Earnings call transcript: Computacenter outlines strategic growth for 2025

Computacenter (LON:CCC) PLC has announced its strategic initiatives and financial targets for the coming years during its latest earnings call. Currently trading at $17.41, the company demonstrates GOOD financial health according to InvestingPro analysis. Despite a minor dip in stock price, the company has outlined robust plans for profitability and expansion, focusing on increasing its EBITDA and exploring new market opportunities. InvestingPro has identified 10 key investment tips for Computacenter, including its strong market position and dividend history.

Key Takeaways

• Computacenter is targeting a 20% EBITDA profitability rate.
• Plans to expand into new brand partnerships and specialized store concepts.
• The company aims to reduce inventory and centralize operations for cost savings.

Company Performance

Computacenter has shown strong performance across its brands, with significant improvements in profitability. The company's EBITDA stands at $15.2 billion, with total revenue reaching $47.06 billion in the last twelve months. The company's Modivo brand has restored profitability from a previous loss, while maintaining a solid gross profit margin of 61.06%. The company's unique omnichannel model, combining physical and online presence, has contributed to its competitive advantage. Based on InvestingPro's Fair Value analysis, the stock appears slightly overvalued at current levels.

Financial Highlights

• EBITDA profitability target: 20%
• Annual EBITDA improvement: 10 percentage points
• Modivo profitability: Increased from -6% to 12%

Outlook & Guidance

Computacenter has set ambitious targets for the coming years, aiming for over 12 billion in revenue by 2025. The company plans to open more than 300,000 square meters of sales area and is focusing on expanding its store footprint in Spain and other Central and Eastern European markets. With a consistent dividend yield of 2.88% and 26 consecutive years of dividend payments, the company demonstrates strong shareholder returns. The introduction of a unified loyalty program is also on the horizon, aiming to enhance customer engagement across all brands. For detailed analysis and comprehensive insights, access the full Pro Research Report available on InvestingPro.

Executive Commentary

CEO Dariusz Miłek emphasized the company's focus on profitability, stating, "My middle name is Margin." The management board also highlighted the importance of operational integration, with Carlo noting, "We want to have full operational integration of all our brands." These statements underscore the company's commitment to efficiency and growth.

Risks and Challenges

• Market saturation in established regions could limit growth.
• Supply chain disruptions may impact inventory management.
• Economic fluctuations in Central and Eastern Europe could affect expansion plans.
• The competitive landscape in the e-commerce sector poses ongoing challenges.

Q&A

During the earnings call, analysts inquired about the company's wholesale sales strategy, which is expected to contribute 3-10% of group sales. Questions also focused on the optimization of performance marketing spend and the emphasis on high-margin licensed brand sales. These discussions highlight the company's strategic focus on enhancing profitability through diversified sales channels.

Full transcript - Computacenter PLC ( CCC (WA:CCCP)) Q4 2024:

Unidentified Conference Host/Moderator, Conference Organizer: Good morning, ladies and gentlemen.

We'd like to welcome you to our conference. We apologize for this delay, but the turnout has vastly exceeded our expectations. So thank you very much for that. So we've called a conference because we've already announced the results more than a week ago, but because of the winter holidays, we decided to push back this conference. And so we have quite a bit to say and so we needed to speak with you face to face.

So let me tell you briefly, we'll walk through the slides pretty quickly because this is now ancient history. We're rapidly improving the EBITDA profitability. It would have been much better had the weather supported us, fostered our results. We don't want to complain. The results are quite sound.

And here, we're showing you that across the group for next year, we want to generate a 20% APITA profile. So you can see how everything is growing very nicely. So let me go through the main brands. So CCC, the leading brand in the group. This is the Abita.

I know the industry. I know this is something that's quite difficult to achieve because footwear, well, basically, the profitability is a little bit different from what's happening in apparel. So this is a much this is an impressive result compared to where we were a year ago. Here, we're showing a breakdown by quarters. As you can see, this is well entrenched profitability across the CCC brand.

And now we can go into half price. So this is something this is a profitability, Avita profitability that is just unheard of in the off price segments at 23%. So it's the best in our industry, in the off price industry. And so we've been able to improve the results quite substantially. So we've improved the annual EBITDA by 10 percentage points.

So we can say this brand has started to generate some money and so start earning money. So if you look at Modivo, we've been able to restore profitability quite strongly. So we had a minus 6% figure in a quarter, so we're now at 12%. This is a major improvement. And so we're showing a portion of the synergy effect that we've been able to achieve since Q3, and we're consistently improving our results primarily on the cost side.

So basically, we want to have a 15% figure next year in EBITDA in mid June next year. So you were concerned a little bit about reduction of, inventories, but we can say that we had counted on being able to sell more during the winter period, but we've been able to reduce our inventories. So we're focusing on inventories across our channels. And so next year, even though the business is growing by 20%, we want to bring down inventories to SEK3 billion. We believe that the inventories are too high, especially in the Modiva channel.

So basically, the consistent effort to build a fashion group. As you know, based on our press releases, we've signed a contract with the Sjobex company, which has a unique three brands that are quite unique, the Warsaw Neckersort and then a running store and then the basketball player store. So we want to build something across the country and the region. So we will have these three stores. And so I think this is enough.

It was in Prague, Budapest, Sofia. And so the product offering in higher price points, I'll show you that this has a totally different segmentation than our channels up until now. And we're starting to work with new brands. So this is something that's quite important. And so this is what the store looks like in Warsaw, the sneaker store.

And these are some of the pictures from inside. Then you have the specialist runner store, and this is the basically the basketball players store. So what's very important to us, so this is the top of our pyramid. So these are specialist products, and we want our brands, our licenses to sell through them. So Hunter, Shark, Rebook, we wanted to sell those brands through those channels.

