CCC Group reports another record quarter, closing third quarter of FY 2021 with highest sales to date and double-digit EBITDA margin
The CCC Group is closing the third quarter of its financial year 2021 (August–October) with the best ever quarterly sales of PLN 2.1bn (up +28% year on year). The growth was driven by strong sales of the autumn/winter collection across all brands, including the successful Back-to-School campaign. The Group made good progress in rolling out its HalfPrice network in Poland and abroad. The concept saw an over twofold increase in revenue compared with the previous quarter. The contribution of e-commerce to the Company’s revenue continued to expand, reaching 45% of total sales.
‘Fashionable products responding to global trends, very well prepared sales operations across the Group, strong stock levels and an up-to-date 360-degree customer communication model have paid off. And we are not stopping there, but keep working to expand our product mix and further develop the omnichannel proposition. Our ambition is to provide the best offering to all customers, regardless of the sales channel they choose,’ says Marcin Czyczerski, President of the CCC Management Board.
In the third quarter of FY 2021 (August–October), the CCC Group posted sales of PLN 2.1bn, up 28% year on year and 41% on the third quarter of FY 2019. Strong revenue was delivered by all the Company’s brands, including its latest concept HalfPrice, which recorded sales of PLN 82m for the past quarter, an over twofold increase on May–July 2021. The off-price brick-and-mortar retail network is now present in Poland, Austria, the Czech Republic, and Hungary. Later this year, the brand will be launched in Croatia and in November – will make its online debut.
High product availability coupled with a responsible pricing and discount policy translated into a wider gross margin (up 5.3pp year on year). The Company also maintained tight cost discipline, with the controlled growth in costs reflecting mainly rapid expansion of e-commerce (with online revenue up 49% year on year) and fast growth of the HalfPrice chain (13 stores opened in the third quarter and work to launch the concept in the e-commerce channel at an advanced stage) – these costs are considered an investment to achieve even stronger future performance. Accordingly, the CCC Group posted a double-digit EBITDA margin for another consecutive quarter, with the third-quarter margin at 11%. In August to October 2021, the Company generated EBITDA of PLN 226m (up 55% year on year).
‘We are satisfied with the strong sales growth delivered by the retail network and e-commerce and with the double-digit EBITDA margin. We maintain cost discipline in the traditional channel, investing in e-commerce and off-price in line with the strategy,’ says Kryspin Derejczyk, Vice President of the CCC Management Board, Finance and Accounting.
Further consolidation of e-commerce
In the third quarter of FY 2021, the CCC Group again delivered strong e-commerce sales growth. The e-commerce channel’s contribution to total revenue rose 6.6pp, to 45%.
The eobuwie.pl Group is working to permanently consolidate its market position in the e-commerce fashion segment. In the stated period, the Company recorded a 44% year-on-year increase in revenue, with eobuwie.pl alone generating sales of PLN 699m (up 37% year on year), and MODIVO contributing PLN 123m (up 113% year on year – its revenue growing even faster than in the previous quarter). The platform contributed an impressive 15% to the eobuwie.pl Group’s sales (up 3pp quarter on quarter).
The eobuwie.pl Group posted a major improvement in gross margin, to 45.3% (up 1.6pp year on year). In the third quarter, costs and revenue grew at a similar pace. EBITDA margin posted by the eobuwie.pl Group came to 8.5%, in line with the target set in the GO.22 strategy (envisaging a cumulative EBITDA margin above 8.5%).
‘The eobuwie.pl Group is steadily growing stronger both at home and on its key European markets. Our strength is underpinned by a clear focus on customers and their needs. Having a good understanding of consumer expectations, we put in place solutions tailored to their shopping styles and habits. As a result, our customer base has just topped 8 million and keeps expanding at a double-digit rate. During the third quarter, we introduced a number of arrangements improving customer experience, such as a 100-day free returns policy in 12 countries and access to esize.me via a mobile app in four other markets,’ comments Damian Zapłata, President of the Management Board of eobuwie.pl‘ We stay on track to develop in our chosen direction’.
A robust sales performance was also delivered by the Group’s other online platforms in the period from August to October 2021. CCC.eu grew at a rate of 54% year on year, accounting already for 13% of the CCC segment (+2.9pp year on year). DeeZee’s revenue rose by PLN 3m year on year (up 17%), its growth driven, among other factors, by ongoing investments to upgrade logistics, including through a newly deployed ERP system.
Omnichannel and strategy update
Strong e-commerce is the lynchpin of an omnichannel sales model. Within the omnichannel ecosystem, the CCC Group is working to digitalise its brick-and-mortar chain, introducing innovative solutions intended to combine online with offline. After a pilot implementation at about 200 stores, the e-kiosk concept was rolled out more widely to nearly 750 locations across Central Europe, bringing the vast online offering also to customers visiting physical stores. Moreover, as the first retailer in Poland and a pioneer on the European market, CCC has offered deferred payments at its offline chain stores. With the PayPo service, customers can take purchased items home and pay after 30 days. Plans for the coming quarters are to provide even more solutions designed to enhance the shopping experience. One of them will be an OMS system integrating in-store stocks with stocks held in the central e-commerce warehouse. Benefits will include improved product availability and streamlined shipping process, as goods purchased online will be shipped directly from stores.
The CCC Group is just about to finish work on its revised GO.22 strategy, details of which will be unveiled in November. It will be a response to the Group’s strong growth in a rapidly evolving market environment.