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XXL – buying what everyone hates

Buying bricks and mortar business

The Norwegian sporting goods retailer has been hit by the same negative trends as all bricks and mortar stores worldwide and the stock has traded down significantly from its highs. I’m not sure if it’s wise to go against this trend of bricks and mortar shops all dying from online competition, but my thesis is this niche will be less hurt.

Today the first sell recommendation on XXL was released by Arctic Securities. Arctic is claiming there is a structural concern, partly by competition, but mostly from the named headwinds from Online competition. Long term I don’t agree that should be the case for XXL, I believe this company has something unique and will continue to grow and take market share long-term. Everyone you talk to likes shopping at XXL, for a number of reasons. They have good products, the staff working there is competent and at the same time they have pricing which is good enough, so you do not go home and order it online instead. So I see this as a short term miss-pricing, where the baby gets thrown out with the bathwater in this trend of everyone selling bricks and mortar.

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Initiate with a 4% position

This is a growth stock, and I’m buying it on the belief that they will be successful to continue to grow, in particular Sweden and Denmark. As a more long term option is the Austrian and later German market, that will take time to materialize, but I do like that they have ambitious targets of growing. I’m willing to add to my position if no negative news come out and the stock trades down to the 70 NOK range.

Catching up to do – Analysis on the way

I have quite a lot of catching up to do in terms of deeper research. I will spend my time during the rest of the month to try and produce more in-depth analysis of some of my recently bought stocks, including this one..

2 thoughts on “XXL – buying what everyone hates

  1. So far burned my fingers with Hibbett Sports, an american sports retailer. So I’m looking forward to your analysis on XXL which for sure will contain some kind of ‘sector analysis’.

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