23% revenue growth, strong e-commerce and gradual development of omnichannel model

‘Another challenging year has passed in the retail market, marking our third year of navigating through obstacles. The macroeconomic environment has undergone significant changes, including the outbreak of war in Ukraine, which has had a substantial impact not only on companies, but also on customers and their purchasing decisions. Our new business model, implemented over the past few years, has allowed us to adequately respond to the evolving needs of consumers, in terms of product offerings, pricing, and the convenience of omnichannel shopping. As a result, we have not only maintained but also increased our market share," said Marcin Czyczerski, President of the Management Board of CCC Group. "Importantly, the key investments related to the change in the business model have been completed. We are hopeful that if the macroeconomic situation stabilizes as forecast, 2023 will be a year of continued sales growth and profitability rebuilding for the CCC Group.’ 

The CCC Group is committed to the continued development of its omnichannel model, offering customers a tailored, diverse, and appealing product range, along with the best possible shopping experience. In the financial year 2022 (February '22 to January '23), the CCC Group achieved a significant increase in revenue, to PLN 9.1 billion (i.e., a 23% y/y), with e-commerce accounting for more than half of that amount (52%). The Group's major segments all contributed to the strong sales growth, including CCC (+13%), eobuwie.pl (+8%), Modivo (+66%), and Halfprice (+256%). Despite the challenging macroeconomic environment, the Company closed 2022 with an EBITDA similar to that of the previous year (i.e., PLN 531 million). 

CCC  

The successful transformation carried out by CCC has been visible at the operational level, resulting in the growth of the business line in Poland in 2022 outpacing the market, with a 15% increase compared to the market's 12%. Digital sales channels are increasingly playing a critical role in this growth. Launched less than four years ago, the ccc.eu online store reached nearly PLN 1 billion in revenue in 2022 and already accounts for more than 20% of the line’s sales. CCC's mobile app has surpassed 11 million downloads by customers, meeting a strategic goal three years ahead of schedule, and has become CCC's main digital sales channel. Continuously improving product offerings and customer communication have led CCC to improve its omnichannel sales per square metre for the last eight consecutive quarters, returning to the record levels of 2018. ‘At CCC, we are currently focusing primarily on cost efficiency and working capital optimization - both with success. In the fourth quarter of 2022, CCC's costs decreased by 9%, while sales increased by 21%. In turn, the value of inventories at the end of the year decreased by 28%, improving inventory turnover by as much as 80 days. These results are the effect of numerous measures, from procurement planning to in-season merchandise management, implemented as we have announced over the past few years. And this is just the beginning - we will reach our strategic goal of 200 days before as early as 2023,’ adds Marcin Czyczerski. 

HalfPrice 

The CCC segment’s high positive operating cash flow allowed it to further develop the Group's youngest business line of HalfPrice. At the end of the year, the off-price network had 91 stores in 8 countries, having debuted in 4 new geographies and opened 41 new locations over 2022. An effective strategy to develop the product offering, the growing reach of the retail network, and creative marketing campaigns allowed HalfPrice to achieve nearly 50% recognition among customers – double that of a year earlier. As a result, the business line's very high sales growth is contributed to not only by the development of the store network, but also by a jump in store LfL sales - in the fourth quarter of 2022 alone, it stood at 30% and has remained consistently high. The year 2022 was a breakthrough year for HalfPrice - after only a year and a half since its debut, it reached operating profitability, and in the third and fourth quarters HalfPrice's EBITDA margin exceeded 12%, indicating strong performance. 

eobuwie.pl (Modivo Group) 

Eobuwie.pl has maintained its market leadership position in the online sales of branded footwear in CEE, with a 33% CAGR growth from 2018 to 2022. “Despite the challenges faced by the multibrand e-commerce sector last year, eobuwie.co.uk has been growing consistently It's worth noting that during this time, the marketplace underwent significant technological changes, adding to the challenge. However, the modern, scalable system implemented will support the platform for years to come, allowing eobuwie.pl to maintain its leadership position in its category. We are currently implementing a series of measures to consistently restore the high profitability of the business line, including optimising operating costs and reducing inventory. We are confident that in a stable business environment, we will see increasingly better results from quarter to quarter," said Damian Zapłata, CEO of the Modivo Group.  

