XXL (Buy, TP: NOK12.00) - Q2 profit warning
XXL just issued a profit warning, with Q2 EBITDA indicated c42–50% below consensus as weakening consumer sentiment and lower demand for sporting goods in general have led to lower sales YOY. Also, increased campaign activity is expected to hit gross margins in Q2. We expect consensus 2022e EBITDA to fall by c14–16% and consensus 2022e EPS to fall by c55–70%following the profit warning. A significant negative share price reaction is warranted.XXL ASA, formerly known as Megasport AS, is a Norway-based retailer of sporting goods. The Company offers a portfolio of products including clothing, shoes, bicycles, wilderness products, sports equipment, training supplies and equipment, lifestyle and wellbeing products, fishing and hunting equipment, dog toys and accessories, riding clothing and accessories, as well as clothing, equipment and accessories for winter sports. Additionally, it offers services such as bike repair and maintenance, hunting excursion and courses, fishing trips, riding holidays, and dog training. The Company operates via around 40 stores, primarily in Norway but also in Sweden and Finland, and via an e-commerce platform.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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