What's very important to us is that we're beginning to work with new brands, Nike (NYSE:NKE), Jordan, UGG, Arc'teryx. Up until now, we haven't had those brands in our network. And so I give you a few examples to describe the situation. These are expert shoes, specialized shoes that it would be difficult to sell even in Modivo or in Biovia. So the $3, Adidas (OTC:ADDYY), Nike, So you're seeing prices of 901,000 and these products are being sold.

But of course, the quantities are pretty important. So the revenue top line figure is $220,000,000 so 28% e commerce. We anticipate that this will grow. So the beat to margin is $9,000,000 and so the transaction value is $28,000,000 for a 75% stake with an average ticket of $600 And so this is a ticket value that's substantially higher than other brands, so in other channels. And so then what's the plan for Modivo?

So we want to restore the profitability in this group. And so we started some initiatives in Q4. So we have the cost cutting program and then the business model simplification and then basically downsizing product portfolios. So we've basically cast aside on profitable products. This is something we'll be able to see in subsequent quarters.

We've also limited this to basically customer service and a photo studio for the whole group. These are group services, but HRIT fleet expansion, these are things that will be at the group level. Up until now, all of our brands had basically pretty extensive departments, and so we basically wrapped that up. What are the strategic goals? Three strategic goals for 2025.

So we have a higher share of licensed brands, private labels. We want to roll out omni channel store network with EOBVM and then we have the group wide joint loyalty club and this is to expand the profitability. So if we talk about the growing share of licensed brands, so you can see in 2022, it was 8% of our products. If this is a private label, then a 7%. In 2024, it was again, 8%.

And so we've always tried to have different products here from CCC. And basically, this is not something that worked out too well in 2025. We want to expand our own shares. We're gonna all the licenses that we have, we're gonna try to use make products of higher quality. Basically, in 2027, we want to have some 55% of sales.

Of course, this implies a lot of work. And so there will be fewer products in the first half of the year, probably around 20%. And then in the latter half, we'll probably talk about 30%. The target gross margin for licensed products, licensed brands, we're going to have 60% after the discounts and the fees for licenses. And so the brand for so the margin for private label is 55%.

And so right now, we're at 38%. So we want to bump that up. Basically, we're doing a bad job in terms of how we're purchasing things. So we've renegotiated all of our commercial terms and we've delisted the unprofitable products. And so basically, we've been able to clean up the portfolio to our advantage.

So I'll show you some of the examples in CCC what's the share of licensed brands so we can start in 2023. This was children's brands like DICE, Disney (NYSE:DIS) and things like that. Then in 2024, we started to add products, the licensed brands, which represented some 18%. And then this raised to some 22% in the last half of the year. So we should be in 35% in the first half of the year and then 50% private labels.

And then in the latter half of the year, we want to be at 50%. So the evolution is very rapid and we want to do the same thing in NeoBovia. And you can see that the margins are quite high on licensed brands and I'm more than convinced based on what we're buying, what we're bringing in through our doors that we're going to be able to sustain those brands margins. So ultimately, we should have a gross margin implied to 63%. This is something that's incomparable when we talk about any other footwear network in the world.

Nobody has that many licenses as we have amassed over the last couple of years. Here, I'll make some draw some comparisons on purpose. What is the margin we have in CCC? How we want to increase that substantially in Motivo Group. So the average ticket, even though the margin is smaller, we're earning a lot more on the ticket.

And so if you have a hundred and 15 per unit, and so we want to we want to move from a 30% margin to a 50%. We're not interested in unprofitable business. We're going to try to sell products that are only profitable. Only profitable products is what we're going to endeavor to sell. And at the bottom, I said that 12,500,000 tickets is that's the number of tickets we have in Modivo.

If we were to add the average price by 40 zwats and that's easy enough to calculate. That's an additional $500,000,000 of margin. Of course, that's of course, in the business model, probably sales will fall by around 10% because we're preparing to have our own club, having stores customers in our own stores and be selling to them. And so not necessarily will we be selling partner brands where we've not been able to achieve satisfactory, margins. Here, I wanted to show what things looked like in 2024.

So I'm talking about all channels right now. So we have 29% of, you know, and then of private labels and 12%, license brands. Well, half price hasn't benefited from any licenses. So 10% should be transfer of our products, 45% should be those licensed goods, and 45% should be branded products because that business can't be run without recognized brands. So at CCC, it's 10% private labels.

And then in NeoBovia, we're talking about the sale of sales of brands. Having in mind that 40%, those are also licensed brands, and so we have to cooperate with our brands, partner brands. Everything else is done on much better conditions. We've renegotiated all of the commercial terms. And the group's target is to have 55% high margin products being sold.

And I think we'll probably need a maximum of two years in order to achieve that target. So then we go on to item two of this approach. We're talking about our own physical stores omnichannel network. So I would remind you that as e commerce, we're the only one that has an omnichannel purchase we're selling in both channels. Well, our the same products are basically being showcased in e commerce as well as in shopping galleries, And that means we're we're able to become recognizable very quickly.

And we can say over the last two years, e commerce has stayed at the same level. So 9%, but in the group fashion group, it's 22%. But what's important here nobody has a physical brick and mortar store with products. No e no strong ecommerce network. Well, they don't have a brick and mortar network.

There there's some individual cases where they might have a store, so but they don't have a chain of stores. So the model that we've had up until now, that's 52 stores. Well, it's it's stopped earning money. So for one specific reason. So the basically, these morgan these slogans basically don't really capture attention.

So that within three minutes, you can bring in the shoes within three minutes, you know, for anything you can choose on the tablet. Well, that hasn't made a big impact on customer behavior. So 60% of the transaction are through Internet orders, 60. In order to generate 60% of sales, we had to order six times more. So they were only basically picking up 16%.

