Modivo S.A. (MDV) Earnings Call Transcript & Summary

[Interpreted] Good morning. We would like to welcome you very cordially to the conference today about the decision of our cooperation between CCC and the company, Authentic Brands Group, our key licensor. We would like to welcome our guests very cordially. So Dariusz Milek, the CEO of CCC; as well as Jamie Salter, who is the CEO of Authentic Brands Group. So I'll go ahead and give you the floor at this time Mr. President.

[Interpreted] Thank you very much. I'd like to welcome everybody very cordially. Today is a little bit different because we're not reposting our quarterly results. We'd like to take advantage of the opportunity and brag a little bit about our cooperation with a very strong group, the Authentic Brands Group, which is an American group. And they supply a lot of value to us in terms of the licenses, which we've signed with them. Authentic is one of the biggest groups to probably say a few words about that. And the business model is as follows. They're buying the best that's available in the marketplace and then they grant licenses to the players who are capable of converting that into good products and robust sales. This is a very important link in our business. So we have a great team which really understands what we want to do. We have a large store network. We have a lot of good resourcing. We're producing a lot, and we were missing a little bit of that international flare in our products. And this is something that Authentic is able to deliver to us. So I'll take advantage of the opportunity, and I'd like to welcome once again. I'd like to introduce once again, Jimmy Salter. Maybe you all don't know, maybe you don't have that awareness. This is an Elon Musk of our industry, maybe Steve Jobs of our industry. So this is a gentleman who -- just a second. Can you hear me now on the English version? Elon Musk. You probably heard what I said about Elon Musk, but maybe not the rest. Glad to hear that. Thank you. Yesterday, he promised that he would start learning the Polish language. So ladies and gentlemen, this is something more than just introducing Jimmy because I've got basically some information that a piece of paper that Jamie has signed. This is he would like to become a member of the Supervisory Board of our company. This is something that's exceptional. Jamie doesn't -- isn't very active in this kind of way. He's rather focused on building value of companies. But we're talking about our licenses being for at least 10-year periods with options to renew provided that we deliver the proper amount of sales in these brands. And so sales is going better than we had originally assumed less we have that desire to develop and grow other sales channels. So there's no threat that Jamie would want to go ahead and terminate that agreement, especially since he is in the Supervisory Board. Well, what's really important that the role that Jamie is going to play. He's going to be the Head of our Strategy and Development Committee and I have asked him to direct this. I'm personally fascinated by American business, and you see the off-price, HalfPrice that we're offering. Americans are doing these things differently straightforwardly and effectively with great effectivacy. And I'd like to embrace this formula in our organization. And so Jamie is going to onboard the best professionals across the globe, and we're going to try to translate the best from another continent. I spent quite a bit of time with Jamie. And this is a gentleman who will not stop. These are not the last latencies that Jamie has acquired, purchased and who have the opportunity to say a few words about himself in just a few minutes. Isn't that correct? Yes, that's more or less it. If I've forgotten to say something, then I'll go ahead and add that at the end. So I think we're going to follow an interactive approach in today's meeting. So before we say more about Jamie and the company he represents, we wanted to say a few words about -- share some facts with you about our cooperation. So we could sort of recap what our collaboration hasn't entailed. We announced this more than 1 year ago. These are the key figures that the highlights at CCC. We sold more than 2 million units of products that are from the ABG group. So they belong to Authentic. What's important to Reebok, which is the key license is a very important component of the CCC portfolio. So in August of 2024, Rebook is responsible for nearly 9%, nearly 10% of sales under CCC brand. And in the future, it will be the brand #3 in our portfolio. And so all of the brands from Authentic, there's roughly 11% of the sales generated by the CCC brand. And so we have 12 licenses signed and we're working on another 4. What's important in our cooperation -- this collaboration is mutually beneficial. And one of the things that's important for CCC as a group as a brand is we're offering to our customers globally recognized brands that generate a lot of high intake margin, which is some 74%. This is pre, of course, discounts and pre-license fees. But from the point of view of ABG, there's a lot of advantages coming from this cooperation. But thanks to this collaboration with the market leader and CCC Group is the market leader. Authentic is getting exposure to a very important Central and Eastern European market with a lot of prospects. So we're the leader, and so this is half of the population in the United States, what we have here on the CEE market. So these are some of the parameters that basically sign up or basically recap our cooperation. [Presentation]

[Interpreted] So the video got launched a little bit earlier than we had originally planned, but this is a video that really promotes the Authentic Brands Group, and it shows you what Authentic is actually dealing with. I'd like to come on to the second portion of our meeting, which is the part -- which is the internal Q&A session because we'd like to introduce Jamie to you, his company to you. Of course, you will also have the opportunity as a matter of our traditional approach at the end of the session to be able to pose your own questions. And we'll also do that portion of the session in English for the comfort of all of the speakers.

