Release Date: July 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- XXL ASA (LTS:0R3P, Financial) reported a significant increase in EBITDA by NOK96 million, indicating improved underlying profitability.
- The company's gross margin improved by almost 5 percentage points year-over-year, showcasing effective pricing strategies.
- Inventory levels were reduced by 15% year-over-year, reflecting efficient inventory management.
- The company successfully raised almost NOK0.5 billion through a private placement and subsequent offering, strengthening its liquidity position.
- XXL ASA's customer club membership grew to over 3.8 million members, enhancing customer engagement and loyalty.
Negative Points
- Sales decreased by 9% in the quarter, which negatively impacted further profitability improvements.
- The availability of top products was only at 82%, which hindered potential sales growth.
- Capital-intensive goods, particularly bikes, experienced a significant decline in sales, contributing to a NOK96 million loss year-over-year.
- The Finnish market remains challenging, affecting overall market performance.
- Despite cost-saving measures, OpEx showed only a modest reduction due to non-recurring items and timing effects.
Q & A Highlights
Q: Can you provide an overview of the financial performance for the second quarter?
A: Freddy Sobin, CEO, reported a 9% decrease in sales but highlighted a NOK96 million increase in EBITDA, indicating progress in their Reset & Rethink plan. The gross margin improved by almost 5 percentage points year-over-year, despite disappointing sales figures.
Q: What are the main challenges affecting sales performance?
A: Freddy Sobin, CEO, noted that low product availability, particularly in top-selling items, and reduced demand for capital-intensive goods like bikes were significant challenges. Additionally, tough comparables from aggressive campaigns in 2023 impacted sales.
Q: How is the partnership with Frasers Group expected to impact XXL?
A: Freddy Sobin, CEO, mentioned that the strategic partnership with Frasers Group, a major shareholder and leading UK retailer, is expected to accelerate the Reset & Rethink journey, enhancing commercial development and sales.
Q: What steps are being taken to improve product availability?
A: Freddy Sobin, CEO, stated that efforts are being doubled to enhance commercial development and strengthen top-line sales. The focus is on increasing inventory for high-demand products to improve availability and sales performance.
Q: Can you elaborate on the financial outlook and strategic focus moving forward?
A: Freddy Sobin, CEO, emphasized the commitment to the Reset & Rethink plan, aiming to improve sales and profitability. The focus will be on commercial development, product availability, and leveraging partnerships to achieve financial targets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