So we calculated that 40% of the customers didn't even come to pick them up because they hadn't physically paid for those products. Of the 60%, that only a portion of them ended up buying those products. So we spent 80,000,000 for a customer to buy the shoes of which 65 for traffic and then we had to pay quite a bit of money for the transport. And so they were ordering ten, fifteen pairs of shoes, but they were only buying one. So the business is not profitable.

Had we spent that 80,000,000 on payable, being in traffic, we would have had additional margin. It's not a big cost to replace these stores, but primarily it's furniture that we have to replace. As you can see, this is not some sort of boutique store. We don't want to scare customers because every town with 60 70,000, inhabitants will have a store like this. We're talking about Elk, Zamasz, Przemysz, Wovitch, Szedlitzviez.

So these are stores, towns where we normally wouldn't do a boutique. What is EOB of obvious difference? I think Bulgarian turned on, but CCC is the main pair ticket. These are shoes up to 300 zwadis, so 300 gross. So here, we'll have shoes being sold for 300 to 600 primarily, but in some cases, it'll be up to about a thousand.

And these are gonna be brands that you wouldn't find in CCC plus our most important brands like Genie, Rosslyn, as well as the higher licensed brands, you know, in terms of higher because of the price. So 60% of the shoes and 30% bags, we've been observing a lot of success in these bags. So we started at 6% in recent weeks. It's 15%. So this is something that we're selling up.

So we can say that, basically, the sales of bags have saved the softer sales of footwear. So there are no returns. There are no orders I mean returns, and we're basically selling per units. So you have to have 12 pairs to have the full range of sizes. We have very high margins on the bags.

So why am I so certain that these stores will earn money? I'm hoping that the customer will give us a big premium that this type of store doesn't exist. So basically, we have CCC, we have mono brand stores. So in one location, one venue, I wanna have fifty, sixty well known brands for retail sales. We've had stores like this in the past, and it turned out we closed a store like that in the past, of course, in response to my instructions, but that was a mistake.

That was a mistake. And so we had the laptops technology. It was modern modernity. We wanted to be a modern company, and that store was something that bothered us for a number of things because people were making some mistakes. They were congratulating us for that store at one of the openings, but that's not the idea.

It was something that was supposed to be opened quietly. We opened it up in Zalonagura. This doesn't have anything to do to segmentation. You can see some backpacks. But if we look at the sales per square meter, this is something that's very good.

We we were selling 9,000,000 in sales. So it's 25 to almost 26,000 per square meter. And so we had others that were at 5,800.0. Of course, there was a crisis. Now it's 9,000 watts per square meter in smaller stores.

But as you can see in the model, we assumed that we would have 12,000 in our sales. And that's something we can achieve with, you know, Modivo. What's important here, the margin. We had a margin of 38%, thirty nine %, but the EBITDA is 17%. That's $1,500,000 in profits in one store.

That's just Zalonagura. So we're counting that retail stores will be above the average margin that we'll have in Modiva at 50% because we're going to have more of our own products, so licensed products. That's the case in stores. You're selling what you showcase. E commerce has a totally different approach.

Basically, they're clicking on brands, but in stores, you buy physical products. So we're assuming that the average store size will be around four fifty square meters. So we have to have fifty, sixty brands. Half of those brands will be our own brands And our representatives will have a larger number of models, Gino, Rossi, Padura. This is not a store for Gennady, Zisbrande, or Lasoske.

This is for higher, more expensive brands, 300 watts and above. And so the 50% margin times a higher ticket, that means you'll have a much better return per ticket and we'll have a more effective return on our investment because we've been able to rent these stores, lease them out on good conditions. We have the fit out, so we're able to have a new network of stores for EOBV very quickly. There's nothing like this across Europe in this price range. That's either boutiques or everybody's thinking about e commerce.

But you can see that only 20% of sales comes from e commerce. Why? Because there are no stores like this. So customers from smaller towns have to buy through the Internet or travel to other cities. We're going to be in Yaliniagara and Gozofjeld Kopolski and that we can always count on around 200,000 inhabitants in the catchment area.

So I really do believe in these stores as well as all the stores that we're running. Here's our ambition in terms of our stores. So we want to replace 52 stores by June and we want to add another 20 stores. So we want to rebrand these things in subsequent years. We're going to be adding 70 stores.

We have a pretty clear plan, and I think we'll be able to do that pretty quickly. So in 2027, we wanna have 208 stores and reach 1,000,000,000 in revenue on our brick and mortar stores, a very profitable undertaking. So this should be a profitability above what we'd be able to generate in a pure e commerce approach. So, of course, returns free of charge. So you can have the payment for returns in NeoBovia.

So we can test a number of different solutions. And then we have the loyalty club in Modivo, which will take over all of the channels. So this is gonna be something quite important. So the average floor area would be four fifty square meters. And the third item whereby we want to improve our profitability in Modivo, that we we want to have the Modivo Club on the April 3.

We'll launch the new club. We'll do quite a bit of marketing. So today, we have 21,000,000 club members, 17,000,000 are active. Here, we've shown you a pyramid of sorts. It's very difficult to draw conclusions because customers overlap.

So 600,000, four hundred thousand, so we should add some new club members. So everything will be a single club at the end of the day. And the effect will be this will be a matter of benefits. So if you buy something from CCC, you'll get a discount or a cashback and half price or Here, I can say I'll come back to that fee in just a moment. If we talk about Motivo, this is a platform that generates benefits.

And there are real benefits if you if we had, you know, e commerce platform in different countries and then we had one warehouse with just these boxes. So we went into e commerce and half price, then we started to send out, you know, glasses and stools. So we had a lot of packaging. Today, we have a single box. And so this is just our ecommerce, and this is modivo.com.

And so you can join us. This is the platform of benefits. You can get the cash back per the card, and you can have then expenses you can make in other brands. And so all of our people will be dressed the same way. So half price, people will be dressed differently, but all of our full price brand networks.