[Interpreted] Again, congratulations on your new role in the CCC Group. Before we move on, could you please tell us a little bit about yourself about Authentic Brands Group. Could you also please explain to us the licensing business model works from your perspective?

Thank you. I'm Jamie. I'm the Chairman and CEO of Authentic Brands Group. I'm the founder. We started the company 15 years ago. And licensing really goes back to the animation world. Think about Disney, when you think about licensing. Think about characters that get license like Mickey Mouse. And when you look at Michael Kors or you look at Gucci, they've been in the licensing business for multiple years. But what they didn't do is they never licensed the core product out. They licensed the fringe products. So they licensed sunglasses, and they licensed fragrance, but they never licensed their clothing or their handbags. So we said, why can't you actually license everything as long as you focus on best-in-class partners by category, by territory. Now that's very, very important by category, by territory. So if we were going to go license a restaurant, my guess is we would not do that with CCC. That would not be a good idea. But when it comes to footwear and if you're going to license footwear, you would go to CCC and Poland because they are the best at footwear. And if you want to license handbags, you would go to CCC because they are the best at handbags. But if we're going to build Reebok gyms, we're not going to go to CCC. We're going to go to one of the best operators that knows how to operate gyms in Poland. So stay focused on best-in-class by category, by territory. So 15 years ago, we said that's how we're going to run this business model all around the world and we started. Today, Authentic Brands is the #2 licensing company in the world behind Disney. We will finish this year at $32 billion, and that is with a b in sales on a global basis. We have over 50 brands in the portfolio, some of the biggest brands in the world. We just purchased Champion, which we closed actually next month. And when you actually think about it, we have 1,700 partners today that our partners like CCC -- now I must say CCC is a very special partner and a very big partner and a very fast-forward partner going much quicker than most about 1,700 partners in the world. Now what's very interesting is we take those partners, and we collaborate with all of the different companies that we have. So today, we have over 600 million social media followers. Now that is good but it's not as good as the 220 million data files. 220 million data files, we know where you live, we know what you buy, and we know when you buy. And taking that data and crunching it has made us incredibly successful because we actually know what brands to buy now because we know what our customers actually really do want. So it is a very laser-focused approach. We're generating almost $700 billion monthly PR impressions. That's a crazy, crazy number. But when you actually think about it, it's not so crazy when you go across all the different brands that we have today. What's also very, very, very important is think local and act global. Now thinking local is important. And you can't think local by sitting at your computer on a Zoom call, that doesn't work. Yes, it helps, but you have to go. So going to Poland, okay, was something that we said we're going to go to Poland. And 3 years ago, we came to Poland. And we didn't come once and we didn't come twice. We came multiple times with multiple executives and we studied the market, and we met this gentleman, Dariusz. And we said we want to be partners with Dariusz. And we looked at Dariusz' business and we said, Dariusz, you have a good business but it's very private label. Private label is a good business, but times are changing, and you need to change. And you need to focus on brands. And he says, Jamie, I love brands. The problem is with brands I can't make enough money. And I said, I agree with you when you sell brands, you make 35% margin. And when you sell your private label, you make much more. He says, that's correct and that's why I love private label. I said, "Well, can you imagine if you can actually make private label margins but you'll have the velocity of the brands and you will give a much better experience to the consumer. You'll share some of that margin with the consumer, so the consumer will get better value. And you will get higher velocity of sales and your AUR, which would be your average unit retail will go up." He said, "No, no. Not going to work, not going to work." No, no, Dariusz, I'm telling you it's going to work, and we started. And here we are, and we're just getting started. Dariusz is now doing 11% of its total business with the Authentic portfolio. The truth of the matter is we should be 50% of the CCC portfolio because if we continue to do what we're doing, is margins are going to continue to go up and as AUR is going to go up and his sales velocity is going to go up. So I actually think we are in the early innings. I know some of you understand baseball, okay? I think we're in inning 2, if it's a 9-inning game. So we are just getting started with CCC, and we are going to continue to buy bigger brands than we've already bought. And Dariusz is going to be the choice of Authentic in this region.

[Interpreted] Thank you, Jamie. Everything you said is -- 2 years ago, so I was just -- one little sort of correction.

Actually, we were here 3 years. We're dealing with you.

[Interpreted] Okay. So ladies and gentlemen, as we're showing you, we're only at the 11% watermark. What's going to happen in the future, we're going to have much greater sales. And as you surmise, we've signed some of these brands a few months ago. And so we're at the beginning stages in production. So this is something that's going to grow very quickly, and our margins will actually transform and my parter confirms that as well. Thank you very much.

