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CCC GROUP'S REVENUE UP IN Q4; RECORD SALES AND PROFITABILITY OF EOBUWIE

The CCC Group, leader of the footwear sector in Central and Eastern Europe, has reported a 2% year on year growth in sales in Q4 2020. The Group's operations in the period were under pressure from the second wave of the coronavirus pandemic and another series of lock-downs across many markets. However, the restrictions affecting sales in the traditional channels were accompanied by a dynamic revenue growth of 84% in the e-commerce segment and eobuwie saw another quarter of rapidly growing high-margin sales.

 

The Group's liquidity situation is stable. In that challenging quarter, CCC reduced its net debt by  PLN 152m relative to the third quarter, maintaining it at a stable level year on year. The Group is well prepared for the coming spring and summer season in terms of the product portfolio, customer communication and efficient operation of sales channels and logistics. It is also continuing its store digitalisation efforts while optimising the retail space.

In the fourth quarter, the CCC Group generated revenue of PLN 1,62bn  (up 26m yoy). Revenue for the whole of 2020 came in at PLN 5,26 bn (-2,5% yoy), including PLN 2,46 bn from e-commerce (up 71 % yoy). The e-commerce segment’s contribution to total revenue in 2020 was 47%, meaning that the strategic target set for 2022 (35%-40%) was achieved much earlier than assumed.

Until the end of the second decade of October, CCC saw growth both in its online and offline business.  In November, in connection with the Black Friday campaign it recorded the highest daily sales ever. In December, thanks to an attractive offering and promotional campaigns targeted at entire families, CCC fully captured the pre-Christmas sales potential. The results for the whole fourth quarter show that the autumn and winter collection met with great reception from customers.

”The fourth quarter and the entire 2020 was a period of strengthening and capitalising on the potential of e-commerce. The pandemic highlighted key trends, such as customer migration to the online world, increased price sensitivity, the changing role of stores, growing sales of casual and sports shoes, as well as importance of the brand and the growing importance of communication and close customer relations. This period also demonstrated that the omnichannel model, on which we are basing our strategy, is the strongest trend in the retail sector, and we are market leader in innovation and modern retailing,” says Dariusz Miłek, CCC founder and Chairman of the Supervisory Board.

In the fourth quarter, the Group's gross margin fell 2.5pp year on year as a result of sales campaigns prior to the closure of brick-and-mortar stores and promotional activities designed to quickly restore in-store traffic after the lock downs. The decrease in the Group's gross margin was offset by a material improvement in the online segment (up 2.1 pp yoy), driven by a year-on-year increase in margins of eobuwie and DeeZee, as well as higher contribution from ccc.eu to online revenue.

Despite two brick-and-mortar store closure periods in the fourth quarter, operating loss was effectively limited to PLN -31m. The CCC Group maintains cost discipline – its costs went up 17% year on year (mainly because of the expanding online channel) but their growth rate was slower than revenue growth.

“The fourth quarter showed that were adequately “braced' for another lockdown. We had provided the company with a financial safety cushion in case of various development scenarios of the pandemic. We had built and strengthened attractive e-commerce channels, which are now generating growing sales. We had identified unprofitable stores and some of them were closed down. We are focusing on stores with smaller surface areas, more engaging, operating in a hybrid form, attracting customers to the omnichannel environment. Despite the enormous scale of our operations, we have demonstrated agility and flexibility of our organisation, rapidly adapting to the market developments,” says Marcin Czyczerski, President of the CCC S.A. Management Board.

 

RECORD YEAR FOR EOBUWIE; DEVELOPMENT OF OTHER E-COMMERCE CHANNELS AT THE GROUP   

In 2020, eobuwie remained the main driving engine of the CCC Group's e-commerce segment. With double-digit year-on-year sales growth, the company also reported very high profitability. Eobuwie’s sales increased significantly in the whole of 2020, to PLN 2.2bn (up 52% yoy), with EBITDA margin at 9.0%. Eobuwie is also expanding its share in new markets (mainly South Europe) and developing the Modivo premium fashion platform, which is already available in 11 countries, and its contribution to the eobuwie Group's total revenue in 2020 reached 10.7%. At the same time, the importance of other e-commerce channels (CCC, DeeZee, Gino Rossi) is growing as well. In the fourth quarter of 2020 they already accounted for 17.4% of online sales, compared with 7.6% in the same period of the previous year. 