So EOBOVIE, VUESS, WSSM, they will basically advertise the money for plug. We'll have one single bag to carry things. So basically, one box will be easier. It'll be a little bit more difficult if we want to change something because you'll have to throw everything out. But we're talking about millions as maybe even tens of millions as what is per year.

So we'll have a single gift card that will be sold. We had a separate one and a half price, CCC, and then we combine things. And now we're gonna have a single Modivo gift card under the Modivo Club. And then you have the Gift Club, and then you have the Modivo Club, and then you have the Gold Club and the Standard Club. So the Gold Club will be at sixties watts per annum, but it would authorize to buy you buy things in all of our networks with a 10% discount.

So it's gonna be a cashback that goes through the card. So as a company, it's gonna cost us 4% instead of 6%. It's a customer that was spending 50 swaths, was getting in 120 we'll spend an extra 120 swaths. So we want the customers to be thinking about our brands. Of course, we're gonna do a television campaign, a strong campaign, radio, cinemas, billboards.

So tens of millions is what is over a few months, but this is much less expensive than buying traffic for a fee. So it's several times less expensive. We wanna generate organic customer flows. We do 120 transactions in our stores. We're probably gonna bump that up to 200,000,000 in our brick and mortar stores, and these are the customers we want to bring in through the doors.

So here's a 10% cashback through our club, and then we'll have, you know, tramway stops, bus stops, anywhere we can, we can develop that. So we have to do that very quickly to make sure that we'll be the owner of these customers in one single closed cycle. So we'll have basically various types of incentives, you know, customer referrals, things like that. And then basically, we'll have basically these leaflets encouraging people to join the club. So each one of the networks will have its own sort of app.

So a lot of people, the statistics are that a large percentage of the customers actually look at things on the Internet before they walk in through the door. So then you can choose the channel as you wish. Or you can select medieval premium, but then you have the benefits platform. One of the campaigns that we're going to run is that with our high first margins, we can allow ourselves to get rid of some of the brands that maybe don't rotate so well with a 50% discount. So it's at a minus 50%, we're able on the licenses to retain a 60% margin.

So that's quite good. We can show our brands. We can show anything we want. Our internal brands or the shoe brands, we're gonna have one strong platform, commercial platform, e commerce platform. And so people have to agree to work as partners.

And so when we have partnership, that means we earn money. Partnership, that's the only case that happens when we earn money. And so this shows you how things could work. And then if we're in the CCC, we can drill down to CCC, and these are the brands that are offered through CCC. Here, we would not show, you know, the high brands.

So we have a unique loyalty program, an omnichannel platform. This is basically the overall look of that online sales only through Modivo, a single platform and a single loyalty program. Here, we have half price below. We're not saying that we won't return to e commerce sales through half price, but this is not something that will happen this year. We have to basically master all of that if I'll happily sell licensed brands through e commerce if 50% of our sales will come through these licensed brands.

Sometimes you buy things or you don't buy things. It's so you have products that are sold less frequently. We're going to sell licensed brands at a sold less frequently. We're gonna sell licensed brands at a high margin, then we can actually add different colors, blue, navy blue, black. And so now in order to handle incoming products, you need to spend 2 swaths per unit just to put all the conditions that have to put on the labels and things like that.

So pretty time consuming process. We want to automate most of the processes. Logistics will be much less expensive. Then we have the benefits that will be offered. These are the benefits that will be offered to our club members.

So the gold club member will have a 10% discount in the form of a cashback, and then you have friends and family. So I think for 20 Swaddies, you can if you buy it for 60 Swaddies, then you have three, chances to invite somebody else to join the club, and that would be an additional 20 swaths. And so, basically, the thirty day return window. So there's no obligation to accept returns. So we don't wanna spend money.

I'll tell you a little bit how much money we're spending per annum. And so then you'll have the deals, so discounts up to 53¢. So gold, then it'll be to the normal club members. And then the third order, all other customers would then have access to these Motivo deals. What I want to do is I want to unify corporate communication.

Maybe you know, maybe you don't know. I'll tell I'm telling you that we have CCCEO. This is a company that's importing for all of our channels. So in Eobovia, it'll be strange if the CCC will be named as the importer. So we can't we wanna change the names to Modivo EU.

So basically, in all of our labels, we will have Modivo EU. And so all of the companies so if you have on the ticket, you have EOBOVIO and then you have CCC in The Czech Republic on the ticket. And so we're gonna change everything to Modivo. And, basically, we'll change all of the names of these companies that'd be Modivo Czech, Modivo Slovakia, Modivo Hungary, and so on and so forth. So, basically, this will pick up the pace.

So right now, all of the names of these companies are totally different in each country. So that's why we wanna unify everything. And so we can say each one of those pages was actually being advertised. So we wanna have now one single platform that will generate scale. So this is our ambition to improve our profitability in MoDivo.

As I'm showing you, in our plans, we had assumed that we would, you know, basically fall a bit. We're not going to enter into a race that we're going to be losing money. This might not happen, but we decided to factor that into our projections. So this is what's happening with the revenue of the top line. Then we have the gross margin.

It's a little bit higher because we have additional services. Customers are going to be paying for the packages and things like that, but we want to improve our margins by leaps in brand bounds. So we've negotiated better returns with our partners. And so every year, we want to basically increase that gross margin by 2027. We want to have a 50% gross margin.

This will, of course, lift our EBITDA. It's gonna be it's quite a bit of money, but this is what's gonna happen. This is, you know, pure mathematics. And so at the end of the day, we had to do evaluation. Not we, but, you know, so the company, an external company, but we didn't go overboard.

Please imagine that CCCC will do e commerce sales. It's not in the plans to do it through eogoview. So that's more than $700,000,000 in e commerce in CCC. And so we're expecting $1,000,000,000 and that should bring us up to that revenue target. So in terms of the basically, Modiva will pick up the revenue from that payable club.

