XXL

Earnings Release • Oct 26, 2016

XXL ASA - Third quarter 2016 results - Strong Norwegian performance

XXL ASA - Third quarter 2016 results - Strong Norwegian performance

XXL delivered a growth of 19 per cent for the third

quarter 2016, driven by new stores and E-commerce.

September was challenging with unseasonal warm weather

in all regions, impacting like-for-like growth and

gross margin. However, XXL is gaining market shares

and both Norway and Sweden improved the cost position

in the quarter. EBITDA for the Group amounted to NOK

214 million in the quarter with a corresponding margin

of 10.3 per cent, where the Norwegian operation is

standing out with the strongest improvement compared

to last year.

XXL has signed its first two lease contracts in

Austria with an intention to open at least one store

late 2017. Austria is an attractive market with four

distinctive seasons, brand and service minded

consumers, and with a competitive landscape similar to

the Nordic markets.

Highlights Q3 2016:

- Total revenues of NOK 2 080 million (NOK 1

753 million), up 19 per cent

- Like-for-like growth of 4 per cent

- EBITDA of NOK 214 million (NOK 201 million)

- Opened one new store in Norway

- Signed first two lease contracts in Austria

Outlook

XXL has signed 12 new lease agreements for store

openings in 2016 where of 7 in Norway, 2 in Sweden and

3 in Finland. This includes 6 stores that XXL had

opened by the end of Q3 2016.

In addition, XXL launched an E-commerce offering in

Denmark in May 2016. The launch is colored by

aggressive pricing and high marketing spending and

will return negative profits the first years of

operation. The business case has minor initial CAPEX

but the total investment should be considered as a

small store outside Norway with 4-5 years of pay-back.

Due to more stores and growth in E-commerce in Norway

XXL will invest in the central warehouse. The central

warehouse in Norway will increase from approximately

24 000 square meters to 32 000 square meters. In

addition, XXL will increase the capacity of the

Autostore system in Sweden. Total infrastructure

investments will be in the range of NOK 50-65 million

in 2016.

The distribution channels for XXL marketing material

is under substantial change where the existing print

and TV marketing is under pressure. XXL will focus

more on digital marketing channels in addition to the

existing channels. The new strategy will increase the

marketing cost in per cent of sales in all countries

in a transition period by approximately 0.5 percentage

points year over year.

The Group maintains the following long term objectives

(on full year basis):

- Like-for-like growth of mid-single digits over

time including E-commerce

- Gross margins to be stable. In Norway at low

40's, high 30's in Sweden and between mid and high

30's in Finland. Due to the demanding macro in Finland

the lift to high 30's may take longer time than in

Sweden

- EBITDA-margin stable as a result of stable

gross margins and operating expenses. In Norway at low

20's, in Sweden low double digits and in Finland high

single digits. Due to the demanding macro in Finland

the lift to high single digits may take longer time

than in Sweden.

XXL has already signed 9 new lease agreements for new

store openings including 2 stores in Austria and aims

for 9-12 new stores in total for 2017.

XXL has signed two lease contracts for store openings

in Austria, whereof one is subject to authorities

approvals. XXL intends to open at least one store in

Austria, and possibly two stores, late 2017 and to

launch E-commerce from the same date as the first

store opening. XXL has ongoing negotiations for more

lease contracts and has received offers in several

cities. The launch will be colored by aggressive

pricing and high marketing spending and will return

negative profits the first years of operations. CAPEX

per store will be in the range of EUR 1.7 -1.9 million

and an average pay-back per store of 4-5 years. XXL

will also establish a local team for buying and

support and will at least employ five more employees

in central functions than in Sweden and Finland. This

organization will be scaled for the whole DACH-region

(Germany, Austria and Switzerland). Average sale per

store is expected to be around EUR 12 million, while

the gross margin and EBITDA-profile will be as in

Sweden over time when excluding for the build up of a

centralized organization. Hence the start-up in

Austria will have higher costs than the launch in

Sweden or Finland. XXL expects between 15-20 stores in

total in the Austrian market.

For further information please find attached the

quarterly report and the presentation material.

The results will be presented at 08:30 CET by CEO

Fredrik Steenbuch and CFO Krister Pedersen. The

presentation will take place at our headquarters in

Oslo, Strømsveien 245, Alna Senter (entrance on the

right side of Maxbo). 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 Q3.

A replay will be available on www.xxlasa.com soon

after the live presentation.

For further queries, please contact:

Tolle O. R. Grøterud,

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 and Denmark. It

is the largest and the fastest growing among the major

sports retailers in the Nordic. 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 lowest

prices and the widest assortment of products, focusing

on branded goods.