XXL

Investor Presentation • Apr 23, 2021

XXL ASA – Q1 2021

Presentation of financial results 23 of April 2021

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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 first quarter 2021, held on 23 April 2021. 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.

Headlines Q1 2021 – steady manoeuvring in rough terrain

Q1 2021

• Q1 LY heavily impacted by extraordinary clearance campaign
• Temporarily stores closures in both Norway and Austria affecting top line significantly
• Capitalizing on strong E-commerce platform with > 30% growth constituting 26% of total revenue base
• Sustainable strong gross margin of > 40%
• Solid EBITDA at NOK 207 million (+NOK 243 million vs 2020)

Outlook

• Strong cash flow and XXL basically debt free
• Accelerated the implementation of strategic projects
• XXL with strong concept and capabilities to succeed post COVID

Highlights Q1 2021 – Solid result improvement

• Operating revenue of NOK 2 166 million (NOK 2 162 million), driven by 7% growth in Norway
  • Several stores temporarily closed during Q1
  • E-com growth of 30% and > 26% of total sales
  • Clearance campaign last year with high volumes
• Strong gross margins (+10 p.p) driven by improved campaign planning. Also LY included an extraordinary clearance campaign
• EBITDA of NOK 207 million (negative of NOK 36 million) – RTM EBITDA of NOK 1 360 million, and NOK 759 million ex. IFRS 16
• Solid balance sheet
  • Share buy back in Q2
  • Initiate a refinancing of the Group with the aim to return to the long term dividend policy

2 166

2 162

30.1

-1.7

+0.2%

vs. 20

-0.6 %

Revenue (NOK million)

Gross Margin

EBITDA Margin (%)

(%)

The COVID situation has impacted XXL across all markets in Q1 – most heavily in Norway with over 50% of sales capacity closed during parts of the quarter

	Q1 2021	Norway	Sweden	Finland	Austria
	Short status	• Oslo & Viken epicenter • Strong restrictions	• Stores open but with reduced traffic due to general mobility	• Limited mobility • COVID-restrictions closely monitored	• Heavy restrictions • Lockdown with effect from 1 January to 8
	description	throughout the quarter peaking in W11-15	restrictions	(with speculations during easter)	February
	Public regulations and restriction	High Low • Extensive restrictions • Reduced mobility	High Low • Reduced mobility	High Low • Limited mobility	High Low • Extensive restrictions • Reduced mobility
	Store capacity closed*	~19%	0%	0%	43%
	eCom Share	29.7%	23.6 %	19.5%	38.4%

Offensive moves this year vs. defensive moves last year

Last year – securing cashflow and reducing opex

• Cutting purchases
• Reduced marketing costs
• Temporarily layoffs

This year – more balanced approach

• Increased purchases
• Accelerated implementation of strategic projects
• Free freight in affected regions
• Testing out new solutions

Extraordinary quarter both this year and last year

RTM Market Shares – gaining in Norway and Sweden

• 12 months rolling basis XXL has gained market shares in Norway and Sweden, while more challenging in Finland
• Changed consumer behavior in Finland during COVID => one stop shopping with Hypermarkets gaining shares

Overall effects of COVID in 2020 was fairly neutral

Norway Sweden Finland Austria

-14.0

Strong EBITDA growth vs. last year

XXL continues to have the lowest prices in the market, but has improved execution in several areas

Page | 10 * Example Norway – all categories: XXL vs. two major competitors

As a result, gross margins have stabilized at higher levels

Page | 11 • 2015-2018: not restated margins

• 2019-2021: restated margins

Financial Review Q1 2021

Key figures

(Amounts in NOK million)	Q1 2021	Q1 2020 (Restated)	FY 2020 Audited
GROUP
Operating revenue	2 166	2 162	10 423
Growth (%)	0 2 % ,	7 4 % ,	15 9 % ,
Gross profit	876	651	3 904
Gross margin (%)	40 4 % ,	30 1 % ,	37 5 % ,
OPEX %	30 9 % ,	31 8 % ,	26 % 7 ,
EBITDA	207	-36	1 117
EBITDA margin (%)	9 5 % ,	-1 7 % ,	10 7 % ,
EBIT	16	-215	364
EBIT margin	0 7 % ,	-10 0 % ,	3 5 % ,
Net Income	-39	-186	126

