XXL ASA (No_rec, TP: NOK) - Weak Q1, but better than forecast

XXL reported weak Q1 results, albeit slightly better than expected, as it continues to underperform in a challenging market. On a positive note, the company continues to make progress on its strategic initiatives and has improved its financial position following the private placement. We have cut our 2024–2025e EBITDA by 21–13% on slightly revised revenue and margin assumptions.

XXL ASA (No_rec, TP: NOK) - Soft Q1 in line with pre-warning

We consider this a slightly positive report for XXL, including weak figures in line with pre-warned levels, but slightly above our forecasts and consensus, and with no change to the outlook. We expect c5–10% positive revisions to consensus 2024e EBITDA and believe a slight positive share price reaction is warranted.

XXL ASA (No_rec, TP: NOK) - Recommendation and target price withdrawn

Given DNB Markets’ role in the recent private placement and the contemplated subsequent offering of shares in XXL ASA, we have withdrawn our recommendation and target price.

XXL (Hold, TP: NOK0.80) - Running out of runway

The Q4 results were below expectations and the outlook for Q1 was soft. While management looks to be making good progress in its turnaround plan, the runway might prove too short, increasing the risk that additional funding is needed. We have downgraded to HOLD (BUY) and cut our target price to NOK0.8 (1.2), reflecting negative estimate revisions and increased funding risk.

XXL (Buy, TP: NOK1.20) - Turnaround in progress

We expect weak Q4 results, reflecting still-low demand for sporting goods and high campaign activity. However, we believe XXL is well placed for a market recovery, given its leading position and promising transformation plan. We reiterate our BUY and NOK1.2 target price.

XXL (Buy, TP: NOK1.30) - Q3 below, cost-cut guidance hiked

We consider this a weak report, with figures below expectations. However, on the positive side XXL has hiked its ambitions for cost cuts by cNOK100m. We expect consensus 2023 EBITDA to come down by cNOK100m. We believe a negative share price reaction is warranted.

XXL (Buy, TP: NOK1.30) - Plotting course for a turnaround

We expect weak Q3 results, reflecting lacklustre demand for sporting goods and high campaign activity. While the market outlook remains subdued, in our view, XXL should be in pole position for a recovery, given its leading market position, strategic actions to restore profitability and a strengthened balance sheet. We reinstate a recommendation with a BUY and a NOK1.3 target price.

XXL (No_rec, TP: NOK) - Taking action

As pre-warned, XXL reported weak Q2 results, reflecting a challenging market. Although the timing of a market recovery remains unclear, the revised covenant structure and underwritten share issue offer XXL time to execute on its new strategy. Reflecting our role in the announced rights issue, we have withdrawn our recommendation and target price.

XXL (Hold, TP: NOK2.20) - Q2 profit warning

XXL has released a major profit warning for Q2, guiding for EBITDA of negative NOK25m–75m (consensus: NOK128m). Despite the significant shortfall, XXL is still in compliance with its covenants due to a temporarily deferral of tax payments. It commented that it is having constructive dialogue with its lending banks. We expect a c30% cut to consensus 2023 EBITDA and a negative share-price reaction.

XXL (Hold, TP: NOK2.20) - Focus remains on covenants

We expect XXL to report weak Q2 results, as elevated industry inventories and low demand for sporting goods leads to continued campaign pressure. Focus remains on covenants, which XXL is set to breach on our estimates. We reiterate our HOLD and NOK2.2 target price.

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Northern Lights

XXL (Hold, TP: NOK2.20) - Not out of the woods yet

The Q1 results were mixed, with soft results broadly in line with expectations but a positive inventory trend, with normalised levels set to be reached in Q2. However, the market outlook remains challenging and XXL looks set to breach its covenants on our forecasts. We reiterate our HOLD, but have cut our target price to NOK2.2 (2.6) despite slight positive estimate revisions, reflecting higher refinancing risk.

XXL (Hold, TP: NOK2.60) - In survival mode

We expect XXL to report weak Q1 results, hit by high campaign activity. Given elevated industry inventories and weak consumer demand, we consider 2023 a lost case from an earnings perspective, with a key focus on covenants. Although XXL appears to comply with covenants on our H1 estimates, a recovery in the sales trend will be needed for H2. We reinstate our HOLD and NOK2.6 target price.

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Northern Lights

XXL (No_rec, TP: NOK) - Weak Q4, as pre-warned

As pre-warned, XXL’s Q4 results were weak, and the market outlook remains challenging, evidenced by its significant inventory write-downs and the launch of the largest clearance campaign in three years to reduce inventory and protect liquidity. We have cut our 2023e EBITDA by 16% and our 2024e EBITDA by 8% on our revised gross margin assumptions.

XXL (No_rec, TP: NOK) - 2023 set to be a tough year

We expect soft Q4 results, in line with the pre-warned level. The key focus should be trading in Q1 to date, and when to expect a normalisation of profitability. In view of the weak macro backdrop and high industry inventories, we expect 2023 to be a tough year. Given DNB Markets’ role as Joint Bookrunner in the recent private placement and Manager in the contemplated subsequent offering, we have no target price or recommendation on the name.

XXL (No_rec, TP: NOK) - Recommendation and target price withdrawn

Given DNB Markets’ role as Joint Bookrunner in the recent private placement and Manager in the contemplated subsequent offering, we have withdrawn our target price and recommendation.

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