At eobuwie.pl, 2022 marked the beginning of an important technological transition – the commencement of the store's migration to a new e-commerce platform, the foundation of its business, in the main markets. The company plans to complete the process later in 2023. In addition, a new eobuwie.co.uk mobile app debuted in October 2022, enhancing the customer shopping experience and driving a higher conversion rate. Work on a new mobile app for the Modivo business line is scheduled to get underway in 2023.  

Modivo (Modivo Group)  

In 2022, the biggest and most important implementation at the Modivo Group was the launch of Marketplace, a platform through which partners can offer their products to Modivo customers, while maintaining a consistent shopping experience. In the first few months of operation alone, more than 300 merchants registered on the Marketplace, offering approximately 150,000 SKUs. This has provided Modivo with an opportunity to expand its product offerings without additional investment in working capital, thus satisfying customer expectations as to the breadth of offering. “Compared with the sector, we scaling up this business line very quickly while maintaining high profitability , which was over 8% in 2022," adds Damian Zapłata. 

2023 outlook 

Summarizing the fiscal year, the CCC has also released an outlook for 2023, with plans to generate at least PLN 10.2 billion in revenue and increase EBITDA profitability to above 10%. This improvement in profitability is expected to be evident not only at the Group level but also in each of its business line. “We are already seeing the first positive trends, with an 11% increase in QTD revenue in the current quarter and a month-on-month improvement in revenue and gross margin,” says Marcin Czyczerski.

The achievement of the above targets depends also on external factors, including primarily the macroeconomic environment and the geopolitical situation in the region. 

Nearing the completion of a thorough transformation of its business model, the CCC Group is also planning significant changes to its financing structure in the coming year with a view to achieving a significant deleveraging. “By the end of the year, we want to reduce our financial liabilities by close to PLN 1 billion”, says Karol Półtorak, Vice President of the Management Board of the CCC Group for Development, Customer and Digital. “According to the plan presented in November 2022, we are working to reduce debt financing. Our next step will be a share issue of up to PLN 500 million to accelerate the change in the financing structure and create a safety cushion in case of potential challenges to the business environment. The company's next steps include the leasback of warehouse space, combined with the refinancing of remaining debt, and ultimately, the aim is to increase the reverse factoring line. Our plan also provides for optional measures, whose implementation will depend on the market situation, e.g. the IPO of Modivo shares and additional financing for HalfPrice. 

Sustainability at the CCC Group – 2022 non-financial report  

Apart from financial results, the CCC Group has released its sixth sustainability report, which highlights our commitment to environmental responsibility, product quality, community, and employees.  

Notably, the company has achieved a 23.6% year-on-year reduction in its scope 1+2 greenhouse gas emissions (direct emissions and emissions related to purchase of energy) by implementing the Green CCChallenge project and a comprehensive fuel and energy reduction programme. The CCC Group reported Scope 3 emissions (supply chain emissions) for the first time in 2021, and in 2022 the Company calculated its most significant emissions category, related to purchased products and services. Aware of its environmental impact, the CCC Group is continuing its efforts towards developing a decarbonisation strategy defining a roadmap and specific actions towards achieving zero emissions. 

In the product area, it is noteworthy that the CCC Group’s portfolio is being consistently expanded to include more products made of certified materials. The share of leather sourced from certified tanneries in 2022 already reached nearly 58%, up 19 pp year on year. 

“We are not stopping with our Sustainability Strategy, which is an integral part of our GO.25 Business Strategy. We are also working intensively to adapt to the next challenges with regard to the new European sustainability reporting guidelines. Being aware of our impact on the environment, we want to continue setting high standards for sustainable operations at every level,” adds Marcin Czyczerski.