After three years of considerable expansion with physical stores beyond its national borders, with the total floorspace rising by 124 percent to over 205,000 square meters, the Polish-based CCC Group says it is now aiming to become the leader in online shoe retailing in Central Europe in the next three years.
It wants to do so by exploiting synergies between its physical stores in various countries, which sell only private label, and a recently purchased Polish internet platform, eobuwie.pl, which offers tens of thousands of models by well-known international brands. The acquisition of a 75 percent stake in eobuwie.pl will cost the group 220 million Polish Zloty (€51.2m-$56.6m), or 12 times its operating earnings before amortization (Ebitda).
The platform is already trading through regional websites in the Czech Republic, Slovakia, Germany, Romania and Hungary. Bulgaria, Lithuania and Ukraine should come on stream in 2016, says CCC, which is anticipating a 75 percent increase in online sales this year.
With a presence in 15 countries, CCC has already become the largest shoe retailer in Eastern Europe, thanks to attractive prices for its private label collections, and it has been recently making major investments in Austria and Germany. The shoes are made in Poland and in the Far East.
However, CCC's growth has been slowing down lately. In the fourth quarter of 2015, the company booked a sales increase of 11.2 percent to PLN 755.4 million (€175.6m-$194.4m). While the gross margin went down by 0.8 percentage points to 53.9 percent, the operating margin (Ebit) increased by 1.2 points to 15.7 percent. The pretax profit rose by 20.3 percent to PLN 114.3 million (€26.6m-$29.4m), but net earnings declined by 66.1 percent to PLN 105.2 million (€24.5m-$27.1m). Excluding extraordinary items, the adjusted net profit was off by only 1.8 percent to PLN 128.2 million (€29.8m-$33.0m).
For the full financial year, CCC reported a 2.2 percent increase in adjusted net earnings to PLN 256.5 million (€59.6m-$66.0m) on 14.9 percent higher revenues of PLN 2,307.7 million (€536.5m-$593.9m). The gross margin and the operating margin declined to 53.9 percent and 10.8 percent, respectively. While the debt/equity ratio stood at 64.2 percent, the cash position more than doubled in the course of the year to a level of PLN 345.4 million (€80.3m-$88.9m), allowing the group to make further investments.
Poland, where CCC is the leader in the footwear market online and offline, still represented 63.0 percent of its revenues last year, down from 69.7 percent the year before. Next came the Czech Republic, Slovakia, Hungary, Austria, Germany, Croatia and Slovenia.
CCC is planning to set up distribution units in two new markets this year – Serbia and Estonia. It is aiming for same-store increases of 15 percent in Germany and 10 percent in Austria. The total floor space of the group is expected to increase by 27 percent through opening 110 new stores in Poland and 40 in the rest of Europe. The biggest offline expansion will take place in Poland, Germany, Austria and Romania.
The total number of stores rose last year from 622 to 665, or 761 including franchises in various countries. CCC is still aiming to have 1,000 stores in place by the end of 2017, measuring 457,000 square meters. The number of stores in Germany and Austria, which grew from 44 to 78 last year, should increase to 166 by then.