Sales on par with LY: +0.2%

• Good development in Norway with 7.3% growth despite closed stores situation due to COVID restrictions
• Like for like growth of -0.6 %
• E-com growth of 30%
• Strong growth for especially Ski's and Outdoor
• Gross margins ended at a strong 40.4%, up from 30.1% LY, mainly explained by improved campaign execution (LY included a massive clearance campaign)
• OPEX% in Q1 is 0.9 p.p lower than last year, driven by good cost control in the segments and improved marketing efficiency
• EBITDA ending at NOK 207 million
  • RTM EBITDA of NOK 1 360 million
  • RTM EBITDA ex IFRS 16 of NOK 759 million

Gross margin development

• Strong gross margin development in the quarter, up from 30.1% in Q1 2020 to 40.4% in Q1 2021
• Broad based improvement all segments strengthened margins, except Austria that executed clearance of seasonal products due to store closures in first half of Q1
• Negative mix effects from higher e-com share, and increased freight costs, but positive effect due to a release of NOK 25 millions in obsolete provision related to inventory
• Sustainable gross margin levels going forward
  • improved market dynamics
  • improved campaign approach and execution
  • healthier assortment and inventory levels

OPEX development

• Group OPEX% down by 0.9 points to 30.9% in Q1
  • Good cost control in the segments
  • Improved marketing efficiency
• Increased costs in HQ and Logistics segment, partly related to the establishment of new central warehouse in Austria

EBITDA development

EBITDA increase in Q1 of NOK 243 million vs. LY

• Clearance campaign LY with low margins
• Strong start of 2021 in January, however more and more affected by store closures, especially in Norway and Austria during the quarter
• Lower OPEX% driven by improved marketing efficiency and better cost control
• All segments with EBITDA growth except for Austria due to high impact of COVID restrictions
• EBITDA margin of 9.5% in Q1 2021 vs. -1.7% in Q1 2020

Net debt development

Inventory at much healthier levels compared to previous years

Financial Summary

Financial Summary

• Solid EBITDA at NOK 207 million
• Several stores temporarily closed during Q1, only partly compensated with higher e-commerce sales
• Sustainable gross margin
• Opex under control
• Positive cash flow and strong balance sheet

Share buy back Refinancing

• XXL will acquire 3.5 million shares starting from 26 April to 1 June 2021

• Optimize capital structure by cover for shares to long term management investment program

• XXL will initiate a refinancing of the Group

• Aiming for
  • continued flexibility
  • improved terms
  • return to long term dividend policy

Outlook

Preparing for new "staycation" spring/summer

Lock down paying its toll in April

• 14 stores closed in Norway
• 5 stores closed in Austria
• Continued focus on implementation of strategic projects

Staying alert for fast changes in the market

• Close monitoring of changes in COVID-restrictions across all markets
• High responsiveness from defined contingency plans with necessary measures depending on impact and operational limitations

Preparing for new "staycation spring/summer"

• Increasing purchasing volumes
• Solid and strong balance sheet giving financial flexibility
• Focusing on commercial excellence, seasonal planning and campaign execution in addition to securing product availability

					STRICTLY CONFIDENTIAL
	ALL SPORTS UNITED Action Log - Covid Task Force 2021 Date:16.03.2021
-1		10 V	Filter J	WORK STREAM ▼	DEPARTMENT V		ACTIVITY
1	4	#1.4	Open	Finance	Rental contracts
1	5	#1.5	Open	Finance	Finance
1	7	#1.7	Open	Finance	Finance
1	8	#1.8	Open	Finance	Finance
2	1	#2.1	Open	E-commerce	Operations NO
2	4	#2.4	Open	E-commerce	Marketing
2	5	#2 5	Open	E-commerce	E-com
2	ნ	#2.6	Open	E-commerce	Operations NO
2	7	#2.7	Open	E-commerce	Operations NO

