Europris (Buy, TP: NOK90.00) - Well-equipped for a harsher climate

Q1 earnings were below expectations, partly due to negative currency hedging effects in Norway and Sweden, and continued weakness in Sweden. However, we believe Europris is well-positioned for the current market climate and expect a successful turnaround in Sweden by 2028. We reiterate our BUY as we continue to find the valuation attractive, but have cut our target price to NOK90 (95) on lowered estimates.

Sweden fuels the unknown

EBIT below driven by SWE and GP

EBIT -37m vs cons +6m on lower sales in SWE and lower group gross profit. Gross profit hit by unrealized FX as the NOK has strengthened.

Built for resilience

Europris (Buy, TP: NOK95.00) - Strong Q1 masked by late Easter

We are positive ahead of Q1, expecting results in line with consensus and on a par with last year, on solid LFL growth in Norway despite a late Easter. We reiterate our BUY and NOK95 target price, as we continue to find the valuation attractive relative to peers on earnings multiples excluding ÖoB’s long-term value potential.

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.

Europris (Buy, TP: NOK95.00) - Norway leading the way

Q4 earnings were above expectations on a strong performance by Norway, while Sweden was soft, primarily due to higher costs, reflecting the ongoing turnaround. We reiterate our BUY and have raised our target price to NOK95 (85) on minor positive estimate revisions. At our target price, Europris would be trading at a 2025e P/E of 15.5x adjusted for ÖoB (which we estimate could add >NOK1 to EPS by 2028).

A tale of two markets

Better, Norway very solid on high GM

EBIT 6% better, Norway particularly strong on higher margins. Somewhat more optimistic outlook

Steady, but no spark

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.

Europris (Buy, TP: NOK85.00) - Stocked up for the holidays

We are slightly positive ahead of the Q4 results, expecting EBITDA 4% above consensus on solid LFL growth and gross margin improvement in Norway. We have upgraded to BUY (HOLD) and raised our target price to NOK85 (73), as we find the valuation increasingly attractive relative to peers on earnings multiples excluding ÖoB’s long-term value potential.

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.

Turnaround takes time

Europris (Hold, TP: NOK73.00) - Weak earnings trend

The Q3 results disappointed on weaker gross margins than expected and soft results from Sweden. We reiterate our HOLD, but have lowered our target price to NOK73 (75) after cutting our 2024e EPS by 4%. While we view Europris as attractively valued versus its Nordic peers, we believe it needs to reverse the negative earnings trend to restore investor confidence in its growth outlook.

Europris (Hold, TP: NOK75.00) - Slightly soft Q3

We consider this a slightly weak report, including figures below expectations, a hiked store guidance and no significant change in outlook. We expect consensus 2024e EBITDA to come down 1% and believe a neutral to slightly negative share price reaction is warranted.

Softer numbers and outlook

EBIT 8% below due to SWE: GM under pressure.Somwhat more cautious outlook

ÖoB: Right move, slow payoff