We assume that we're going to be able to encourage some 3,000,000 customers to join that should give us 180,000,000. And then we have CCC's e commerce. It has a 60% EBITDA margin after covering all of the head off ex cost, so it's 22% at the end of the day. So it's a pretty decent profitability level like on our own products. And this is something that will dwell in the final result.

So this is not something we haven't recorded, recorded or factored in. So a lot of things are going to be happening here with WorldBox and Modevo. So then basically, if we look at the next steps, so we have to have ambitious goals. So we have ambitious goals. That's what we've set up here.

This year, I assume that our growth doesn't have to be spectacular because we're cleaning up, you know, IEA BOVIA, we're backtracking the stores. We're opening at 70,000 square meters that won't give us such a big upward impact as the stores will open in subsequent years, but that'll be more than 12,000,000,000 in revenue. And then we want to have the 20% to beat at the end of the day, which is our goal. Our target goal, we don't have less than 20%. And then we would be opening this year more than 300,000 square meters of sales area, so floor area.

So if we follow that path, if the plan is done, so have 250,000 square meters of new floor area and then we'll be able to get to 2,500,000,000.0. So it's February. We've got contracts signed for 310,000 square meters. So we can assume that, you know, 10%, fifteen % might be pushed back until spring of next year. So So we should open up quite a bit of new space.

That's 60% of half price. So half price is 2,000, 2 thousand 5 hundred square meters per store in Heifers. So we'd have to open in order we'd have to open quite a few e m bovine stores to catch up that. So we're half half price is expanding quite quickly. It's going pretty well.

I thought it was going to be more difficult. It's not so easy to find, a commercial premise of two and a half thousand in a good shopping go. It can happen. Sometimes it has to transpire. Somebody has to step back.

These are shopping malls that have already been created, and it's easier to open CCC or Ilebovio as opposed to a large area store. So these are plans that factor in only additional floor area. It doesn't include franchise stores. We have a lot of offerings from abroad. It doesn't include wholesales.

We have a lot of offers from abroad. They want to open up franchisee stores. We're not sure if we're ready for that. We're considering that big organizations from across the world who are coming into this, so partners who are much many times larger than we are, they understand that this is a network that they can generate money on. So right now, to be frank, we can give a margin of 58% to our partner.

We understand that our partners have to earn money in order to invest more money in opening new stores. So we can give a high margin and then we'll be able to earn quite a bit on wholesale. So this would be substantially above our beta target level. And so in the we're going to be opening marketplaces where we want to sell our licensed products. So wholesale sales as well as franchise sales.

Okay. Let me give you some information. I can tell you these results, of licensed brands, well, in CCC, this is starting to be big. It's going to get bigger. In Eoboview, it doesn't appear.

In a half price, we don't have it. And World Bucks hasn't really been opened. So all of this is going to function in all of our channels. The business we've done up until now, this is having a better product with a higher margin, with better production costs, with a higher quality product and the costs that we have limited in the company. But if you ask me, there's a lot to be achieved yet.

I can tell you a little bit about some of the next steps for this to be more transparent to you. If we look at returns, complaints, so we sell products for 12,000,000 net. So 1.5%, those are complaints or returns. So that's 100 and some odd million. And so basically, every single brand has been handling this.

So basically, we're selling some stores sorry, shoes that came back to the stores per kilo. So I've centralized that. We're looking at every single pair. And so I think 20% is something I can get some savings, maybe 50%. We have some sales channels.

Off price, we can do basically. We can try it. We don't have to sell shoes for Eswati. Then if you look at financial costs, $50,000,000 a lot, not a lot. We've refinanced.

That's $22,000,000 savings. We have a new range of factoring. Perhaps, generally speaking, the costs will fall. So I think that's some $50,000,000 So as we look at logistics, we closed at the store in Romania. That's $24,000,000 It's a good thing that we hadn't opened two stores in Romania.

So I think in the processes in logistic, we're going to be able to sell a saver around $50,000,000 Then we have reserve and collect $80,000,000 That's something that we lost on that unnecessarily. IT elimination of unnecessary projects, that's $80,000,000 We had five fifty IT guys, and so now we have 300. So we have one single IT department that deals with the most important projects for the network channel. There used to be a race, who had better technology, who was doing more projects, projects weren't being completed. They took too long.

They were too expensive. So that's 80,000,000 in costs. Then the org structure in Modivo, roughly 80,000,000. We're gonna spend less on the management in Modivo. The first result was in Q4.

That was a 15,000,000 savings. So we think that we're going to be able to spend 80,000,000 less in Modivo next year. We're talking about, you know, HR costs. Those guys were doing projects as well, and so it's difficult to master what was going on there. Performance marketing, this is where we want to save money.

We had big numbers there, big figures, several hundred million. I assume that we're only going to save a hundred million today. Well, performance is something that gives us pause. Should we cut it off as much or compete with the market? Because with high margins, it's certainly something worthwhile considering to do additionally.

But we have to take a very calm approach to that subject. Then we have subscription proceeds. I wrote $100,000,000 but we're thinking it's going to be $180,000,000 Then we have refunds to the club card. If you imagine in our network, well, it was 7,269. That's what the amount of returns.

We were accepting all of the returns in stores, so 516,000,000. So that was 7% of our total retail sales. So if you can imagine that 30% of the customers were actually buying those shoes, The other 70%, we don't know what happened. Did they come later to the customer or neighbor the customer's neighbor come in and buy that? So that's a few hundred million Swaddies.

So $560,000,000 minus 30%, that's $400,000,000 And so the average margin in half price and cc's is 55%. So it's $240,000,000 That's the amount of money that we gave to customers. We didn't even know if that customer would ever come back and buy anything. So we don't have an obligation to accept returns in our brick and mortar stores. And so we're gonna give money back through the card.