A question to you. Could you please tell us how you see your role in the CCC Group as the Chair of the Strategy and Development Committee? What are your ambitions, what are your targets? What do you want to achieve?

So the good news about Authentic is I fly around the entire world, 1,600 partners. We learn from these 1,600 partners. What's working, what's not. And what we've seen is there are certain things that work and certain things that don't work. So what I learn when I'm in America or what I learn when I'm in Japan or what I learn when I'm in the Philippines or Korea. I will tell you that we take a little snippet of all those learnings. And I've sat down with Dariusz and I say, look, let me tell you what T.J. Maxx is really doing or let me tell you what Costco is really doing. Let me tell you why we are 30% of Costco's business. Or let me tell you why we are 5% of T.J. Maxx's business. These are great retailers, really great retailers. And I believe that if Dariusz continues to sort of take some of my advice, I truly believe that he will be one of the greatest global retailers on the planet. He is someone that does not stop when you give him a good idea. But what I love about him is he tests. Now test is a very good word. Test make sure it works. But then when it works, roll it out and roll it out as fast as you possibly can. And that's what Dariusz is so good at. There's a retailer. I won't mention their names, and I said to him, you really should be doing what CCC is doing in America and the retailer didn't listen to me. And that retailer is not doing so well right now. And I can honestly say, if that retailer took the approach that CCC is taking here in Poland they would be much more successful. So learning what other retailers do around the world is critical. And when I learn those things, and I pass them on, if he does them, there's a high probability he is going to be successful because there is really successful retailers today, but there's lots of retailers that are unsuccessful. And the unsuccessful retailers are just not making change fast enough. And that's why these companies like Shein and Temu that are coming on the market, and they are doing exponential sales. They are faster, they are better, they are better value. I could go on and on and on. And I believe that Dariusz is one of those retailers that actually will be a winner. And when you look at what's going on is the retail landscape is changing dramatically around the world with technology, if you're not in AI and you're like Internet is something that we all talk about. But the Internet is really just part of retailing, okay? Pick up in store, buy online, see it online, buy it in the store, see it in the store, buy it online. It's just another form of retail. So by learning those things and learning about Amazon, if you actually think about it and you slow down for 5 minutes, and you pick up the good and you get rid of the bad, you will become a much better retailer. And that's what I think Dariusz is doing from this relationship between us and Dariusz. We do have 450,000 points of distribution around the world. We have a good handle on what's going on in the retail market.

So you've partially answered my next question, but let's dig deeper. So it's been over a year of the cooperation between the CCC Group and Authentic Brands Group. How do you perceive the CCC Group? How do you understand its business model? Why was it specifically CCC who became your strategic partner for the region?

I think the most important part is they have an enormous amount of private label, which gives us a very large sand box. Because converting private label into brands is what's important to Authentic Brands because we make money when you sell more of our brands. Now the good news is that if you have 10% private label and 90% brand, that's a harder conversion. But if you have 90% private label and 10% brand, it's an easier conversion for us. So we are spending an enormous amount of time on CCC because it's becoming sort of the role model for us. So as much as we are learning, as much as Dariusz is learning from us about what to do, we're actually learning from Dariusz what to do with other folks around the globe too. So this is actually a win-win relationship. And we're taking really a page out of his book at times. Now we're being very respectful in the territory, meaning we are not going to one of its competitors and saying, well, we should do this with you, but we are going to other parts of the world and using his model to convert these other private label type of retailers over into our brands.

So you mentioned before that the cooperation between us, between the 2 companies, it's not over yet, that we are just ramping up. So what lies ahead of CCC Group and Authentic Brands Group? What are the next steps in our cooperation moving on?

Well, the next steps are for us to sign more licenses with CCC. And more importantly, in signing more licenses, it's really -- CCC is very good at the sourcing side, too, right? We really didn't touch on that part. But understanding that part is also a huge opportunity for us, but a very big opportunity also for CCC to actually provide the know-how, okay, and the know-how it's called a tech pack, a sourcing code and a design. And that's what effectively we are licensing to our partners around the world. And when you can have supply chain, it's much easier to license the brand. Supply chain is, what is this Reebok shoes? What does it look like? How much does it cost? And what is the design? So by CCC helping in that area, that also allows us okay to supply to more customers around the world. And of course, CCC makes a little bit of money when they provide the know-how to us. Just like CCC, we'll buy that know-how from some of our other customers because it's a shared platform.

