Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CCC SA (WAR:CCC, Financial) reported a significant increase in operating results for Q3 2024, with EBITDA reaching nearly PLN 1.5 billion, marking a fourfold increase year-on-year.
- The company achieved a 14% year-on-year revenue growth, with a 3 percentage point increase in margins, driven by improvements across all brands, particularly HalfPrice and Modivo.
- The cost/income ratio improved to 39%, surpassing the company's benchmark of 40%, indicating effective cost management.
- CCC SA's profitability in the footwear sector remains strong, with a consistent profitability rate above 20% for six consecutive quarters.
- The company has successfully reduced net debt and improved financial liquidity by utilizing factoring lines and extending payment terms with suppliers.
Negative Points
- Despite the positive financial performance, CCC SA faces challenges with higher inventory levels, particularly in the CCC brand, which the company plans to optimize over the next two to three quarters.
- Modivo's profitability, although improved, remains lower than the group average, highlighting the need for further enhancements in this segment.
- The company is heavily reliant on licensing agreements for growth, which may pose risks if these agreements are not renewed or if market conditions change.
- CCC SA's expansion plans, while ambitious, require significant capital investment, which could strain financial resources if not managed carefully.
- The company's strategy to reduce reliance on partnership brands may limit product diversity and could impact customer choice if not executed effectively.
Q & A Highlights
Q: What are the plans for the IPO of Modivo?
A: Dariusz Milek, CEO, stated that the focus is currently on achieving profitability for Modivo. The company is working on synergies and improving financial performance over the next two quarters. The decision on an IPO will depend on achieving these profitability targets.
Q: How is CCC SA addressing consumer softness in the market?
A: Dariusz Milek, CEO, mentioned that CCC SA has not observed a significant decline in consumer demand. The company is focusing on offering licensed products at competitive prices, especially in smaller towns, which has helped maintain strong like-for-like sales growth.
Q: What is the strategy for expanding retail space, particularly for HalfPrice?
A: Dariusz Milek, CEO, explained that more than 50% of the new retail space will be dedicated to HalfPrice, as it is a high-performing segment. The company plans to open 200,000 square meters of new retail space annually, focusing on Central and Eastern Europe.
Q: How does CCC SA plan to improve profitability in Modivo?
A: Dariusz Milek, CEO, stated that Modivo will focus on increasing the share of own and licensed brands in sales, reducing inventory levels, and optimizing logistics and marketing costs. The goal is to achieve an EBITDA margin in excess of 20%.
Q: What is the company's approach to licensing and brand partnerships?
A: Dariusz Milek, CEO, emphasized the importance of licensing as a profitable business model. CCC SA holds licenses for several well-known brands and plans to expand this portfolio. The company aims to increase the share of licensed brands in its sales mix, particularly in the HalfPrice segment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
