RESULTS OF THE SECOND QUARTER UNDER THE IMPACT OF A PANDEMY, E-COMMERCE GETTING MORE POWERFUL AND FOUR-SIZE EBITDA EOBUWA
The CCC Group, the footwear sector leader in Central and Eastern Europe, ended the second quarter with revenues of nearly PLN 1.3 billion, which is 21% lower than a year ago. The decrease in revenues was the result of a pandemic and temporary store closure. In the past quarter, the Group focused even more on the development of e-commerce, developed mobile channels for reaching customers, and intensified work in the area of logistics efficiency. At the end of June, 95% of the Group's stores resumed sales, which allowed them to return to the multi-channel sales model and implementation of the GO.22 strategy.
From April 20, restrictions on stationary sales were gradually lifted. The return of customers to stores was characterized by systematically improving visits, accompanied by a significantly higher yoy conversion and the number of products on the receipt. During the period of temporary store closure, the Group carried out sales through the e-commerce channel, which as a result recorded a dynamic, 79% yoy increase The share of online revenue in the Group's sales in the second quarter of 2020 increased to 48% (vs. 21% a year earlier).
Due to market challenges related to the pandemic, the Group significantly accelerated its development e-commerce, launching online platforms and applications in new foreign markets. The ccc.eu store has started on three new markets (Romania, Austria, Hungary), as well as the CCC application. As a result, the ccc.eu platform, existing for over a year, available today in 6 countries, recorded over 200 percent in the second quarter. increase in revenues compared to the previous quarter. In May this year ccc.eu had record sales of nearly PLN 40 million. The online store has a level of up to 13.5 million customer visits per month.
Eobuwie, being the Group's e-commerce engine, generated revenues of PLN 532 million (+ 52% y / y), which was influenced by a high number of orders - a total of approx. 2.8 million (including 64% from mobile devices). After a weaker March 2020, in April, May and June eobuwie recorded significant increases in sales (by 28%, 71%, 60% y / y respectively), with higher gross margins and lower marketing costs. The group plans further development of eobuwie, as well as its modivo e-shop with premium clothing, which continues its rapid development and ended the second quarter with sales of PLN 49 million.
One of the fastest growing and best-selling (at first price) brands in the Group - DeeZee also accelerated its development during the pandemic, opening in the last quarter an online platform in 4 new markets (Czech Republic, Slovakia, Hungary, Romania). In the second quarter, DeeZee recorded sales of PLN 19m (73% increase yoy) and high operating profitability of several percent.
Closing the stores for 7 weeks and a deep slump at the level of store visits resulted in the company losing around PLN 1 billion in revenues. We reacted to lockdown very quickly. We have implemented a plan based on an agreement with banks, bondholders, the use of assistance programs. We successfully carried out the issue of shares, raising over PLN 0.5 billion. We implemented our program step by step. We were fully prepared to open stores with a new collection. Today, preliminary data for the second quarter show that we have stabilized the situation using all available options. In the face of a pandemic, we've accelerated the pace of e-commerce development. Today we are one of the strongest players in the online channel with a unique omnichannel sales model. We have about 60 different platforms for sale on the web, including mobile applications. The CCC.eu platform has only been in existence for a year, and already has over 1.5 million completed orders. There is still a lot of work ahead of us, but we are on the right track. - says Marcin Czyczerski, President of the Management Board of CCC S.A.
Consolidated gross profit on sales decreased by 26% to PLN 620 million. In the second quarter of 2020, the CCC Group recorded a decrease in gross sales margin by 3.2 pp, which was determined by the high share of e-commerce sales in April (93% of consolidated revenues) and higher yoy promotional activity in May, associated with a significant shortening of the SS season '20 by COVID-19.
The Group's costs amounted to 585 million (-17% y / y). Savings at the level of costs of salaries, logistics, external services and marketing contributed to a significant decrease in sales and general management costs. The company has introduced a savings and efficiency improvement program, which aims to further reduce the cost base and improve profitability. In the second quarter, the Group recorded EBIT and EBITDA of PLN 34 and 187 million, respectively.
In the results of the second quarter of 2020, the Group recognized provisions for restructuring expenses in the amount of PLN 147 million. These provisions are mainly related to activities related to the closing of selected stores on the German market, the finalization of activities in the field of sports sponsorship and to one-off costs related to refinancing. The Group's costs (including provisions) were at the level of 732 million (+ 4% y / y). As a result, after considering provisions for restructuring expenses, the CCC Group recorded EBIT and EBITDA in the second quarter at the level of PLN -112 and 40 million, respectively.
In the 2nd quarter we did a huge job with our partners gallery owners in the field of renegotiating rent conditions. We have even accelerated the development of e-commerce and all digital contact points with the customer. We want to win for us, for CCC, it is a unique opportunity that appeared on the market - says Karol Półtorak, Vice President of the Management Board of CCC S.A. Development and Strategy.
The time of the pandemic showed the power of online commerce. After a demanding March, in which customers focused on purchasing the necessary products, the following months showed sales increases and improving consumer sentiment. The pandemic period caused a change in shopping trends, non-obvious categories became popular and we recorded high increases in them. There have been customers who have not yet preferred this form of shopping, we expect that some of them will stay with us permanently - says Marcin Grzymkowski, President of eobuwie.pl S.A.
The pandemic has shown us even more clearly that accelerating the development of e-commerce must go hand in hand with increasing the efficiency of logistics processes. And we succeeded. Logistics has maintained high operational efficiency and completed all receipts and shipments throughout the past quarter towards e-commerce and shopping. Even at the end of trade, we exchanged almost the entire range in stores to ensure stocking appropriate to the expectations of customers who visit us after the thawing of the economy - says Mariusz Gnych, Vice President of the Management Board of CCC S.A for Logistics and Production.
The total area of the CCC sales network at the end of the second quarter of 2020 was 761 thousand. sq m, which means that year-on-year it increased by almost 8% y / y (59 thousand sq m). In turn, since the beginning of 2020 it has grown by only 2 thousand. sqm. This is in line with the strategy that assumes the optimization of retail space. Due to the uncertainty associated with coronavirus, the Company significantly reduced its opening plan later in the year (previously announced 60,000 sq m net in 2020). Eobuwie stores were the fastest growing retail space (+13 omnichannel stores y / y).
At the end of April 2020, the CCC Group was present in 29 countries - in 23 sales are carried out in 1208 stationary stores, and in 17 via an online channel. The group has a total of over 60 online platforms throughout Europe: eobuwie.pl, ccc.eu, MODIVO, DeeZee, and Gino Rossi. In 2019, CCC customers purchased over 52 million pairs of footwear in all sales channels.