Could you please tell us a little bit about a few brands from your portfolio. Let's start with Reebok maybe, which is your flagship brand and which is quickly gaining share in CCC sales revenues?

So look, Reebok is by far, the biggest brand in our portfolio. We bought it last year -- well, we bought it 2 years ago. But this is really our first real year where we took over from Adidas because we had a transition services agreement for the first 12 months. And so this year, our sales will be approximately $5.4 billion. So think about it. They were doing, I think, $3.7 billion. And here we are our first year, we're at $5.4 billion. So that came with great partners, obviously, like CCC. But more importantly, it came with really the business model, which is it's very simple. If you're making X margin on Adidas or Nike or Puma and you're making Y margin on Reebok. You're going to obviously push Reebok. Now it does 2 things. It gives the retailer more money to spend on marketing. It gives the retailer better margins to share some of those margins with their consumers. So the consumer is a big winner. And obviously, CCC is a big winner from the margin enhancement. But what we're seeing is our brand strategy, obviously, is working. And when you really think about Reebok, we should just let Reebok be Reebok, right? I mean if you really look hard at Reebok, why do we buy it? Well, we bought it because it's one of the greatest sports brands in the world, right? There's 3 great sports brands: one is Nike, one is Adidas and one is Reebok. Reebok at the end of the day, if you think really hard about Reebok, Reebok was in sport big time in this place called America. Adidas comes in and Adidas is a much smaller company back 15 years ago when they come back -- come to America and they go, we're going to buy Reebok and they get exactly what I would have done. I would have taken all the learnings and all of these relationships that Reebok had, and I would have turned those all into Adidas relationships, which is what they did. And of course, as we all know, Adidas is one of the biggest companies in America behind Nike. So actually letting Reebok be Reebok is exactly what we're doing. So we're back in basketball. We're back in running. We're going back into soccer. We're going back into football. We're going back into all the sports that Reebok once upon a time was in.

So we can see a couple of slides introducing the Reebok brand to our today's guests, including those global partnerships that you have with various celebrities with various sports stars, but we also have more local collaboration, which was -- well, actually introduced last night during the Shaq event. So we have a short video we want to display after this slide. So I'll just play the video. [Presentation]

So that's the most recent call up with Ewa Chodakowska and now we can move on to our discussion on Hunter brand, which is also gaining traction in the CCC's portfolio. Could you please tell us a few words about that brand as well?

I mean, Hunter is a brand that's been around for a very, very long time. It's a premium brand. And it's interesting because I brought this brand to Dariusz and Henry said, Henry and I said, Dariusz what do you think? I'm not so sure. It's a premium brand. I don't know if I can sell premium brands and we said, Dariusz, you can sell premium brands. You have a great customer. You just have never offered them premium brands. And Hunter, there's obviously been known for their rain boots, but Hunter, okay, you can take this brand into the apparel business. You can take this band into the accessory business and you take it into luggage. You can take it into handbags. So look, we've done a great job at sort of finding the best-in-class partners, okay, to make the Hunter brand and we are building this back. And this is a brand that will be similar to Belstaff or Moncler. And we're building this brand. Obviously, it's its British heritage. And we're building this brand back and it is gaining market share incredibly quickly all over the globe. So we're early days. We've only owned this brand for about a year, early days, but we are seeing incredible growth. We'll have 100% growth on this brand over the next 12 months.

[Interpreted] So I would just like to add that this is an ingenious idea with this brand. As you can see, the U.K. there's at least 6 very strong brands in Ranchos and in Poland, there isn't one. And the Rainbow -- so I'd like -- when you go to take your dog for a walk, it would be very good for you to have a pair of Hunter shoes or boots. And so we're able to do that. That's something we can deliver. And so if we talk about the product, I'd like to say, it's not so much the case that I'm doing the products myself. And so my son, [indiscernible] is here, who is responsible for, of course, the male portion of the collection and then we have Valerie, who is responsible for women's shoes footwear as you can surmise, Valerie is my partner, [indiscernible] everything, there's my son. So everything is here in the family. We are a strong core of people and to make sure that things are very strongly controlled product is the most important thing in our business. And that's something that will accrue very strong margins. I'd also like to introduce our business angel between ABG and CCC. So this is Henry. So basically, everything got started with him. He's the person who identified us, who found us. He was the person who came first and he established contact with us. And we started to vary, of course, modestly with a license for backpacks. And now we're moving forward very strongly. And so Jamie, I wanted to ask, where is Shaq?

You send them home after last night, right? You put him on the plane and he went home.

[Interpreted] I mean, I'm not sure. We -- it's our partner now, but where is he? I mean he was supposed to be here.

You told me that he could go home and he was tired. I mean that's what he does after he does a DJ said. He goes to the plane and he...

