XXL

Investor Presentation • Apr 26, 2023

XXL ASA

– Q1 2023 Presentation of

Financial Results 26 April 2023

Disclaimer

Important notice

The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated ("relevant persons"). Any person who is not a relevant person should not act or rely on this presentation or any of its contents.

This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the XXL Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions.

This presentation includes and is based, inter alia, on forward-looking information and contains statements regarding the future in connection with the XXL Group's growth initiatives, profit figures, outlook, strategies and objectives. All forward-looking information and statements in this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the XXL Group and its lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions.

Important factors may lead to actual profits, results and developments deviating substantially from what has been expressed or implied in such statements. Although XXL believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation.

XXL is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither XXL nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared for the interim results presentation for the first quarter 2023, held on 26th of April 2023. Information contained herein will not be updated. The following slides should also be read and considered in connection with the information given orally during the presentation.

XXL ASA – Q1 2023

Great brands Great prices Great assortment Great expertise Great accessibility

Strong actions => XXL will probably be the first Nordic sports retailer to have reached normalized inventory levels

Q1 – the actions have given significant reduction in inventory

Q1 – a quarter where XXL has worked with both defensive and offensive moves

Refinancing	Defensive moves	Offensive moves
• Settlement of private placement of NOK 500 millions	• Continued reduction in purchasing of incoming goods	• Launched a strong campaign activity program in Nordics
	• Capital discipline	• More aggressive marketing, new DR layout, and new media mix
	• HQ reorganisation	• E-com: improved navigation and commercial expression
	• Structural measures
• Settlement used to pay down debt	• Significant reduction in inventory (second largest reduction in XXL's history)	• Top line growth in all Nordic markets, and gaining shares – under difficult market conditions
	• Low CAPEX levels	• Significantly improved marketing
	• More efficient HQ organisation	attention (among top 5 in
	• Exit Austria project – good progress	Norway) • E-com growth of 29%

Negative P&L effects in Q1 – but strengthened balance sheet and prepared for upcoming seasons

Gaining market shares in difficult markets

Q1 2023

• Challenging macro situation with lower demand for sporting goods and high inventory in the industry
• XXL are executing on strong and immediate actions in order to adapt to the new market situation
• Prioritized clearing out inventory to return to normalized levels in the upcoming seasons and start with in-season products
• High share of clearance activities has contributed to growth of 6% in the quarter and gaining market shares, but significantly lower gross margins
• EBITDA of minus NOK 45 million (NOK 83 million)
• Settlement of private placement of NOK 500 million in full used to pay down debt

Outlook

• Continued strict inventory and liquidity control into summer season
• Inventory expected to normalize during Q2 2023
• Scale and cost efficiency to strengthen XXL position through the current market turmoil
• Exit of Austria
• Increase share of private label going forward
• Optimize store footprint and size over time

Highlights Q1 2023

• Lower demand for sporting goods in general combined with a build up of inventory in the whole industry
• Operating revenue of NOK 1 984 million (NOK 1 865 million)
  • o All segments with growth vs. LY
  • o E-commerce with strong growth of 29%, representing 27.8% (23.0%) of total operating revenue of the Group

(%)

(%)

• Gross margin ended significantly below LY, negatively impacted by more clearance activities in the market, as well as increased sourcing costs
• EBITDA of minus NOK 45 million (NOK 83 million), mainly explained by the significantly lower gross margin

Q1 - Gaining market shares in challenging markets

• Challenging market conditions for the sporting goods industry in 2022 and so far in 2023, with weakening consumer sentiment and reduced demand for sporting goods all over the Nordics
• XXL gained strong market shares, both stores and online in Q1 2023
• XXL's target and goal is to gain market shares over time

