Darius Milek, the 41-year-old Polish entrepreneur who founded CCC Shoes & Bags in the 1990s after selling shoes in an open market, has chosen to pull back from the operational management of the stock-listed company to become chairman of its supervisory board. Milek, who has become one of the wealthiest men in Poland, will concentrate on strategy, product development and expansion. The former vice president in charge of finance, Marcin Czyczerski, will take over his position as chief executive.
Online sales drove the revenues of CCC Shoe & Bags for the fourth quarter of last year, jumping by 64 percent from the year-ago quarter to 328 million zlotys (€76.3m-$85.7m). Overall, the revenues of the rapidly expanding Polish-based chain of shoe and leathergoods stores surged by 25.0 percent to PLN 1,603.3 million (€373.1m-$419.0m).
However, same-store sales were down by 9 percent. The company blamed this on a difficult comparison base and unfavorable weather conditions. This figure doesn't include the discontinued operations of CCC Germany, which CCC decided to sell to the Hamm-Reno Group, the second-biggest footwear retailer based in Germany, last November, in exchange for a stake in the company.
The management said the results of the fourth quarter were largely determined by the weather. In particular, high temperatures recorded in October, the most important month of the year for CCC, were not conducive to the sale of the autumn-winter collection. It also pointed out that the decision made in the fourth quarter of 2018 to sell CCC Germany eliminated the unprofitable part of the business. That part of the business is now managed by the HR Group.
The company said it focused on product development and strengthening new sales channels. It expanded the portfolio of available brands, with the addition of Gino Rossi and DeeZee, and focused on the development of e-commerce and its omni-channel strategy.
Footwear represented 88 percent of CCC's sales in the fourth quarter of 2018, while handbags accounted for 6 percent and cosmetics and accessories for 6 percent. E-commerce revenues accounted for 20 percent of the group's turnover, with growth led by the eobuwie.pl website.
CCC's revenues from the physical retail channel increased by 22 percent to PLN 1,247.7 million (€290.3m-$326.1m), including growth of 0.5 percent in Poland, 22.8 percent in Central Europe, more than 100 percent in Western Europe and 42 percent elsewhere.
The group had 1,125 stores at the end of the quarter, with more than half of them located outside Poland. CCC has operations in a total of 23 countries – 18 offline and 15 online.
The gross margin increased both in the offline channel – up by 0.1 percentage point to 53.5 percent – and in the e-commerce channel – with a gain of 0.4 percentage point to 41.8 percent.
At group level, the gross margin dropped by 0.4 percentage points to 51.1 percent due to a change in the revenue structure, as a result of the growing share of e-commerce in sales.
Ebitda declined by 9 percent to PLN 201 million (€49.7m-$57.2m), mainly due to lower sales at the beginning of the quarter, which was caused by unfavorable weather. CCC's net profit from continued operations declined by 18 percent to PLN 126 million (€29.3m-$32.9m).
For the full 2018 financial year, CCC saw its total turnover rise by more than 19 percent to the equivalent of €1.11 billion with a 16 percent increase in the physical stores. About half of that came from the Polish market, where the company claims a market share of around 25 percent. Net profits fell by 81 percent to €13.2 million, but they were only 26.4 percent lower excluding divested activities such as the loss-making CCC stores in Germany.
One of the company's new projects is the further expansion of the online business with the launch of the first website under the CCC name. The use of a new foot scanner first introduced in the autumn will be generalized in CCC stores and the product offer will be expanded beyond private label items, with the help of HR Reno.
Meanwhile, Vögele Shoes, the Swiss chain in which CCC acquired a 70 percent stake last year, boosted its sales by 26 percent on a comparable basis in January and February. The chain consisted of 208 stores at the end of last year.
To cope with future growth, the company will invest this year the equivalent of €23 million in IT and logistics, including a doubling of its warehouse capacity from the current level of ten million pairs.
CCC plans to open shortly a f lagship store of 2,100 square meters in the Citypark of Ljubljana, the capital of Slovenia. New stores will also be opened in Austria and Croatia.