[Interpreted] Maybe you should check and call them. Can you give me a ring and see what's happening?

People at Reebok. Sorry, I didn't wake up in time.

He is literally 2 feet taller than me. Shaquille, that's an honor. Thank you for joining our today's conference. Could you please tell us a little bit about your brand, about your Shaq? What's the DNA of the brand? What are the values related to the brand? What's the target group. Please take your time.

The DNA is about family and affordability. I realize second, third year in the league that I was overcharging children for shoes. We don't grow over similar backgrounds where our parents didn't make a lot of money. So I thought it was crazy for me to charge kids a lot of money for shoes. So again, affordability, fun, great designs. It's not that people don't want to pay less money for shoes. They don't want to pay less money for less fashion. So we give the topline leathers, top fashion, top everything. And it's been doing very well so far. And I'm honored to be partnered with CCC and Dariusz and his lovely wife and his family. They do a great job. I've never been to Poland before. People here have been very, very hospitable. So we look forward to coming back every year.

Shaq, you should really tell the story, why you wanted to develop your Shaq shoes because I think that, that story is why we're partners today because your family values and the way you look at life really it touched me and I said, this is someone I want to be partners with for the rest of my life because going partners with Merrill Monroe and Elvis Presley and Mohamad Ali, I promise you they don't fly private, and they will show up on time all the time. But then you go partners with a live athlete, celebrity, somebody that is bigger than life, no pun intended. It gets a little nerve wracking. But you told me this story, and it really hit home. So I think everyone needs to sort of hear that story of why we've developed the Shaq brand and who you are because I think that's going to really get this audience to understand the Shaq brand.

So the story goes I was leaving practice 1 day and a lady was dragging her son, and I thought you want to autograph, but she is very upset with me and used some very bad words to basically say, you guys are charging us all this money, and we can't afford and my baby wants nothing but your shoes, and it kind of hit me because they kind of put me back to when I was a child and I had to wear same sneaker for 3 years because, one, we couldn't find my size and two, my father couldn't afford them. So that day I decided to drop my big contract and start the Shaq brand because she made really good sense. So -- and I actually had some money to give us man. I don't make the prices. I'm young in this business. Here's a couple of thousand. She smacked the money on my head. She said I don't want your money. I want somebody to like you to make some shoes that are affordable. So that day I called the company that I was involved with. I told them, I said, "You know what, thank you, but I want to start my own shoe brand. Ever since then, we've sold over 250 million pairs. That's like in 1995.

Excellent. So thank you very much. I think we can proceed to the Q&A session. We know that Shaquille is very busy today. He is going to participate in an event in one of the CCC stores in Warsaw. So if it's time, we understand, but we can start the Q&A session. So if you have questions, you would like to ask to Shaquille, to Jamie, to Dariusz Milek. You're got to go. Obviously, in Polish.

Can I hug my favorite person in Poland.

[Interpreted] So ladies and gentlemen, we'd like to invite you now to pose any questions you may have.

I know you work with your family. Do you want to talk about the impact and the importance of family, your family and how you view our partners and everyone at Authentic.

Well, look, working with your family is not always easy. Your family will tell you the truth. And the truth sometimes hurts. They -- I have all -- 4 my boys in the business. And I guess that is probably the secret sauce of the business we have today because my 4 boys always tell me what's going on, what brands to buy. And they're the gut check for me. So I actually am having sort of the best experience of any father in the world that I get to work with my 4 children. I get to see my kids pretty much every day, whether it's in person or it's on a Zoom call, but it does have its challenges at time. Now I will also tell you -- but that's one of the interests I have in CCC because they do work with their family. And it's definitely a different dynamic, but I will tell you that any businesses that I've seen where the relationship with the family is involved. Most of those businesses are really incredibly successful.

And here's the reason why I start with Authentic. We had a meeting and Jamie and his oldest son had a very nice discussion. I like these 2 guys. Like I was like [indiscernible]. No, these guys are here. The family, and we have some going back respectfully, of course I love the not always -- but I like -- Jamie made a great point. Any company that has this family of -- and that he makes his boys work. I love that. I respect that. And I was like, you know what this is got would be in business with for the rest of my life.

And one of my family members is actually here. Corey Salter, who started the business with me literally 15 years ago.

And how old is Corey?

Corey is now 35 years old, our 3 -- I have 3 grand childen -- he has 3 children.

Hold on, hold. How was Corey 35 and your wife is 34. Look at his wife, she's 34 years old. How is that possible?

No, she's actually 37 because we've been married for 37 years.