Post COVID-19 we believe in a more stable market dynamics and that XXL will capitalize on our strong business model and capabilities

Significant challenges in sporting goods retail PRE-COVID

• Inventory build-up and stagnation across all players and markets
• Highly competitive intensity with strong price and margin pressure
• Weakened balance sheets and liquidity for several key players in the Nordics (and Europe)

More stable market dynamics POST-COVID

• Persistent increase activity levels expected in key markets
• Strong recovery expected already in 2021 in Europe driven by continued spend on sportswear and equipment as economies recover
• Retail capacity balanced during 2020 in Norway and Sweden
• More healthy competitive dynamics and stabilized margin levels
• Accelerated online shift across all markets

XXL with strong concept and key capabilities to succeed

• Strong, stable and long-term owners
• Strong balance sheet and capitalization gives is us the opportunity to invest in future growth
• Realizing a defined strategic roadmap with demonstrated ability to execute
• XXL's branded big-box concept with key capabilities for future growth and strengthened position
• XXL with a solid omnichannel position

We have maintained and accelerated progress on our key strategic initiatives throughout the second wave of COVID restrictions

We believe that our customers will experience a stronger and better XXL POST-COVID - 60 of 90 stores rebuilt already

• New zone change and build up in stores
• Revitalized brand platform
• RFID and ESL to be implemented in all countries
• Improved web site and customer journey
• New brands access
• Elevated product ranges in selected categories
• Improved value-adding services in store

Our ambitions going forward is to continuously gain market shares and strengthen our profitability

LONG-TERM MARKET SHARE GROWTH

Our ambition is long-term market share gains in all markets and continue the growth within the e-com channel

IMPROVE GROSS MARGIN

We target to strengthen and improve our gross margin further from the stabilized 2020-levels (> 39% in gross margin)

DECREASE COST-RATIO

We continue to invest in improved operational efficiency to decrease the cost ratio and increase quality

Reassume long term dividend policy

Closing remarks

Q1 2021 takeaways	• Several temporarily store closures – capitalizing on strong e-com platform • Norway is standing out with a revenue growth of 7 per cent despite several store closures • Accelerated implementation of several strategic projects during lockdown • Gross margins at good and sustainable levels • EBITDA of NOK 207 million (negative of NOK 36 million LY) • Strong balance sheet – initiate refinancing of the Group
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	• Currently 14 stores closed in Norway and 5 stores closed in Austria • Continue rollout of ongoing strategic program • 2 new stores signed for 2021, 1 in Sweden and 1 in Austria • Capex in 2021 of NOK ~250-300 mill, related to ongoing improvement programs

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We are improving all elements of our "game play" and are moving up to the 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

Q1: Norway and Sweden – improvement on several parameters

• Gaining market shares improved seasonal execution
• Improved top line growth despite heavily impacted by several store closures. XXL has capitalized on its strong E-com platform, partly compensating for lost sales in stores.
• Increase in Gross Margin explained by an extraordinary clearance campaign last year and strengthened execution this year with improved campaign planning
• Opex improvements explained by like for like growth and scale in operations
• EBITDA of NOK 209 million (NOK 86 million)

• Growth of 0.7% vs. LY (excluding Outlets), driven by strong ecom growth.
• Improved gross margin explained by good campaign execution and the clearance campaign LY
• Opex improvements explained by lower personnel costs, and improved marketing mix
• EBITDA of NOK 72 millions (negative of NOK 1 million LY)

Q1: Continued EBITDA improvements in Finland. Austria heavily impacted by Covid-19 restrictions