XXL : Second quarter 2018 results - Capturing growth but pressure on margins

XXL ASA delivered a growth of 14 per cent for the second quarter 2018 with focus on capturing volumes through campaigns under slow retail conditions. This provided for solid growth figures, especially driven by the E-commerce business, but with a negative effect on the margins. Further, XXL has succeeded to reduce the inventory level, putting pressure on gross margin as well. Total revenues from the E-commerce operations now accounts for 15 per cent of total Group operating revenues. XXL has implemented several omni-channel solutions in 2018 that already show good results and will continually strengthen its offering to customers on all platforms. Group EBITDA amounted to NOK 185 million in the quarter, affected by the establishment in Austria, where XXL has been in operations for less than a year. Group EBITDA without Austria amounted to NOK 203 million.

Highlights Q2 2018

- Total revenues of NOK 2 331 million (NOK 2 054 million), up 14 per cent

- E-commerce growth of 38 per cent

- Three new store openings

- Strong growth but pressure on margins

- Improved cash flow due to lower inventory level

Outlook

XXL has signed 7 new lease agreements for store openings for 2018 where of 4 in Norway, 1 in Sweden and 2 in Austria. This figure includes 5 stores that are opened by the end of Q2 2018.

To continue the growth strategy, within both stores and E-commerce, and in new markets as well as existing markets, XXL will invest in infrastructure, IT and training facilities. These investments are expected to be in the range of NOK 70-90 million for 2018. In addition XXL will refurbish at least two stores with CAPEX in the range of two new stores.

The Group maintains the following long term objectives (on full year basis):

- Like-for-like growth of mid-single digits over time including E-commerce

- Gross margins to be stable. In Norway at low 40's, high 30's in Sweden and between mid and high 30's in Finland.

- EBITDA-margins stable as a result of stable gross margins and operating expenses. In Norway at low 20's, in Sweden low double digits and in Finland high single digits.

- New market entries affect both Group gross margin and Group EBITDA-margin in the establishing period of 1-3 years.

The Austria average sale per store is expected to be around EUR 12 million, while the gross margin and EBITDA-profile will be as in Sweden over time when excluding for the build-up of a centralized organization for buying and support. Hence, the start-up in Austria will have higher costs than the launch in Sweden, Finland and Denmark. CAPEX per store will be in the range of EUR 1.7-1.9 million and the average pay-back per store is estimated at 4-5 years including net working capital. The average pay-back time is after being some time in the market, following an establishing period. XXL expects around 15 stores in total in the Austrian market.

For further information please find attached the quarterly report and the presentation material.

The results will be presented at 08:30 CET by CEO Fredrik Steenbuch and CFO Krister Pedersen. The presentation will take place at our headquarters in Oslo, Strømsveien 245, Alna Senter (entrance on the right side of Maxbo). The presentation will be held in English and will be webcasted at www.xxlasa.com. You may also follow the presentation live by telephone. Dial-in details: +47 21 56 33 18 (Norway) and +44(0) 20 3003 2666 (International), passcode - XXL Q2

For further queries, please contact:

Tolle O. R. Grøterud

Investor Relations XXL ASA

Tel: +47 90 27 29 59

E-mail:ir@xxlasa.com

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act

About XXL ASA

XXL is a leading sports retailer with stores and e-commerce in Norway, Sweden, Finland, Denmark and Austria. It is the largest among the major sports retailers in the Nordics and the fastest growing among the major sports retail chains in the World. XXL pursues a broad customer appeal, offering a one stop shop experience with a wide range of products for sports, hunting, skiing, biking and other outdoor activities. XXL's concept is to have the largest stores with the best prices and the widest assortment of products, focusing on branded goods.