XXL

Earnings Release • Feb 8, 2024

XXL ASA – Q4 2023

Concluding the year with disappointing results, but turnaround actions starting to materialize

Presentation of Financial Results February 8th, 2024

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 fourth quarter 2023, held on 8 February 2024. 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 Q4 2023 Presentation

CEO agenda

1 Reset & Rethink progress

2 A strengthened team

3 Q4 results

2023 a challenging year with many changes to reshape XXL for the future

• No operations nor material contractual obligations in Austria after 2023-year end

Challenging market and results New management and board New foundation with Reset & Rethink Inventory reduction (mNOK)

• Strategic partnership with Stormberg progressing well

KPI comparison Stormberg vs. other (Index)

• Strengthening hunting brand Mackenzie • Evaluating other strategic partners Other Stormberg Other Stormberg

Exit Austria Modernized loyalty club XXL REWARD Double down on own brands & PL Initiated further turnaround measures

• Rights issue concluded in Q3-23
• Re-organizations to right size overhead
• Launched cost out program of 300mNOK
• Reviewed store footprint and activated new down scaling strategy

X

XXL's journey ahead

RESET

Top line quick wins and cost control through MWBs

0-12 months 0-18 months

RETHINK

Accelerate key top line levers

RESET: We are continuing with our 5 "Must Win Battles" – which are progressing well!

MWB indicators | Increased focus towards lower price points which will also improve availability

MWB indicators | Strict capital and buying discipline has already given effects with clear shift towards fast moving products

MWB indicators | Further indicators pointing towards underlying progress in our MWB turnaround plan

Efficiency in store operations continuing to improve during the quarter

Q4 RPWH* improvement vs. LY (%)

Stronger price control leading to improved underlying gross margins moving towards target

Gross margin development (%)

** Extra provision of 70 mNOK to loyalty program XXL Reward

STORE OPERATIONS PRICING E-COMMERCE PROFITABILITY

After having implemented online improvements, we see clear positive shifts in online conversion rates cross all markets

Online conversion rate improvement (%-points)

* Revenue per working hour

Restructuring | Continuing to consolidate and optimize markets and sales channels as well as concluding a 300 mNOK cost out program

Renewal of the Senior Management Team to strengthen execution | 4/4 senior management recruitments successfully finalized

New Senior Management

Emelie Friis

Marketing & Growth, started mid Aug 23

Over 25 years experience in marketing with focus on FMCG, Retail and consumer brands

Simen Swanström

Simen Swanstrom Helly-Hansen

Category, Buying & Supply started 1 st of Nov 23

Strong & diverse international experience, over 20 years, coming in with proper & relevant category management competence

New Senior Management Team members

Peter Jansson

IT & Technology, started 1st of Nov 23

A previous IT consultant that joined XXL in 2014 and up until now has acted as SVP Tech development (~CTO)

Dawid Gosciniak

COO starting mid April 24

Over 20 years retail experience within fashion & lifestyle, mainly within H&M and having roles as head of global construction, global leasing, store development in global expansion and lastly global store experience & commercial

New centralized roles have been established and together with key new SVPs successfully recruited

Challenging market short-mid term, many distressed players, which will enable a less saturated and hopefully a healthier market ahead

* Credit safe PRESSEMELDING - 29. JANUAR 2024

Q4 financial summary

Several materially adverse effects in Q4

Description		mNOK impact
	REWARD To strengthen customer loyalty, with increased buying frequency and share of wallet, XXL has renewed its customer club XXL Reward by introducing bonus points. This has led to a provision directly impacting sales and gross margin negatively. Moving forward the impact will be lower, as Q4 was the launch for the strategically strengthened customer club, with high initial costs that will be lower onwards	~70 (P&L effect)
	Restructuring Various costs taken to reshape and restructure the company, e.g., rights issue costs, legal costs, redundancy pay related to rightsizing as well as costs related to consolidation and optimization of markets and sales channels	~10 (P&L effect)
	Goodwill XXL has made an impairment of its technical goodwill leading to an extra ordinary write-down of 522 mNOK as well as write-down of right of use assets of 54 mNOK	576 (P&L effect, no cash effect)
	Tax On October 3rd, 2023, XXL paid 90 mNOK to the Norwegian tax authorities regarding a reassessment of taxable income for the subsidiary XXL Sport & Villmark AS relating to the XXL group's international transfer pricing model. XXL opposes the claim	90 (Cash effect)

Financial Review Q4 2023

Material write downs and additional provisions in Q4 2023

• The Group's booked Goodwill has been 2 744 mNOK, mainly related to the acquisitions of XXL Sport & Villmark AS in 2010
• A technical write down of 522 mNOK was made in Q4 2023, related to the weak market development and increased WACC

• The write down has no cash effect

• Due to the operational development and situation for some of the stores, it is prudent according to IFRS 16, to impair and write down some of the Swedish (49 mNOK) and Finnish stores (5 mNOK)