Gross margin in Q1 was impacted by a strong and extraordinary campaign program

Financial Review Q1 2023

Key Figures

(Amounts in NOK million)	Q1 2023	Q1 2022	FY 2022	• Revenue up with NOK 119 million vs. last year
GROUP Continuing Operations - Figures adjusted for additional write-down and impairment losses)			- Positive like for like growth of 3.0% - E-com growth of 28.7% - representing 27.8% of total revenue
Operating revenue	1 984	1 865	8 426	versus 23.0% last year
Growth (%) Gross profit (adj ) Gross (adj ) (%) margin Additional write-down of inventory OPEX % EBITDA (adj ) EBITDA margin (adj ) (%) Impairment losses EBIT (adj )	6,4 % 622 31,4 % - 33,6 % -45 -2,3 % - -239	-10 4 % , 712 38 2 % , - 33 ,7 % 8 3 4 4 % , 1 -111	-12 2 % , 3 022 35 9 % , 301 29 ,5 % 538 6 4 % , 1 -165	• Gross margins ended at 31.4%, down from 38.2% last year campaign shares and heavy discounting - The current market demands strict focus on inventory levels and between quarters and seasons
EBIT margin (adj ) (%) Net Income adj **Earnings per share (adj)	-12,0 % -225 -0,75	-6 0 % , -136 -0 ,53	-2 0 % , -109 -0 43
, GROUP Continuing Operations (Reported Figures)			• OPEX in % is 0.1 p.p lower than last year - Driven by the higher top line yielding scale in operations offset by negative currency translation effects
Gross profit Gross margin (%) EBITDA EBITDA margin (%) EBIT	622 31,4 % -45 -2,3 % -239	712 38 2 % , 8 3 4 4 % , -113	2 721 32 3 % , 237 2 8 % , -467	to store base, increased marketing spend during clearance activities as well as costs related to the raise of new equity
(%) EBIT margin Net Income **Basic Earnings per share (NOK)	-12,0 % -225 -0,75	-6 0 % , -137 -0 ,54	-5,5 % -411 0 00 ,	• EBITDA ending at negative NOK 45 million

GROUP | Continuing Operations (Reported Figures)

Gross profit	622	712	2 721
Gross margin (%)	31,4 %	38 2 % ,	32 3 % ,
EBITDA	-45	8 3	237
(%) EBITDA margin	-2,3 %	4 4 % ,	2 8 % ,
EBIT	-239	-113	-467
EBIT margin (%)	-12,0 %	-6 0 % ,	-5,5 %
Net Income	-225	-137	-411
**Basic Earnings per share (NOK)	-0,75	-0 ,54	0 00 ,

• Revenue up with NOK 119 million vs. last year
  • Positive like for like growth of 3.0%
  • E-com growth of 28.7% representing 27.8% of total revenue versus 23.0% last year
• Gross margins ended at 31.4%, down from 38.2% last year
  • The significantly lower gross margin was mainly related to the high campaign shares and heavy discounting
  • 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
  • The margins were positively affected by reversal of NOK 217 million in Q1 of the total loss accrual from 31.12.2022 of NOK 301 million
• OPEX in % is 0.1 p.p lower than last year
  • Driven by the higher top line yielding scale in operations offset by negative currency translation effects
  • Increased costs are related to new store openings, CPI adjustments to store base, increased marketing spend during clearance activities as well as costs related to the raise of new equity
• EBITDA ending at negative NOK 45 million
• Net income of minus NOK 72 million in Q1 2023

Gross Margin Development

XXL ASA Q1 2023 - Gross margin per segment (in %)

• Weakened gross margin development in the quarter, down from 38.2% in Q1 2022 to 31.4% in Q1 2023
• Margins negatively affected by high campaign shares and heavy discounting in the markets. The current market demands strict focus on inventory levels and liquidity control. XXL has prioritized clearing out inventory to be prepared for the upcoming seasons with in-season products available
• The margins were positively affected by reversal of NOK 217 million in Q1 of the total loss accrual from 31.12.2022 of NOK 301 million
• XXL targets a long term sustainable gross margin around 40 per cent for the Group

OPEX Development

XXL ASA Q1 2022 - OPEX per segment (in %)

• Group OPEX% down with 0.1 points to 33.6% in Q1, mainly explained by higher revenue yielding scale in operations
• Operating expenses increased by NOK 31 million due to negative currency translation effects of around NOK 20 million.
• Increased costs are related to new store openings, CPI adjustments to store base, increased marketing spend during clearance activities as well as costs related to the raise of new equity

EBITDADevelopment

XXL ASA Q1 2023 - EBITDA per segment (in MNOK)

Q1 22 Q1 23

• Negative EBITDA development vs LY mainly explained by the decreased gross margins
• EBITDA margin of -2.9% in Q1 2023 vs. 4.4% in Q1 2022

Net Debt Development

Financial position

Outlook

Six clear priorities going forward

PRIORITY	Revenue	Gross margin	Opex	Balance sheet
Category strategies	✓	✓		✓
Private Label	✓	✓
Full fletch omni-channel	✓
Improve campaigns and marketing	✓		✓
Austria strategic review	✓	✓	✓	✓
Cost to 30%*			✓
* Excluding IFRS 16 effects

