XXL

Investor Presentation • Oct 27, 2020

XXL ASA – Q3 2020

Presentation of financial results 27th of October 2020

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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 third quarter 2020, held on 27 October 2020. 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 – Q3 2020

Presentation of financial results 27th of October 2020

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Solid results and continued improvements – Focus on operational excellence

• Operating revenue of NOK 2 823 million (NOK 2 473 million), up 14%
• Group like for like growth of 10%
• E-com growth of 13%, and 84% growth in gross profit
• Norway with 21% growth
• High growth for Outdoor and Bikes
• Extraordinary market conditions, especially at the beginning of the quarter
• Strong gross margins driven by lower seasonal sell down and improved campaign execution
• EBITDA of NOK 413 million (NOK 271 million)
• All segments with positive development vs LY
• EBITDA ex. IFRS 16 from NOK 132 million Q3-19 to NOK 268 million in Q3-20
• Healthy inventory levels and solid balance sheet gives financial flexibility

Market data – variations between markets

Norway and Sweden with strong EBITDA growth

• Strong market conditions and positive "staycation" effects
• Gross margin increase due to lower seasonal sell down and improved campaign execution
• Opex improvements explained by like for like growth and scale in operations

• Record high EBITDA in Q3

• Growth from new stores, but negatively affected by the outlet stores to the Norwegian border

• Strong gross margin improvement explained by lower seasonal sell down and improved campaign execution
• Opex improvements partly explained by improved marketing efficiency
• Strong EBITDA improvement of NOK 62 million

More challenging market dynamics in Finland and Austria

• Weak sales development in challenging market, tougher comparable, but also loss of market shares in Q3
• Strong margin improvement due to less seasonal sell down and better campaign mix
• Opex increase explained by the negative growth, somewhat counteracted by improved marketing efficiency

• Record high EBITDA in Q3

• Negative like for like growth due to challenging market dynamics

• Margin improvement due to better campaign planning and less clearance activities
• Opex improvements explained by higher scale in operations and improved marketing mix

We are launching an ambitious growth strategy for e-commerce to maintain and further strengthen our leading position in the Nordics

• XXL are the biggest online sports retailer in the Nordics with ~ NOK 1.9 billion in turnover
• We have now defined a detailed, specific and ambitious plan to further grow and strengthen our eCommerce channel and offering
• After the reorganization of XXL from 1st of September eCommerce is now a fully integrated channel across the value chain and organization

Unique internal engagement lead to a successful launch of XXL REWARD – an improved member program for XXL customers

XXL has had a newsletter subscription program with more than 2.3 million customers over recent years

In September we had a soft launch of XXL REWARD, an omni-channel customer program with improved functionality and new customer benefits

First week of market launch an average of 47% of all transaction across Europe interacted with XXL REWARD

XXL REWARD will improve our customer communication and enable more insight to be shared with internal teams and external partners

XXL are working in parallel with short-term improvements in customer journey and a long-term loyalty program strategy

Share of XXL REWARD transaction in-store (Recruitments in-store during W42)

Financial Review Q3 2020

2020 – a special year with different focus areas in each quarter

Strengthen balance sheet 169 MNOK vs. Q1 2019 • Clearance sales and lower purchases significant lower inventory resulting in improved cash flow and higher liquidity reserves • Capital raise • New agreed long term loan facilities • Covid-19: Contingency plans • Secure cash flow – top line – purchases – cost savings • Secure top line growth and market shares Secure cash flow and top line Operational efficiency • Operational efficiency – margin improvements – cost reductions • Strategic initiatives including – category development – in-store experience – omni-channel champion Q1 Q2 Q3 Q4 Seasonal execution • Seasonal execution • Campaign and operational excellence • Stay alert for fast changes in the market

Key figures

(Amounts in NOK million)	Q3 2020	Q3 2019	YTD 2020	YTD 2019	FY 2019 Audited
GROUP
Dperating revenue	2823	2473	7851	6673	8992
Growth (%)	14.2%	3.6%	17.6%	11.7%	$-5.1%$
Gross profit	1 1 4 4	922	2789	2.599	3058
Gross margin (%)	40.5%	37.3%	35.5%	389%	34.0%
OPFX %	25.9%	26.3%	26.4%	27.9%	28.6%
FRITDA	413	271	715	736	490
EBITDA margin (%)	14.6%	11.0%	9.1%	11.0%	5.4 %
EBIT	214	94	156	211	-201
EBIT margin	7.6 %	3.8%	2.0%	3.2%	$-2.2%$
Net Income	159	33	52	61	-327
**Basic Earnings per share (NOK)	0.63	0.24	0.25	0.45	-2.31

• Positive sales development in Q3 vs. LY: +14.2%
• Good development in especially Norway with 21.1% growth
• Like for like growth of 10.1%
• E-com growth of 13% and a strong gross profit growth of 84%
• Most categories with growth, but especially strong for Outdoor and Bikes
• Gross margins margins ended at a strong 40.5%, up from 37.3% LY, explained by lower seasonal sell down and improved campaign execution
• OPEX% in Q3 is 0.4 p.p lower than last year, driven by like for like growth driving scale in operations and improved marketing efficiency
• EBITDA ending at NOK 413 million record high Q3