• The write down has no cash effect

Goodwill IFRS 16 Other assessments

• Reward Program introduction of bonus points has triggered an accrual of approx. 70 mNOK in Q4 => classified as both sales reduction and gross profit reduction => effect on gross margin of approx. 2%-p
• Some restructuring costs related to legal costs, rightsizing of org etc. of approx. 10 mNOK
• Tax payment of 90 mNOK in Q4

Key Figures

(Amounts in NOK million)	Q4 2023	Q4 2022	FY 2023	FY 2022
GROUP - Continuing Operations
Operating revenue	2,049	2,264	7,961	8,426
Growth (%)	-9.5 %	-13.2 %	-5.5 %	-12.2 %
Gross profit	687	448	2,508	2,721
Gross margin (%)	33.5 %	19.8 %	31.5 %	32.3 %
OPEX %	34.2 %	30.2 %	32.5 %	29.5 %
EBITDA	-13	-236	-80	237
EBITDA margin (%)	-0.6 %	-10.4 %	-1.0 %	2.8 %
EBIT	-767	-408	-1,409	-467
EBIT margin (%)	-37.4 %	-18.0 %	-17.7 %	-5.5 %
Impairment losses	576	-	576	0.0 %
EBIT adj.	-191	-408	-833	-467
EBIT adj. margin (%)	-9.3 %	-18.0 %	-10.5 %	-5.5 %
Net Income	-1,017	-373	-1,629	-411
Net Income adj.	-441	-373	-1,053	-411
**Basic Earnings per share (NOK)	-0.62	-1.89	-2.15	-2.14

• Revenue down by 215 mNOK vs. last year - Challenging market driven by low consumer confidence and reduced demand for sporting goods results in a negative like for like growth of 12. 0 % - Introduction of XXL reward bonus points has led to a provision of approx. 70 mNOK directly impacting revenue of approx. 3% • Gross margins ended at 33.5%, up from 19.8% last year - Last year's figure was impacted by an additional write down of inventory of 301 mNOK • OPEX in % is 4.0 p.p higher than last year - Operating expenses as percentage of sales increased to 34.2% in Q 4 (30.2% in Q4 22) impacted by the negative like for like growth hampering scale in the operations
• Increased costs explained by new store openings, higher marketing costs, and negative currency translation effects
• Some additional costs related to the equity raise, and rightsizing of organization
• EBITDA ending at negative 13 mNOK
• Net income adjusted of negative 441 mNOK in Q4 2023

Gross Margin Development

Q4 22 Q4 23

XXL ASA Q4 2023 - Gross margin per segment (in %) 19.8 25.3 12.3 15.6 33.5 36.0 28.7 34.3 GROUP NORWAY SWEDEN FINLAND

• Improved gross margin development in the quarter, up from 19.8% in Q4 2022 to 33.5% in Q4 2023 (mainly due to an additional write-down of inventory of 301 mNOK in Q4 2022)
• Introduction of Reward bonus points has triggered an accrual of approx. 70 mNOK in Q4 and had an effect on gross margin of approx. 2%-p

•

• 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

OPEX Development

XXL ASA Q4 2023 - OPEX per segment (in %)

• Group OPEX% in Q4 increased to 34.2% (up 4.0 points vs Q4 22), mainly impacted by the negative like for like growth hampering scale in the operations
• Operating expenses increased by 15 mNOK vs Q4 22, but are lower than last year when adjusting for negative currency translation effects of around 29 mNOK despite new stores, salary increases and KPI adjustments.
• Cost out program and restructuring are thus starting to materialize

EBITDADevelopment

• Positive EBITDA development vs LY in all segments mainly explained by additional write-down of inventory in Q4 2022
• EBITDA on historic low levels mainly explained by reduced revenue and lower gross margin
• EBITDA margin of -0.6% in Q4 2023 vs. 10.4% in Q4 2022

Good development towards a healthier inventory composition

Allocating more capital towards lower price points to increase availability and conversion

Stock quantity development towards low price points will significantly change competitiveness and product availability

Net debt reduced

Net debt development (mNOK)

Financial position

Summary 2023 full year

Summary and final remarks

Current trading and outlook

CURRENT TRADING OUTLOOK

• January sales decreased to ~550 mNOK
• Favourable winter conditions leading to double digit growth in main winter categories like cross country and alpine
• Gross margin materially strengthened
• Before comparing to extraordinary clearance campaign ("Prisskred") launched late January 2023, sales down ~8%
• Non-seasonal products and capital-intensive products in general challenging, like home gym, outdoor equipment
• Limited availability on important price points holding back sales

• Delivering on the "Reset & Rethink" plan ambition of 500-750 mNOK EBITDA uplift during the next 12-18 months

• Continued low CAPEX levels - expected to be around 100-150 mNOK in 2024
• No new store openings signed
• Downscaling and evaluating the store base

X

XXL's journey ahead

RESET

Top line quick wins and cost control through MWBs

0-12 months 0-18 months

RETHINK

Accelerate key top line levers

We believe we are moving in the right direction

THANK YOU!

Q&A

All sports united. Sports unite all.