Nordic sports retailer XXL warns on sales, shares fall 18%

OSLO (Reuters) - XXL XXLA.OL, the Nordic region's largest sports retailer, suffered a sharp fall in fourth-quarter sales due to heavy discounting across the industry and mild winter weather that hurt demand, sending its shares down to record lows.

XXL has issued a series of sales and profit warnings since 2018 and last October raised cash from shareholders in order to shore up its balance sheet.

Its 2019 revenue fell to around 9.0 billion Norwegian crowns ($1.02 billion) from 9.5 billion, the company said in a statement released late on Thursday.

That reflected a 12% fall in like-for-like sales in the fourth quarter, it said.

“December and in particular Christmas sales have been weak,” the retailer said.

XXL predicted 2019 earnings before interest, tax, depreciation and amortization (EBITDA) of 870 to 900 million crowns, which would be up from 541 million the prior year but the numbers are not comparable as XXL changed accounting standards in 2019.

That implied a fourth-quarter EBITDA of 134 to 164 million crowns, well short of the 308 million expected on average by analysts, brokers DNB Markets said.

“While investors may have anticipated a discrepancy compared to the forecasts by analysts, we believe the shortfall in this case to be greater and thus will lead to a negative (share price) reaction,” DNB wrote in a note to clients.

XXL’s shares fell 18% in early trade on Friday to an all-time low of 13.80 crowns, and are down 86% in the last 24 months.

The company said it has not yet decided whether it needs to write down the value of its inventory.

“XXL expects to be in compliance with applicable loan covenants in the fourth quarter of 2019,” it added.

The company’s full fourth-quarter earnings report is due on Feb. 7.

Reporting by Terje Solsvik; editing by Jason Neely and Emelia Sithole-Matarise