Going forward XXL is working along the following actions

Category/Purchasing	Private Label
• XXL launched in April 2023 a new stock forecasting model that will significant improve inventory control • Supply is reorganized and is now a part of Category => will increase availability going forward	• Very good progress with several options
	Cost to 30%
• Significant improvements - New media mix - Stronger sales message and one message in all channels - New DR layout - Improved planning process • Continue a strong campaign and	• Exit of Austria in 2023 – progressing well • Store optimization and effectiveness • HQ reorganization - will improve efficiency
	Marketing

Austria –exit in 2023

	Exit according to plan
		entity. Project has good progress
		• Austria is treated as discontinued operations
		closed in Q2
		Continued negative results from Austria

• Working with several solutions including sale of the Austrian entity. Project has good progress
• Austria is treated as discontinued operations
• One store closed in January 2023, and two more stores to be closed in Q2
• Ambition to have no negative cash effects going forward

XXL has significantly reduced committed volumes in H2 2023 versus previous year

Significantly reduced incoming goods (BNOK) Implications

Financial ambitions – "40-30-10"

Actions to achieve ambition

• Increase private label share from 10% towards 30%
• Category strategy and execution
• Pricing balance every day low price vs. campaign execution – protect market share

Actions to achieve ambition

• Optimize store staffing
• Marketing efficiency
• HQ costs
• Downscaling of stores and optimize store footprint
• Austria

• 40-30-10: excluding IFRS 16 effects – Assumption of NOK 10 billion in yearly turnover. 2022 adjusted for additional write -down of inventory

Closing remarks

Q1 2023 Key Takeaways Priorities Going forward

• Lower demand and high inventory in the industry
• XXL are executing on strong and immediate actions in order to adapt to the new market situation
• High share of clearance activities has contributed to growth and market shares but impacted gross margins negatively
• Settlement of NOK 500 million private placement

• Manoeuvring through the turmoil in the market
• Strict liquidity control and follow up
• Inventory normalization expected during Q2 2023
• Reduce cost base
• Austria exit
• Category strategies
• E-commerce growth
• Strengthen campaigns and marketing

• Scale and cost efficiency to strengthen XXL position through the current market turmoil
• Race to "40-30-10"
• Increase private label share
• Optimize store footprint and size over time
• CEO Freddy Sobin to start in May 2023

Q&A

XXL ASA – Q1 2023

Appendix

Status QTD – LFL and EBITDA

28

Q1: Norway and Sweden

• Positive development in topline compared to the same quarter last year, representing a positive growth of 2.4 per cent. The growth is fueled by the clearance campaign initiated in February, as the market is challenging with weakened consumer sentiment and reduced demand for sporting goods.
• More clearance and campaign activities under challenging market conditions as well as higher sourcing costs, explains the decrease of 7.1 percentage points in the gross margin
• Operating expenses ended at 23.4 percent, explained by positive like for like growth yielding scale in operations and focus on store staffing offset by higher marketing spend due to clearance activities and cpi adjustments on store base
• EBITDA of NOK 95 million (NOK 166 million)

• Positive development in topline compared to the same quarter last year, representing a positive growth of 6.7 per cent. The growth is fueled by the clearance campaign initiated in February, as the market is challenging with weakened consumer sentiment and reduced demand for sporting goods.
• High clearance and campaign activities, both in the market and by XXL, under challenging market conditions as well as higher sourcing costs, explains the decrease of 7.3 percentage points in the gross margin
• Operating expenses ended at 28.9 percent, explained by positive like for like growth yielding scale in operations and focus on store staffing offset by higher marketing spend due to clearance activities and cpi adjustments on store base
• EBITDA ending at negative SEK 8 million (SEK 28 million)

Q1: Finland

• Positive like-for-like growth, despite challenging conditions with weakened consumer sentiment and reduced demand for sporting goods. The growth is fueled by the clearance campaign initiated in February.
• Lower gross margin is explained by more clearance activities under challenging market conditions as well as higher sourcing cost
• Opex% better than LY due to positive like for like for growth, yielding scale in the operations, offset by higher marketing spend due to clearance activities and cpi adjustments on store base
• EBITDA ended at EUR 1.2 million (EUR 3.0 million)

All sports united. Sports unite all.