[Interpreted] [Operator Instructions] We also have several questions from the chat function. So maybe to embolden you us pose some of the questions from the chat function. I want to ask about marketing about joint promotion of the brands from the portfolio of ABG. So does the CCC Group co-finance the ongoing marketing campaigns with Authentic Brand Group. And are we, as an organization, happy with the reception of the campaigns that we've done up until now. So of course, one of our duties or obligations is to assign a certain portion of the revenue top line to marketing. These aren't major announced, but the scale of business, the magnitude of business that we're going to be doing, that means that these campaigns are going to be quite large size. And so in signature, we're not going to say that Reebok in CCC. We're going to say we're going to just talk about Reebok. We have Modivo, we have Eobuwie footwear where we have HalfPrice, and we have a number of channels we're going to want to utilize to sell Reebok shoes through. And so we're going to be more accountable for the promotion of the brand as opposed to talking about the company that's specifically doing the sense that things are going to be happening. There's going to be buzz on the street. We can see that this is going to be a very strong campaign. Maybe another question from the chat function. So having in mind the greater direct involvement of Jamie and the cooperation, collaboration between Authentic and CCC. Are you considering joint ventures or direct capital injection into CCC? So I'm not aware of anything of that sort. But I can't say everything. So realistically, this is just the beginning of a beautiful business relationship. And I think a lot of fortune has been afforded to us that we have the ability to work so closely with Jamie. This was not so easy. Jamie, had to be authorized by his Board of Directors in order for this to be possible. And so basically, it's a partner of Jamie because these are even mentioned the partners of Jamie, that these are the biggest investment funds around the world. We understand that Shaquille is going to have to leave us in a short way. So we want to ask the final question to Shaq. So participants online, participant would ask you to compare the Shaq brand to the Jordan brand. Are there any major differences? Would you like to draw some of those distinctions and make a comment on that?

Ours is way better and way more affordable. Has been very successful at how he does the strategy, but I'm not okay with that strategy at all. So I think people can be proud to wear a great look and affordable shoe with the name that they love and respect. There's only person's name that'sequal or maybe above mine and I say so [indiscernible] way below me and build the business and I do have a tie. Again, way more affordable, looks better, and we have more fun over here, second Reebok.

I think what you can say is, look, the Jordan brand is a great brand. Nike, great brand. If you really look at Shaq's playbook, it is similar. Shaq owns Reebok. Shaq owns the Shaq brand. Shaq endorses the Reebok brand. He has Reebok shoes that sit at a higher level, and he has the Shaq brand that sits at the value level. So having obviously the know-how from the Reebok brand helps the Shaq brand and obviously having the shock brand when it comes to basketball, helps the Reebok brand. So I would say that the 2 brands are sort of synonymous together, working together. And I think you'll see that most of our partners around the world that have the Reebok brand also have the Shaq brand. Now for a number of years, the Shaq brand was focused a little bit differently until we sort of came on the scene. And now we are laser, laser-focused on merchandise. Not just footwear, apparel, accessories, clothing, tailored clothing, we are really starting to focus on building the Shaq brand out more than just where that is very different than the Jordan brand. The Jordan brand is just Jordan footwear and a little bit of apparel. Whereas the Shaq brand will be all commodities because Shaq really plays in all of those areas. So it's definitely has the possibilities to be much bigger than the Jordan brand if we continue to do what we're doing on a global basis.

[Interpreted] Thank you. Thank you for your participation. I know that you are very busy, so we wish you a pleasant event in the CCC store. We'll continue with the Q&A session. We have some additional business questions.

We've got the translator in the box. Great job brother.

Shaq, thank you very much. We do appreciate you. He's actually going to now go to visit stores, and we have him working to go visit all the different CCC stores, shake hands, take pictures, say hello to everyone and make sure that Dariusz is actually selling a lot of shoes because that's really important to the brand.

[Interpreted] Thank you. We would like to thank Shaq very much. Are there some additional questions?

Yes, we actually have a large number of questions. Having in mind the development of the licensing model. What's going to happen with the private label? Will you forget about private label then?

[Interpreted] We've had a number in the tens teams and then tens and basically, one of them is responsible for something like children, women's, sporting goods. Well, I think we can distinguish things. We have 6 or 7 strong brands, there's Lasocki, which is the leader and [indiscernible], which has been acquired and then Sprandi and Jenny. Those are our own brands. So we have 6 -- we consider to be about 6 private labels, maybe 10 partners, probably business partners. If we talk about third-party brands, and then we're counting on tens of brands, licensed especially from the Authentic Brands Group. We're talking about partnership with -- we're going to really live the partnership. So I think the next question is more to Jamie. How does Authentic manage cannibalization of brands on its various markets are your partners? Do they have a lot of independence in making decisions. Which brands they will sell, which ones they will promote?

