XXL

Earnings Release • Jul 19, 2019

XXL ASA – Second quarter 2019 results - Reduced inventory and improved cash flow but disappointing sales development

XXL ASA – Second quarter 2019 results - Reduced inventory and improved cash flow but disappointing sales development

Key focus in the quarter has been on reducing the inventory level and has contributed to a positive development in cash flow. XXL’s liquidity reserve amounted to NOK 0.5 billion and the leverage ratio ended at 4.05x. In the second quarter 2019 XXL delivered operating revenues of NOK 2.2 billion, representing a decline of 6 per cent, but with continued improvements in the gross margin. EBITDA amounted to NOK 273 million (NOK 185 million) and NOK 143 million when adjusting for positive effects of the IFRS 16 implementation. The results are negatively impacted by lower supplier bonuses of around NOK 30 million due to reduced purchasing volumes. XXL is disappointed with the revenue development and is working on fine tuning the balance between revenues and gross margins in combination with reducing the inventory level in a controlled way. XXL has defined many initiatives to deliver on the ambition of improving the working capital situation and reducing costs down towards 25 per cent of sales over time.

Highlights

- Total revenues of NOK 2 187 million (NOK 2 331 million), down 6 per cent

- Higher gross margin of 39.2 per cent (38.5 per cent)

- EBITDA of NOK 143 million (NOK 185 million) adjusted for IFRS 16 effects

- Results impacted by lower supplier bonuses of NOK 30 million

- Reduction in inventory and improved cash flow

Outlook

XXL has signed 5 new lease agreements for store openings in 2019 where of 2 in Sweden, 2 in Finland and 1 in Austria and aims for 4-5 new stores in total for 2019.

In line with the existing growth strategy, XXL will continue to invest in new stores, E-commerce platform, existing stores, infrastructure and IT. Total CAPEX for XXL Group in 2019 is expected to be around NOK 180 million. Going forward XXL expects to slow down the pace of the store roll-out and focus on new stores in Austria and some in Sweden. At the same time XXL will be downsizing several existing stores.

XXL has a mid-term ambition of inventory per store of NOK 25 million.

The Group has the following long term objectives (on full year basis and adjusted for IFRS 16 effects):

- Group like-for-like growth of low single digits over time including E-commerce

- Competition and E-commerce growth to put pressure on Group gross margin over time

- Group OPEX% as percentage of total operating revenues to gradually trend down towards 25 per cent in a five year period starting from 2019. Growth and especially improvements within E-commerce is essential for obtaining this ambition.

- Group EBITDA-margin stable around 2017 level as a result of lower gross margin and OPEX% over time. In Norway around 20 per cent, in Sweden and Finland low double digits, in Denmark and Austria high single digits

For further information please find attached the quarterly report and the presentation material.

The results will be presented at 08:30 CET by interim CEO Tolle Grøterud and CFO Stein Eriksen. The presentation will take place at our headquarters in Oslo, Strømsveien 245, Alna (entrance to our offices on the left side of McDonalds). The presentation will be held in English and will be webcasted at www.xxlasa.com. You may also follow the presentation live by telephone. Dial-in details: +47 21 56 33 18 (Norway) and +44(0) 20 3003 2666 (International), passcode – XXL Q2.

For further queries, please contact:

Tolle O. R. Grøterud

Interim CEO/Investor Relations

XXL ASA

Tel: +47 90 27 29 59

E-mail:ir@xxlasa.com

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act

About XXL ASA

XXL is a leading sports retailer with stores and e-commerce in Norway, Sweden, Finland, Denmark and Austria. It is the largest among the major sports retailers in the Nordics and the fastest growing among the major sports retail chains in the World. XXL pursues a broad customer appeal, offering a one stop shop experience with a wide range of products for sports, hunting, skiing, biking and other outdoor activities. XXL’s concept is to have the largest stores with the best prices and the widest assortment of products, focusing on branded goods.