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CCC Group’s first-quarter 2022 highlights: fast revenue growth of 32% and an almost 50% increase in gross margin (up around 6pp year on year)

In the first quarter of 2022 (February to April), the CCC Group generated revenue of PLN 1.9bn, an increase of just under 32% year on year, with e-commerce accounting for more than half (55%) of that figure. The Group posted an approximately 6pp year-on-year growth in gross margin, which reached close to 50%. This performance was driven by the consistent implementation of the GO.25 business strategy, which envisages the expansion of the omnichannel model, product range and logistics as well as strong customer relations and customer proximity.

This past quarter saw a perfect storm of challenges to consumers’ purchasing power: signs of another wave of the pandemic, the war in Ukraine, macroeconomic headwinds and, most importantly, high inflation and rising interest rates impacting consumer wallets. At the CCC Group, we remain under the inevitable influence of these factors, but owing to the investments made in recent years, we are much more resilient today. This past quarter demonstrated we are capable of delivering growth and responding quickly to the changing external environment even amid an extremely challenging business landscape,’ said Marcin Czyczerski, President of the CCC Group Management Board. ‘Of course, we are hoping for the market situation to stabilise and drive demand higher. April was much better in this regard compared with the first half of the quarter, and we hope this trend will continue.

In the first quarter of 2022, the CCC Group posted revenue of approximately PLN 1.9bn, up 32% year on year. Online sales accounted for 55%, having increased 16% year on year to PLN 1bn. The Group continues its efforts to further increase the share of online sales, in line with its GO.25 strategy.

The CCC segment generated revenue of PLN 790m last quarter, up over 40% year on year. This year, sales reported by the business line went up 3% compared with the same quarter of 2019 (not affected by the pandemic) despite an over 3% reduction in retail space.

For more than two years we have been in the process of changing CCC stores, adjusting the floor area and making them more digital. This is our response to the changing customer expectations. We can see this model is working. Compared with 2019, sales per square metre are up about PLN 30, or 6%,’ added Mr Czyczerski.

The Group’s youngest concept, HalfPrice, delivered revenue of PLN 118m in the first quarter of 2022. DeeZee’s turnover for the quarter was broadly flat year on year, at PLN 26m.

The Group’s gross margin rose 5.9pp year on year and 2.4pp quarter on quarter, reaching a very strong 49.2%. The growth in gross margin was led mainly by an almost 10pp year-on-year rise reported by the CCC segment. The Group posted gross profit of just under PLN 928m (up 50% year on year). In the past quarter, costs and revenue grew at a similar pace. It should be noted that quarter on quarter SG&A costs fell about PLN 32m, or around 3%.

‘In parallel with investments in strategic growth, we are gradually rebuilding our operating profitability after the pandemic. Despite a challenging market environment, we improved our operating profit by PLN 56m year on year. In the following quarters, we are set to generate further growth,’ added Kryspin Derejczyk, Vice President of the Management Board, Finance and Accounting, at the CCC Group.

The CCC Group closed the first quarter of 2022 with an EBITDA margin of 5.8%, an increase of 3.4pp year on year.

MODIVO Group

Last quarter, the MODIVO Group recorded revenue of PLN 916m, with sales up 19% year on year. The MODIVO business line reported a turnover of PLN 162m (+69% year on year) last quarter. In the same period, eobuwie.pl increased sales by ca. 12% year on year, with revenue at PLN 753m.

The Group generated a gross margin of 43.5%, up 0.4pp year on year. SG&A costs grew 35% year on year, driven by growth projects supporting the expansion of logistics operations, sales support systems, and marketplace implementation. Quarter on quarter, costs fell ca. 9%.

‘In the first quarter of 2022, the MODIVO Group delivered a double-digit revenue growth despite the geopolitical headwinds and the high base due to the 2021 lockdowns. MODIVO was the fastest-growing business line of the CCC Group. At the same time, we are consistently implementing our product portfolio and technology development programme. Among other projects, we are about to launch a marketplace and a new advertising platform for our partners, enabling us to generate new, high-margin revenue streams,’ said Damian Zapłata, President of the Management Board of the MODIVO Group.

The MODIVO Group posted EBITDA of PLN 59m, with a margin of 6.4%, which is in line with the GO.25 strategy.

GO.25 – consistent implementation of the business strategy

The first quarter of 2022 saw the CCC Group consistently deliver on the objectives outlined in its GO.25 business strategy, unveiled at the end of last year. The most important ones are the following:

Grow business lines: HalfPrice made its debut in Slovakia as its 7th market. 16 new stores opened in Poland. Eobuwie.pl launched operations in Latvia and Austria.

Grow omnichannel: CCC launched an omnichannel gift card that is available across all sales channels. An upgraded CCC store has recently opened in Warsaw, featuring the first online area with the Sprandi apparel collection.

Drive product development: The CCC Group started the spring-summer 2022 season by adding new own brands to its diverse fashion portfolio: SIMPLE, Americanos, and Togoshi. They are supported by captivating and engaging marketing campaigns.

‘In line with GO.25, in the first quarter of 2022 we assembled an important new team, Data&AI Hub, that employs advanced analytics solutions such as predictive analytics, machine learning and AI to support sales, product and operations management. This serves to optimise operations and more accurately identify customer expectations,’ added Karol Półtorak, Vice President of the Management Board, Strategy and Development, at the CCC Group.

The strategy ‘GO.25: Everything fashion. Omnichannel platform’ is available at https://corporate.ccc.eu/strategia.

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