Gross margin development

• Strong gross margin development in the quarter, up from 37.3% in Q3 2019 to 40.5% in Q3 2020
• Broad based improvement all segments strengthened margins
• Gross margin improvement explained by lower seasonal sell down and improved campaign execution

OPEX development

• Group OPEX% down by 0.4 points to 25.9% in Q3
• Driven by positive like for like growth yielding scale in operations
• Improved marketing efficiency
• Increased costs in HQ and Logistics segment, mainly explained by ongoing improvement program, higher capacity costs at the central warehouses, and higher bonus accruals in Q3 vs. last year. Also last years figures was positively affected by a reversal of NOK 18 million related to the old share option program

EBITDA development

EBITDA increase in Q3 of NOK 142 million vs. LY

• Driven by sales growth in the Norwegian market
• Stronger gross margins of 3.2 percentage points due to improved campaign planning and lower seasonal sell out
• Lower OPEX% driven by positive like for like growth, and higher marketing efficiency
• All segments with EBITDA growth, and especially strong in Norway (NOK 90 million)
• EBITDA margin of 14.6% in Q3 2020 vs. 11.0% in Q3 2019

Significant improvement in working capital levels

Net debt development

• Strongest Q3 EBITDA registered
• Broad based improvement all segments posting positive development and especially strong in Norway
• Strong gross margin improvements
• Improved marketing efficiency
• Positive cash flow in the quarter driven by continued inventory build down
• Significant reduction in Working Capital and Inventory compared to previous years
• Strong balance sheet
• Net interest bearing debt of NOK 45 million, a reduction of NOK 1.8 billion vs. last year
• Liquidity reserves of NOK 1.2 billion
• Share buy back of NOK 100 million starting from 28th. of October until 15th. of December
• Optimize capital structure and to cover for shares to the long term management investment program
• The "corona facility" RCF of NOK 300 million will be reduced with NOK 100 million

Closing remarks

XXL is systematically working on measures to strengthen the long-term position as the leading sport concept in the Nordics

We are improving all elements of our "game play" and are moving up to the mid-field keeping possession of the ball

"Strengthen the defense"

• Secure a healthy balance sheet and inventory
• Secure cost control and start realizing cost reductions
• Secure a more analytical, structured and fact based decision making

"Take control of the mid-field"

• Secure efficient processes and quality in daily operations and longterm planning
• Improve cross functional cooperation
• Strengthen seasonal planning and campaign execution

"Apply high-pressure attacking"

• Improve customer experience and perception of XXL
• Improve concept, category plans and marketing
• Realize sales and market share growth

Summary

Q3 2020 takeaways	• Solid results and continued improvements • Top-line growth of 14% - especially strong in Norway with 21% growth despite demanding supply situation at the end of a record-breaking season • Good campaign execution and higher gross margins • EBITDA of NOK 413 million (NOK 271 million LY) • Solid balance sheet gives financial flexibility
Priorities	• Optimize inventory and cost base • Secure efficient processes and quality in seasonal operations • Increase marketing efficiency • Improve category and concept offering • Accelerate our strategic action plan for e-com • Priority on changes with direct customer impact
Outlook	• Unpredictable situation – important to have contingency plans ready in case of fast changes in the market • Expect a more normalization of demands going forward but still with high fluctuations across markets, sales channels and categories • 3-5 new stores per year and downsizing a selection of existing stores • Capex in 2020 of NOK ~150-180 mill. Expecting an increase in the next years

Broad based EBITDA improvement across all segments

• Strong market conditions and positive "staycation" effects
• Positive like for like growth of 16.1%
• Higher gross margins up 1.8%p to 41.1%

• EBITDA-margin up 3.5%p to 21.7%

• Positive sales development in the quarter up 2.6% vs. LY in local currency

• Like for like growth up 0.2% in local currency
• Growth was offset by "closed" borders affecting XXLs Outlet shops on the Swedish border
• excluding the outlet stores the reported growth was 7.2% in local currency and a like for like growth of 4.1%
• Positive development in gross margin of 3.5%p to 40%

• EBITDA increased with 62 million and a margin of 18.2%

• Weak sales development in challenging market, but also loss of market shares in Q3

• Negative sales development in Q3, down 4.4 % vs. last year in local currency, and a negative like for like growth of 8.7%
• Positive development in gross margins, up 6.3%p to 41.8%

• EBITDA increased with 28 million and a margin of 19% up 5.1%p against last year

• Positive sales development in the quarter up 5.1% vs. LY, explained by new stores and e-com growth

• Like for like down 4% in local currency more challenging market dynamics compared to the Nordics
• Working on a plan to break even
• Selectively opening of new stores
• Improve logistics facilities
• Gross margin up 1.8%p to 33.5%
• Positive EBITDA of NOK 6 million
• Reduced opex due to cost reductions related to higher marketing efficiency

Denmark

• The adjustments last year to reach break-even on a significant lower cost base has been positive
• Despite a revenue decline of 41.8%, EBITDA ended at NOK 0 million, explained by a reduced opex base and improved gross margins

HQ and Logistics

• Higher cost mainly explained by higher bonus accruals, higher capacity costs at the central warehouses and related to the ongoing improvement program.
• Also last year figures was positively affected by a reversal of NOK 18 million related to the old share option program
• OPEX of NOK 131 million to 4.6% of Group sales
• Several initiatives to reduce the cost base

Growth split by markets