“The pandemic made online purchases more popular, and we are benefiting from these changes. We believe that the eobuwie.pl brick-and-mortar stores, or the hybrid premium fashion format we are developing under the Modivo brand, are stores of the future, placing themselves at the forefront of the changing retail sector. Customers expect novelties, easier purchases and, most importantly, a positive experience, and they find it all at our stores. The traditional channel supports recognition of the eobuwie.pl brand, and – for a few months now – also Modivo. But online sales are and will remain our core business. The current market situation will foster further digital revolution in retail and will be beneficial to e-commerce businesses such as ours. We quickly adapted our logistics and working procedures to the new reality. The esize.me foot scanners were made available in the 2D application on smartphones. Thanks to the extensive robotisation and automation of work at our logistics centre, we shipped over 100,000 products daily in the peak period for orders during the Black Friday campaign. Investments in cutting-edge logistics solutions, including packing machines, technological solutions that facilitate purchases at our stores, attractive products and rapid deliveries are what our customers can count on,” says Marcin Grzymkowski, founder and President of the Management Board of eobuwie.

 

IMPLEMENTATION OF THE STRATEGY; REVISION OF THE EXPANSION PLANS FOR THE TRADITIONAL STORE NETWORK

The Group is implementing the GO.22 strategy announced in January 2020, focusing on growth in the CEE region. The strategic objectives remain unchanged: roll-out of the omnichannel model, digitalisation and reinforcement of e-commerce, expansion of the product mix, sustainable development.

CCC is developing multi-channel sales while reviewing the traditional stores network and scaling down its expansion, especially in Western Europe. The Group decided to close down a total of 80 stores in 2020, and reduce the store surface area to the optimum size of 500-800 square metres (15 reductions in the previous year, several dozen planned for the first half of 2021). As at the end of 2020, the total surface area of the stores was similar (a slight increase of 14 thousand square metres, mainly in Romania and Slovenia, as well as in Poland as a result of expanding the network of hybrid eobuwie and Modivo stores). 

At the same time, the Group is proceeding with the digitalisation of its stores: approximately 200 locations have already been equipped with tablets for online purchases, and the first self-check out machines are to be put in place in January. It is more and more often the case that CCC’s brick-and-mortar stores generate online sales.

“We see enormous potential for further customer conversion towards a multichannel relationship with the CCC world. Based on data as at the end of the fourth quarter, only 20% of the CCC club members in Poland made at least one purchase online.  This number is growing by the day, and we are happy to see each new customer who buys our goods using the digital solutions. We are working on this all the time, seeking to encourage both younger and older customers, those from large cities and smaller towns. CCC now stands for #CzynneCalyCzas, which means a 24/7 service,” says Karol Półtorak, Vice President of the CCC Management Board for Development and Strategy.

 

LOGISTICS SUPPORTING THE OMNICHANNEL ECOSYSTEM

The Group has state-of-the-art logistics facilities designed to support expansion of online sales. In 2020, it opened a new distribution centre in Zielona Góra (K2), which made it possible to increase the number of e-commerce orders handled. At present, another stage of the project is being completed (K3). On the other hand, the logistics centre in Polkowice, which ships goods to 20 different markets, was also adapted to handle e-commerce shipments. In addition, the fourth quarter saw the launch of 60-minute deliveries from CCC stores in selected eight Polish agglomerations. At the beginning of 2021, this solution will be made available at further 35 cities.

“Technology driven logistics not only improves operational efficiency but also work safety. It is the blood system for a smoothly operating omnichannel model and a key to customer satisfaction in the online segment. Since March 2020, we have been operating under exceptional conditions, which have become our new normality. At places such as warehouses and logistics centres, sanitary restrictions determine business continuity. Only a well-organised, human-controlled process guarantees proper use of technologies. We have risen to the challenge, we have maintained business continuity making all planned deliveries, also during the most intense sales periods, and efficiently handling the growing e-commerce business,” says Mariusz Gnych, Vice President of the CCC Management Board.

“An important element of our strategy, irrespective of the challenges caused by the pandemic, is responsible growth, in terms of the product, the natural environment, employees and the society. We are happy that our efforts in this area did not go unnoticed, and at the end of August 2020 the prestigious MSCI ESG  rating for our Company was raised from BBB to A. Our long-term goal is the A+ rating,says Marcin Czyczerski, President of the CCC Management Board.

At the end of 2020, the total area of the CCC sales network was 693 thousand square metres. At the end of December 2020, the CCC Group was present in 30 countries. In 22 of them it operated 1,060 offline stores, and it had an online presence in 17  countries. The Group operates a total of 70 online platforms across Europe, including eobuwie.pl, ccc.eu, MODIVO, DeeZee, and Gino Rossi.

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