CCC, the international Polish-based shoe manufacturer and retailer, saw revenues for the first quarter of 2020 decline by 9 percent from the year-ago quarter to PLN 944 million (€207.9m-$226.5m).
Despite good January and February sales due to some clearance and an early start to the spring collection, the start of the coronavirus outbreak caused an acute traffic decline in the first half of March and the company closed most CCC stores later in the month. However, the group’s e-commerce sales soared by 39 percent to represent 43 percent of turnover, versus 28 percent last year.
The management said it focused on delivering its new GO.22 strategy, relying on the omnichannel model, with a focus on the fashion aspect and a comprehensive product offering. As part of this strategy, it unveiled new advertising campaigns for the Gino Rossi, esize.me and Lasocki brands. During the quarter, a new logistics centre opened in Zielona Góra in January, which the management said has significantly enhanced the group’s capacity to process orders online. The facility has an area of nearly 40,000 m2 and three storage levels, its processes are highly automated and its target warehousing capacity is up to 5.5 million product items.
The group also continued to develop the CCC internet application, launched in February 2019, which already recorded over 1.4 million downloads. The app is planned to be launched in the coming months in the Czech and Slovak markets, and later in the year it will also be available in Romania, Hungary and Austria.
A cornerstone of the group’s omnichannel strategy, the app makes it easier for customers to shop online, browsing through pictures with a like/dislike button. The customer can also check the availability of products in offline stores or find the nearest store, or access the current promotional offer online and in offline stores. Members of the CCC Club use the mobile version of their loyalty card and people who want to join the Club have the opportunity to register through the application. In the next few months, CCC is planning to implement additional functionalities, such as the possibility of personalizing push notifications for promotions and communication about the latest collection or providing shoe visualization in 3D and augmented reality. It will also be possible to download to the application data from the esize.me platform, i.e. a foot scan made with a special scanner in the CCC offline store or eobuwie.pl. Google Pay and Apple Pay will also soon be added.
With coronavirus, the management said the priority is now to secure the liquidity and financing, adding that it has managed to postpone the payment deadlines for its liabilities. It is also planning to issue shares to raise up to PLN 500 million (€110.0m-$120.0m) and embarked on cost restructuring and contract renegotiation.
During the quarter, the company’s consolidated gross profit fell by 17 percent to PLN 410 million (€90.4m-$98.4m), while the gross margin dropped by 4.0 percentage points to 43.4 percent. The group’s Ebitda and Ebit were negative at PLN 136 million (€30.0m-$32.6m) and PLN 327 million (€72.0m-$78.5m), respectively.
At the end of the quarter, the size of the CCC sales network stood at 754 000 square meters, down by 6,000 m² from the same period a year ago, as the group sought to optimize the retail space of Gino Rossi in Poland and Voegele in Switzerland. The fastest growing retail area was eobuwie, with 12 new omnichannel locations. Given the prevailing uncertainty sparked by the coronavirus pandemic, the company intends to significantly curtail its planned store openings this year.
At the end of March 2020, the group had a presence in 29 countries: in 23 of them through more than 1,200 brick-and-mortar stores, and in 15 via an online channel. In total, CCC has over 50 online platforms across Europe, including eobuwie.pl, ccc.eu, Modivo, DeeZee and Gino Rossi.
In 2019, the company posted a 24 percent increase in revenues to PLN 5,845 million (€1.3bn-$1.4bn). More than 52 million pairs of footwear were bought by CCC customers through all the sales channels. The growth engine was e-commerce, which grew by 49 percent, and organic growth. The gross margin was down by 0.7 percentage points to 49.4 percent, due to a higher share of third-party brands in retail sales and an increase in e-commerce revenue.
The portfolio of products available in CCC stores was expanded in 2019 with new private labels, branded sports shoes and suitcases and accessories. The DeeZee brand, a traditional online business model, appeared in CCC’s offline stores last year. It sold 1.3 million pairs of shoes, becoming the group’s best-selling first-priced brand. Gino Rossi, with a new high-price quality range, was also introduced to CCC stores.
The Ebitda margin declined by 4.6 percentage points to 14.5 percent, while net income tumbled by 92 percent to PLN 18 million (€4.0m-$4.3m).