Great numbers for the sports equipment giant, but with one grip they could have been even better.
On Tuesday morning, XXL boss Pål Wibe was able to tell about very solid quarterly figures:
– These are fantastic numbers, especially in Norway, says Wibe.
Profit after tax tripled compared with the same period in 2019. The figures are in stark contrast to the situation in February, when the crisis was at its worst.
Admits lost sales
Cost cuts and trimming of inventory are behind much of the profit progress, both in the second and third quarters, points out the XXL manager. But these measures also had negative consequences:
– With too high a stock, the financial situation becomes very vulnerable. Now we entered the corona crisis with more solid conditions. But it was a bit negative in the third quarter, towards the end of the summer season. Then we had too little goods, says Pål Wibe to Nettavisen.
– Did you lose sales by not having enough goods in the shops?
– In the third quarter we have it. By the end of the third quarter, we had sold everything and could not run end-of-season sales.
– How much did you lose on this?
– We have not counted on that.
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– Do you have enough goods in stock until Christmas? What can you say about that?
– We have worked hard to secure ourselves so we have more than enough for Christmas, and have a good dialogue with the suppliers. We have better time to prepare now, so we are very confident of having enough goods.
The pandemic turned the economy around
Increasing e-commerce and a new loyalty program are among the instruments that will ensure increased growth in the future, the XXL manager emphasizes.
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After a tough start to the year, XXL was well positioned when the corona epidemic broke out in full force in March, Wibe says.
– We saw in April that the situation could be to our advantage. It has been shown that people are more active than ever, and this reflects that people have become more aware of staying active. It’s good for consumers and good for us.
– Where would you have been without the pandemic?
– Hehe, it’s hard to know. Now we just have to work more long-term to improve.
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Bets heavily on e-commerce
According to Wibe, XXL is the only company in the sports equipment industry to have both a strong online store and large physical stores. The investment in e-commerce has meant a lot for growth, and the pandemic has accelerated this development:
– We will have a turnover in e-commerce of around two billion kroner for the entire group in 2020. We are by far the largest e-commerce player in the sports industry in the Nordic region, and here Covid has probably been an accelerator. Our growth alone will be NOK 500 million – that is more than the total net sales of most of our largest competitors.
– Isn’t there a risk that the increased demand will also lead to increased prices?
– We will always have the lowest prices on everything.
While e-commerce turnover was NOK 1.3 billion in 2019, Wibe expects a total net turnover of NOK 1.8 billion in 2020, which corresponds to a growth in the share of 17-18 percent.
– How are you going to handle the new bandage rules – do you think it will affect Christmas sales in stores?
– We do everything we can to follow the infection control rules. We have a great advantage with our large department stores and online store. It should be safe to shop at XXL. We think that maybe the Christmas shopping will spread more than usual.
Triple the result
In Norway, turnover grew by as much as 21 per cent in the third quarter, while total growth was 14 per cent. XXL tripled its profit after tax, compared with the third quarter of 2019.
Key figures for the quarter:
- Operating revenues NOK 2,823 million, up 14 per cent (NOK 2,473 million in the third quarter of 2019)
- Operating profit (EBITDA) NOK 413 million (NOK 271 million in the third quarter of 2019)
- Profit after tax NOK 159 million (NOK 52 million)
The Norwegian market stands out with significantly greater growth than the other countries in which XXL operates. Sweden also has good growth, while the development is negative in Finland and Austria.
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