This is something that started to happen. Is this can the Consumer Protection Office, can we do that? So we're we're doing everything according to the letter of the law, so this is something that we can do. That's another hundred million. I wasn't really trying to sum it because there's a lot of synergy, a lot of savings.

This is something that we will clearly deliver, and I think we'll probably do all that this year. So now I wanted to confirm to you that I want to share money with the shareholders. It's going to be no less than 25% for the 2025 financial year. What's gonna happen later? We'll give you information about that later.

Why have we decided not to do the IPO? With these changes in the business model, it's necessary. We don't need a company that's listed in the stock exchange that's under or reporting to a subsidiary of another listed company, that would take too much time to deal with the minority shareholders. So if the customer has been brought through the doors by CCC, but the payments being being paid to Modiva, should Modiva give us 90% or should it give us 60%, we would have this conflict of interest where is the center of profit in which network. So we need to have full unification of the customer base for this to be a successful undertaken, and then we have to have a joint loyalty program.

And so we wanna have an optimally enhanced management of the group. Optim management, we want to maximize the financial performance of their group. So Modiva will be a single strong e commerce platform for the group. And so having a distributed shareholding would be at odds with this consolidation. So maybe I can ask Carlo at this point in time to say a few words about what's going to happen next.

So thank you very much. Good morning, ladies and gentlemen. As we've said, we believe strongly in the full operational integration of all of our brands. So operational integration is what we're going to do with our brands, with the club. So we had the number of customers in those big circles.

So basically, you can see those circles don't overlap sufficiently. We have customers who are buying footwear and we in subsequent years, we want them to buy more from us in jeans, let's say sweaters as well as jackets. And so basically these circles should overlap to a greater extent and that way we'll be able to drive upwards the income per customer. You can't talk about integration unless you have full equity ownership across the board, just the reasons that the CEO mentioned. So we've made the decision that we need to buy out that 22.81%, which is in Modivo S.

A. And we're gonna we're gonna actually buy out those other shareholders. We have four contracts that we've entered into with four minority stakeholders. So for the 22.81%, we have a $1,358,000,000 which gives you an implied valuation for the 100% equity stake of 5,950,000,000.00 swaths. And so thinking about different structures, how to finance that, but the best would be a simple rights offering.

And that's what we wanna propose to the shareholders at the shareholder meeting that we've decided to convene today. We're calling that shareholder to the shareholder meeting today. And so if we if the one point let's say it's 1,400,000,000.0 instead of 1,358,000,000.000, that's what we need from this rights offering. We have 500,000,000 declaration from Ultra, and that means we would have 900,000,000 that we need to capture from the market. And so this will be the management board.

I'm going to want to participate in that rights offering. And then add 5,000,000. That's my personal investment, my personal stake. And so we can say that pool will be a little bit smaller. Of course, that's a little bit of a joke, but let's go on.

So we want you to have comfort in terms of two shareholders. We have the largest two shareholders in Modivo, which had the biggest appetite. They have seen how the share price of CCC has grown. We have special terms for them that we would pay $6.59 for 10% equity stake and then be warrants to be issued. So if the share price exceeds by 50% in terms of the price we obtain as a result of raising equity.

And so this is a two year warrant instrument, and this would give them the right to convert those shares at the share price, just at the same price as other investors. So it's a win win for everybody. And this structure, in fact, would be possible, thanks to Ultra's decision, that it's going to be able to convince other investors that this construct is a good construct and they'll have a certain level of return. We've talked about that in the current report, and Ultra has given certain assurances, and this has contributed to their positive decision to participate in this transaction, this deal on these commercial terms. And so we believe that this is a good parameter.

It's a win win solution for the parties concerned. So the share price, we're going to issue up to 10,000,000 shares, but the final size of that offering will be adapted to the amount of money we need. So basically, the number of shares that we need to issue in order to acquire that $1,358,000,000 we're talking with brokerage houses based on this recommendation. So if there's gonna be an oversubscription, then we as a company will be ready to issue an additional 1,000,000 shares. Is not the priority.

Basically, we want to finance this transaction in order to buy out those other shareholders and move forward and then basically move in the direction of full integration at full steam ahead. What's also important, if we're able to obtain additional funds from that additional 1,000,000 shares, what we want to do, we want to accelerate the half price growth. We have a specific target we wanna use that money for. I think I've said everything we wanted to say about the rights offering. Can't hear the question.

So, basically, we have to make the bonds, I guess, is is we'll probably refinance those bonds once they once they become mature in basically a year. And we'll be able to refinance at a lower expense. That's something we're going to want to take advantage of. Then there was Series B that was mentioned in the press report. That's the next slide.

So thank you very much. Let me give the floor now to Councillor Olesh, who is the Chairman of the Supervisory Board. Welcome, Alexander. I'm the Chairman of the Supervisory Board at CCCC. I wanted to tell you a little about Series P and how the supervisory board wants to ensure the stability of management of the company in the context of these plans.

From the point of view of the supervisory board, what's critical over the next five years is to ensure that mister Dalish Muek will be the leader, which means we'll have a new strategy that he's gonna be capable of implementing that strategy. But as we saw a moment ago, he's gonna add additional money to the company from the point of view of the supervisor. But we had one important problem because he's not interested, and he's declared that publicly in terms of obtaining revenue, so compensation. We wanted to make sure I've been with CCC for many years, and I remember that mister Miwok was not a management board member. So I prefer we wanted to look for different solutions.

We wanna make sure that it stays in the management board. That's why we have a concept to set up an option program. This should be a program that's addressed to mister Dariuszmuec. So this should be for motivation incentive program for the next five years, but he should also be able to use this to have an integrated team. So I have an issuance of subscription warrants.