So that's an excellent question, which is the DNA of these brands. The DNA of these brands is critical. Disney will tell you, you cannot change Mickey Mouse's ears. You're just not allowed it, right? Mickey Mouse will always be Mickey Mouse. So it's very, very important that, yes, you think local and act global. So you may have different colors in the Japanese market for Reebok shoes than you have in Poland, but the logo is the logo, the box is the box. The tissue paper is the tissue paper. The marketing is the marketing. You will definitely have different categories in certain countries that are stronger than other countries. But the DNA of the brand sits at the Authentic level, and they will get their style guides, their color palettes, their marketing campaigns. And we obviously will tailor those to each market, but the DNA and the know-how comes from head office, you would say. Now I will tell you that certain partners are better when it comes to sort of marketing and design and sourcing. And when we find those particular partners that are really good at that, we sort of hook into them, and then they collaborate very closely with us in New York. So Dariusz is actually one of those partners and sometimes those get to some heated arguments. But in the end, all the approval process and DNA still stays at the authentic level.

[Interpreted] Are there any other questions people in the room would like to pose at this time?

[Interpreted] We have -- I wanted to come back to what Jamie said a moment ago. It's not the case that everybody has all of the brands from ABG. All of the -- it's not the case that everybody fits the ABG brand. Thanks to our segmentation, the fact that we're in multiple channels I think we have a slightly better fit. I don't think anybody else has a higher number of licenses signed than we do today across the board. I don't think -- that's what I'm thinking. Maybe I'm wrong.

The #1 partner in the world as far as multiple licenses. You're not the #1 partner yet in dollars, just so we're clear. You still need some work on that. Okay.

[Interpreted] I've not really gotten started yet in terms of sales.

I mean there's no doubt about it that this is a small country. You have, I believe, 37 million or 38 million people that live in Poland. We are over-indexing for sure in this country. Now people say, Jamie, are you worried about that? And I say no because we have multiple brands. So we are very careful on how hard we push a brand in a country. And I will tell you that there's a reason why we continue to buy brands. But when we buy these brands, we look very careful. Is it going to cannibalize our existing brand, right? Will Champion cannibalize Reebok. And the answer is no, Champion is predominantly an apparel business, whereas Reebok is predominantly a footwear business. So when we're looking at these brands, we are careful from a cannibalization standpoint. But we also -- when we're looking at these brands, we sort of look at distribution. We're constantly looking where are these brands successful, right? And where are the holes? Because that is the important part, which is, can we take Champion around the world? The answer is yes, because it is a global brand. And you take something like Hunter. Hunter is a great European brand and a great American brand, but it's really nowhere else in the world. So can we expand Hunter globally? And the answer is yes, but it's a lot more work than something like a Champion that already has global distribution. So we're constantly looking at the brands, but we're also looking at our partners, where are our partners strong. So Hunter is a good example. We knew that we could actually do very well with CCC. We knew that it fits the CCC model. So when we're looking at these brands, we actually look at our partners on where we can plug our -- these new brands into the 1,600 partners around the world. And obviously, Dariusz because he has HalfPrice and he has CCC it makes a lot of sense where we can do not just our sports brands, but we can also do our fashion brands because today, about 70% of our business is rooted in sport, and 30% of our brands are rooted in fashion.

[Interpreted] Then we have some questions from [indiscernible] .

I'm from the BDM Brokerage House. It's very nice to have the opportunity to post questions. So I have a question to Mr. Chairman. What are the benefits in terms of being on the stock exchange without mentioning Prestige. If I am correct, in 2021, you've postponed your IPO plans? And what are your thoughts about listing and Authentic Brands Group today?

It's an excellent question. If you asked me, I will give you the same answer that I traditionally give, which is -- we're a big company. Our company value -- last valuation was about $21 billion, and we're a private company. We're a family. And being public is harder. So the question is, are we going to go public? And I think at some point, we may have to go public because we're getting so big that, that will be our only sort of exit strategy. But I'm in no hurry. I have 4 children. They're all in the business. My son, I want him to take over the company at some point and maybe he'll decide to take it public in the future. But right now, we're a private company, and we'll continue that at least for the next few years. And to add to that, you go public usually for 2 reasons. One is because you want to exit or the second is because you need liquidity. We're not interested in exiting, and we don't need liquidity. We're an incredibly profitable business.

[Interpreted] So maybe I'll respond to the question as well. So being a listed company is not something that bothers us or disturbs us. We've been a public company for some 20 years. We've gone through a lot of different moments, weaker moments, stronger moments. We think that the stronger moments are in front of us. Our goal is to be a member of the index that WIG20 index in the near future. I'm hoping that this will happen shortly. And we're not thinking about withdrawing the company from the stock exchange at all.

