Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CCC SA (WAR:CCC, Financial) achieved a record-breaking revenue of PLN2.574 billion in Q2 2024, marking a 6% year-on-year increase.
- The company reported a leading EBITDA margin of 26% in the industry, with significant improvements in profitability across its brands.
- Half price brand saw a strong growth of 23% in revenue, with an EBITDA margin improvement to 18.5%, moving closer to the 20% benchmark.
- The company successfully refinanced its debt, securing long-term financing at more favorable terms, which is expected to provide stability for the next five years.
- CCC SA is planning to expand its retail footprint significantly, with plans to open 50 new half price stores and 50 new CCC stores annually, indicating strong growth potential.
Negative Points
- The company's results were negatively impacted by FX rate fluctuations, which reduced the group's revenue by approximately PLN100 million.
- Modivo's performance was not satisfactory, with a flat margin year-on-year and a slight decrease in revenue in Polish zlotys.
- The company experienced an increase in inventory levels, partly due to stocking up for the autumn-winter season, which could pose a risk if not managed effectively.
- Despite improvements, the online sales channel for CCC brand decreased by 6%, as the company focused on directing customers to more profitable offline channels.
- The company faces challenges in maintaining cost discipline and achieving further cost reductions, with a target to bring the cost-to-income ratio below 40%.
Q & A Highlights
Q: What is the link between inventory and wholesale sales, and how much revenue and at what margins can be generated?
A: We are still collecting purchase orders, so it's too early to specify exact figures. The model looks promising, but we don't want to estimate its size yet.
Q: What is the expected CapEx for 2025 and 2026?
A: We plan to allocate around PLN250 million for CCC and half price combined.
Q: Are there further cost savings possible in Modivo?
A: Yes, there are always opportunities for cost reduction. We aim to reduce costs by 1% and achieve synergy across support functions, targeting a cost-to-revenue ratio below 40%.
Q: What is the strategy for CCC store expansion, and why not focus solely on half price?
A: CCC remains an effective model with high profitability. We plan to expand to 1,200 stores, focusing on locations with low costs and high profitability, such as smaller communities.
Q: Do you still believe in e-commerce?
A: Yes, e-commerce is the future, but we believe in an omnichannel model. Our strategy involves balancing between online and physical stores, leveraging the strengths of both channels.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