First of all, this will be for Mr. Dorek Muic. They would be convertible into equity depending on a single parameter. It will depend on the market cap of the company. So during today's presentation, we've said that we want to grow the market cap by at least 50%.

And so the first criterion, so these warrants issued to the CEO, this 300 per share. So the number of convertible warrants will grow as the market cap grows, so share price grows. So we have far reaching goals. So our program would come would be fully achieved at a share price of 1,000 swaths. So these will not be shares issued free of charge.

It's 200 swaths. So if you look at the figures over the next five years, having in mind the best scenario where the price is 1,000 swaths per share, and so basically the dilution is 3.48%. And so a max of 5%, fifty % would be issued to the CEO. The other 50% would enable him to be the leader and there would be he would define the team with the he can define the team with the consent of the supervisory board. The model we've thought up has one assumption.

So if all of the shareholders earn money, so and they earn quite a bit of money, then the CEO should also earn money. And we we believe that this approach is in our joint interest, and it seems it's an ethical approach. Do you have any questions about the proposal as presented? So thank you very much for your attention. So then I'll give the floor microphone back.

So I think we said everything. Let me add, at this point, maybe this is a bit of a bet, maybe not really a bet, but for the next five years, I have to work arduously in order to deliver this program. These are not easy numbers, but it is doable. Our model does allow for this to occur. And it would be a shame not to leverage that for us to be one of the examples of a Polish company that's capable of generating achieving success not only in Poland but abroad as well.

The more I look at that, the more I believe in it. That's it from my side. So thank you very much for your attention. Are there any questions from the room? Good morning.

Thank you very much for this presentation. I have several questions. In terms of Wholesales, what was the value of Wholesales in Q4? What's the planned target figure for the whole year? Too little.

So in upcoming weeks, I'll receive a lot of good information from my partners that I'm going to be able to distribute most of the brands through wholesale arrangements. That's what we want to do. We have a department that's doing wholesale sales, especially Quicksilver, Oncie and some of these other brands. And we've been selling them since the beginning of this year. We can distribute, Nae West and many other brands across Europe.

In the near future, we should have the decision in terms of the figures. We're thinking about 3% per annum. That's what we're thinking today. In q four, it was around 6% of sales. So sales are gonna grow quarter on quarter.

So it might even reach as high as 10% of CCC or the whole group of the group. We have a separate department that's dealing with wholesale sales. In the near future, maybe the business model will be divided up that a totally different channel won't be responsible for wholesale channels, wholesale sales, just like we're doing with Modiva, which is responsible for e commerce. And so you have retail sales, off price. I'm not promising you that we're gonna report it that way.

But generally, we wanna make sure that things are more and more transparent to show you which channel is moving forward more swiftly. But we have very satisfactory margins in wholesale sales. What does that mean satisfactory? It's above EBITDA. So it's above our EBITDA.

I can't tell you more because then people who are buying will be, you know, infected. What's the CapEx planned for 2025 CapEx? So investment expenditures. So happy people don't count money. So things are it's hard to talk about CapEx if we have a payback period of six months.

So generally speaking, I really wouldn't follow that discussion because the EBITDA per store in CCC is 40% and so it's 29%. So in half price thing, we have a payback period of nine months in CCC. It's six months. So I want to open as much as possible. We don't have enough good space.

We wouldn't open up any stores on attics. So in the Second Floor of the from the on the First Floor of against the gross Ground Floor, we have to have a good location, location, location, location. Has something changed in WorldBox? I don't see anything on the presentation. Yes.

We didn't want to overload you with information. The most important thing to us is to show you what our path is, how many square meters we're gonna open, how we're gonna grow. And we're talking about the ABITA stability. We want to grow with a stable EBITDA. We don't have an idea in terms of the Germany, the DACH countries like Germany and other German language countries.

We're focusing on Central And Eastern Europe. We have a good understanding of the market, and we have four brands. We're using it at the same time, and that means it'll be easier for us to roll out the Modivo Club. So if we I believe in omnichannel, so I think nobody has a model like the one we have today. We're selling fifty fifty.

So we have stores in 2027. We're gonna have another Madrid in Spain and Madrid. Spain is doing pretty well. So I wanted to leave some information for next quarter. We won't have anything to talk about.

So this year, we want to open 16 half price stores in Spain. So we have very good sales density. Costs are very good. The margins are good. And so it's a country with some 48,000,000 inhabitants.

When will we see the maximum effects of cost cutting in Modivo? Was it already Q4 or will it be Q1? I think we see those cost cutting results already now. We won't be able to do much more. Maybe in some stores, we won't be buying empty traffic.

We'll save money on payable traffic. We'll save money by using our club loyalty program. And then we want to improve the product margins. So we will also sell off in the first half of the year the the remnants of these partner products. So I think everybody's finally understood that, you know, my middle name is Margin.

And who doesn't understand that my middle name is Margin? That means they're not gonna work with us. So we have a big market share. And if if somebody's not working with us, it's more his or her loss than it is our loss. And that's the way things have to be.

As you can see, nobody's earning any money in e commerce across Europe, and we're the only e commerce that's actually earning any money, and I know how to do that. Can we count on reverse factoring growing quite substantially? Do we wanna talk about that? Wilkosh, I'm talking too much, and Wilkosh hasn't been on the stage, so I'm not sure if my microphone's on. So this is one of the priorities.

We've already started the financial year, so we have the factoring. Here, we're very far along with our banking partners. This is not the only thing that we're concentrating on in terms of optimizing, working capital. As the CEO mentioned, we're talking about inventories as well. We want to extend the payment terms and days and also using trade credit and utilizing the balance sheets of our suppliers.

We have better and better ratings, so that means there are a broader array of instruments that they can have so they can use factoring, they can get insurance for their supplies, they can utilize their specific question about reverse factoring, we have very specific ambitions. We want to reach the benchmark in the industry of several hundred million. So it's not very big having in mind the size of the group. So in the CCC business, you know, it's 600,000,000. In Modivo, it's another 300,000,000.

