
| IFRS 16 effects affecting EBIT |
-20 | -11 | -6 | -2 | -2 |
| EBIT ex IFRS 16 effects |
-269 | 11 | -101 | -37 | -143 |
| H1'23 | XXL Group |
NOR | SWE | FIN | HQ & logistics |
|---|---|---|---|---|---|
| EBITDA reported |
-102 | 185 | -45 | 18 | -259 |
| IFRS 16 effects OPEX |
-313 | -124 | -98 | -64 | -27 |
| EBITDA ex IFRS 16 effects |
-416 | 61 | -143 | -46 | -287 |
| EBIT Reported |
-488 | 48 | -160 | -57 | -319 |
| IFRS 16 effects affecting EBIT |
-39 | -19 | -12 | -4 | -3 |
| EBIT ex IFRS 16 effects |
-527 | 29 | -172 | -61 | -322 |
Q4 Results 8.2.2024 E-mail:
Q3 Results: 27.10.2023 Contact person: Phone:
Tolle Grøterud [email protected] +4790272959
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