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Big numbers for the sports equipment giant, but with just one grip they could have been even better.
On Tuesday morning, XXL boss Pål Wibe was able to count very solid quarterly figures:
– These are fantastic numbers, especially in Norway, says Wibe.
After-tax profit tripled compared to the same period in 2019. The figures contrast sharply with the situation in February, when the crisis was at its worst.
Supports lost sales
Cost cuts and inventory cuts are behind much of the earnings progress in both the second and third quarters, the XXL manager notes. But these measures also had negative consequences:
– With too high a stock, the financial situation becomes very vulnerable. Now we enter the crisis of the crown with more solid conditions. But it was a bit negative in the third quarter, towards the end of the summer season. So we had very few products, Pål Wibe tells Nettavisen.
– Did you lose sales due to not having enough products in stores?
– In the third quarter we have it. At the end of the third quarter, we had sold everything and were unable to execute the end of season sales.
– How much did you lose on this?
– We haven’t counted on that.
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– Do you have enough products in stock until Christmas? What can you say about that?
– We have worked hard to make sure, have more than enough for Christmas and have a good dialogue with suppliers. We have better time to prepare now, so we are very confident that we have enough products.
The pandemic changed the economy
Increasing electronic commerce and a new loyalty program are some of the instruments that will ensure further growth in the future, emphasizes the XXL manager.
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After a difficult start to the year, XXL was well positioned when the corona epidemic broke out in full force in March, says Wibe.
– We saw in April that the situation could be an advantage for us. People have been shown to be more active than ever and this reflects that people have become more aware of staying active. It is good for consumers and good for us.
– Where would you be without the pandemic?
– Hehe, it’s hard to tell. Now we just have to work longer-term to improve.
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Bet heavily on e-commerce
According to Wibe, XXL is the only company in the sports equipment industry that has a strong online store and large physical stores. Investment in e-commerce has meant a lot to growth, and the pandemic has accelerated this development:
– We will have an e-commerce turnover of around two billion crowns for the whole 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 a throttle. Our growth will only be NOK 500 million, which is more than the total net sales of most of our larger competitors.
– Isn’t there a risk that the increase in demand will also cause an increase in prices?
– We will always have the lowest prices on everything.
While the 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 share growth of 17-18 percent.
– How are you going to handle the new dressing rules? Do you think it will affect Christmas sales in stores?
– We do our best to follow the infection control rules. We have a great advantage with our department stores and online store. It should be safe to buy in XXL. We think that perhaps Christmas shopping is more popular than usual.
Triple the result
In Norway, turnover grew up to 21% in the third quarter, while total growth was 14%. XXL tripled its profit after taxes, compared to the third quarter of 2019.
Key figures for the quarter:
- Operating income NOK 2,823 million, an increase of 14% (NOK 2,473 million in Q3 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 a significantly higher growth than the rest of the countries in which XXL operates, Sweden also has good growth, while the evolution is negative in Finland and Austria.
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