So this is a very small percentage compared to other players where those limits are in the billions. So there's a lot of potential for us to explore. So we want to double at least this year. So I think Wilcox doesn't want to say that. So if we reduce inventory and then we drop our inventory turnover in days, two eighty days, so then if we have two hundred days, along with the fact that this ship is sailing for two months and we're gonna be able to get to two hundred or one hundred and fifty days for half price because a lot of the product's already in Europe.

So with an average of one hundred and eighty days, we'll have a model that would finance itself through factoring, and that's our primary target. And I think we're pretty close to achieving that target a few more quarters, and this is something that should work very well. So as the results are generated, we're going to be able to push upwards, expand these limits. Thank you very much. So two more questions.

I'm from the XYZ editorial board. I have a couple questions. The first question, recently, Iovio was connected to Modivo. You could go there and buy shoes and apparel on your slides. You have footwear and bags.

Does that mean you won't have a connection between both Modivo and Eobovie footwear? What's the second question? What is the cost per store of Eobovie in this model? And so if CCC has a payback period of six months, half price nine months, what is your supposition in the new format for Eboovia? So we won't have a Modivo.

Modivo is only going to be ecommerce. So, basically, it was a cheap way for people to have a dressing room, a changing room. And so people were coming in to pick up the products. That's not sensible. Modivo will only be a sales.

It won't be linked to retail sales, but it's only a matter of synergy. It's going to be an integrator of the group, the club and e commerce sales. The second question, the business plan, we have 12,000 sales per square meter, 25,000 is what we've achieved. That's the sales density. I believe in this model because this model doesn't exist elsewhere.

You can't buy shoes in a town of a hundred thousand inhabitants of Armani, Lagerfeld, or Guess (NYSE:GES). You have to order those shoes through the Internet. We're gonna give that to customers. This is an omnichannel approach. You can come in, measure the shoes, and then you walk out with the shoes.

You don't have to pay for the courier, go to a package parcel, send it back. So basically, we see people coming back. E commerce hasn't killed the retail customer. People are coming back to stores. E commerce is quite difficult.

It's highly competitive. There's you have to buy space, your packages, and so we've accustomed customers to returns. It was a bad slogan for us to say, don't buy it until you try it on because people weren't I I told people not to buy those shoes. That was a mistake. Why if I encourage people not to buy shoes, why should they buy the shoes?

You know? It was just so thank you very much for your response. One more question from the community here present. I'm from Embank. I wanted to clarify the deal structure.

I understand if it's used for all of the instruments are used, you would distribute 11,000,000 shares and a 2 and a half million warrants. So it would be as many as we need plus a million, but up to 10,000,000 as a cap. So it's up to 10. The max is 10,000,000. If there's gonna be a need big needs, it would be an additional million.

Once again, So we will never exceed 10,000,000 plus 2,500,000.0 warrants. So it's 1,600,000,000.0 divided by the share price and the deal plus million. So it seems that 10,000,000, we won't issue too many shares. Okay. That's clear.

Then in terms of the Modivo Group, in Q4, we saw a decline in performance marketing costs. Is this the optimum level or do you anticipate in subsequent quarters that we'll see some optimization in performance marketing? I don't know. Frankly, I don't know. We continue to think about fighting for the marketplace.

So we have such high margins. We should actually vie for the market. We won't spend as much. I think the mix, customer mix, people coming back to our channels is going to be such so I think that performance marketing will be diluted. Performance marketing is an opportunity for people to start buying from our licensing brands.

Once we win a customer, then we believe that those customers will come back to us to buy T star once again. So this is a channel that would enable us to win the market for our most expensive brands, and that's going to be quite a good benefit for us. So that would be a great channel of performance marketing. Then we would use performance marketing, but we'd like to use it in a tap into it in a totally different way. We want to use it wisely based on what is actually going to generate returns every quarter.

Up until now, Moldivo with a 30% margin was buying traffic at 16%. So if we're gonna have a 60% margin and let's say it's 14 or 12%, that's what the traffic is. That means we're gonna have a big upward impact. So we know some people who are buying at low margins and they're able to earn money on Allegro (WA:ALEP). And I've been thinking, why aren't we able to earn money on that?

If we're gonna sell rebulk in the marketplace at 80 percent, how much can we pay for performance? That's the that's the that's the answer we're looking for in order to respond to this question. We can probably earn quite a bit. Why should we overpay? We're gonna pay as much as we need to pay.

But at the end of the day, we're gonna have a 65% margin. It depends. Are we buying this traffic for tennis shoes for $60.75 or for shoes that are worth, you know, 400 swaths? That's also important. We're paying per click.

All of these things need to be factored into our calculation. That's why I say I don't know. So we're I don't wanna surrender or relinquish that market. I don't wanna strengthen other strengthen other brands. The brands that we manage in the region, we want our licenses to be very strong licenses.

We want to have very strong brands. And if we're going to advertise Rebook, let's as an example, that should have an impact on every single channel as well as half price, which is selling the remnants of collections. Basically, everybody should benefit from that advertising. Everybody knows CCC, you know, World Bucks. We're gonna advertise, you know, brands and products.

I can't hear the question. He's not using his microphone. The brand owner only has he's not selling products in wholesale. I'm the host. I have to earn money to pay the licensing fees.

That's the only thing we have to pay. Let's not go overboard. The license fee, including marketing, it's less than 2% of the margin. It's not a lot. It's not 6%.

It's 2%. If we have a 75% margin, we're only losing 2%. So I understand there are no more questions. So I'd like to thank you very much for your attendance, for the turnout being so high. We've had such a high number for the first time of observers in the market and followers for the first time.

So thank you very much for

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