XXL ASA (No_rec, TP: NOK) - Some early signs of recovery

XXL reported weak figures as pre-warned, but with signs of light as revenues and gross margins appear to have started to recover from low levels, supported by its strategic initiatives. We continue to find the balance sheet soft, but the NOK600m rights issue targeted for March should ease the situation somewhat.

XXL ASA (No_rec, TP: NOK) - Q4 weak as warned

We consider this a weak report for XXL, including figures slightly above the pre-warned levels, but badly hit by non-recurring costs. We expect 10–20% negative revisions to consensus 2025e EBITDA and believe a negative share price reaction is warranted.

XXL ASA (No_rec, TP: NOK) - Q4 trading update and fully underwritten r...

XXL announced yesterday after close that its main shareholders have agreed on a fully underwritten rights issue and that the alternative rights issue will not be implemented. The company also provided a Q4 trading update, which implies a gross profit cNOK11m–31m below our estimate due to a lower gross margin.

XXL ASA (No_rec, TP: NOK) - Frasers bids for XXL

Frasers Group has announced it intends to launch a voluntary offer for all the shares in XXL at NOK10 per share. If all offer conditions are met, the transaction is expected to close in Q1 2025, and Frasers will also consign up to NOK500m of stock to XXL.

XXL ASA (No_rec, TP: NOK) - Recommendation and target price withdrawn

XXL reported weak Q3 results and announced a contemplated NOK600m fully underwritten rights issue. Given DNB Markets’ role in the contemplated rights issue, we have withdrawn our recommendation and target price.

XXL ASA (Hold, TP: NOK0.75) - Q2 disappoints

While there are early signs of a market recovery, this was not apparent in XXL’s Q2 results, which were significantly below expectations, driven by lower sales, reduced gross margins, and higher costs. XXL is making progress on its strategic initiatives, but it needs to return to sales growth to see the full impact. We reiterate our HOLD and NOK0.75 target price.

XXL ASA (Hold, TP: NOK0.75) - Weak Q2

We consider this a weak report for XXL, with figures below expectations and a reiteration of the improvement programme. We expect 10–15% negative revisions to consensus 2024e EBITDA and believe a negative share price reaction warranted.

XXL ASA (Hold, TP: NOK0.75) - Doubling down on private label

We are positive ahead of the Q2 results (due at 07:00 CET on 12 July), expecting EBITDA 23% above consensus. While we see early signs of increased retail spending, we believe XXL needs to prove it can deliver on its strategic initiatives to fully benefit from a potential market recovery. We reinstate our recommendation with a HOLD and NOK0.75 target price.

XXL ASA (No_rec, TP: NOK) - Closing in on partnership with Frasers Gro...

XXL announced this morning that it is close to agreeing a strategic partnership with Frasers Group. We believe the announcement is positive as it accelerates XXL’s ambition to double down on its private-label share, which is key to improving gross margins and profitability. We believe the agreement is likely to trigger market speculation that Frasers Group is one step closer to a full acquisition of XXL, although in such a scenario it could have made more sense for Frasers Group to wait.

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.

Northern Lights