You'll buy us.

[Interpreted] I'm looking around. There might be some ambitious plans, but I think that's something that dwarfs us at this point in time in terms of anything that we might dream about. So I'm looking around the room to see if there are any questions. I don't see any other questions. I wanted to come back to the chat and 1 more question to Jamie about whether Authentic is currently working on acquiring some more brands into its portfolio. And do you think that any of these brands would have the potential to be as big of a brand as Rebook. Could you -- as Reebok, could you basically the rate information what you're working on right now?

So Champion, we signed Champion. I guess, it was about 4 months ago or 5 months ago, that will close at the end of this month. Champion is currently doing about $3 billion on a global footprint retail. We do think Champion has the potential to be as big as Reebok. As far as other new brands, look, we're going through an interesting time right now in the consumer space. Interest rates are incredibly high. Companies have to refinance their debt and I do believe that there will be some new big opportunities over the next sort of 36 months where we will be able to buy those brands. And yes, some of those brands I've discussed with Dariusz and Dariusz likes them. So yes, I think there's going to be very big opportunities in the future with Dariusz on future brands that we will be buying. But these will be very big brands. We're -- our sort of theory now is go big or go home.

[Interpreted] So we have a large number of questions that are quite similar. I'll basically consolidate them into 1 single question. To what extent is the company satisfied with sales performance in August, having in mind the back-to-school campaign. And this is a question to Jamie. Actually, I think this is a question to you, Mr. Chairman.

[Interpreted] Can I speak? Well, things are going very well, just as we had anticipated. So basically, we have a big offering. We have inventory. So we've launched very well in August. So we can state that August is drawing to an end. So things have fired up pretty well. And this is something we'll continue in September and October. We think that this quarter will be much better than recently and that means we're going to have pretty hefty margins as well. And this is due to better sourcing in factories, purchasing, of course, over getting past eliminating agents, distributors, other entities and players in the supply chain. And so we're basically buying directly from the factories, and we're selling directly through our sales channels. And so that means we are able to extend and enhance those margins. And if we add to that, the licensing model where we can produce these products at a similar price as for a no-name product and then sell it as a Reebok that means we can always charge a higher fee, and we can sell it more efficiently, more quickly. So I don't want to talk about the results today. The financials, we should leave that until the next call. This is something that -- we don't want to be punished by the stock exchange for revealing information.

[Interpreted] So we have one additional interesting intriguing question, we've talked about implementing solutions from Northern America -- and you and CCC and your cooperation and collaboration. So is there something we could do in the opposite direction? Are there any sort of solutions that Jamie, Authentic that you've seen in Poland and CCC, things that you see that you could transplant successfully into Northern America?

Some had to be better retailers in North America. No joke. CCC is one of the best retailers I've seen really around the world. I always -- I run home and I say, you got really you don't get it. You've got to go to Poland and see what these guys are doing. And I'm going to give you one little example why they're just such a good retailer and working so fast. So you go into a CCC store, you go into a HalfPrice store. And you see a TV screen above where there's shoes on a table or there is clothing on the table. Well, if you go into a store in America, that's not the way it is. The way it is, is there's a header a picture of Reebok action shot or Hunter action shot. What's going on in CCC is not only can they change that shot to whatever they want at split second. They can also give you a message 50% off. Buy one, get one free. They can tell that message and they can change it inside their office on a split second. So they're just faster and better than the retailers that I've seen. In the U.S., there is formats, obviously, like CCC. There is formats. And CCC is just doing so much more from a per square foot. And I think that when I look at CCC because I've studied it, CCC has invested tremendously in technology and distribution systems. So they were hurt, right? Their stock went way down. They spent a lot of money building these systems and their stock got hurt. The truth of the matter is, they have spent the money and they are ready, okay? And that's why you're seeing the increase in sort of everything that is going on at CCC. So I don't want to take total credit. Oh, let's stop selling private label and start selling licensed products. I think you got to give credit to that, but you got to look at the back of the house. The back of the house is state of the art. And a lot of retail companies today, they're antiquated. And that's why you sort of look at what's going on with NVIDIA and AI and what's happening. CCC can change on a dime because their systems are brand new, and they can put that in. A lot of people don't understand that, oh, can you just like pick up in store and deliver off the e-commerce site, no, it doesn't work that way, right? Like the cash registers, they don't necessarily work that way if you have an antiquated system. You have to have new systems to do that kind of stuff. And it's incredibly expensive to change your old system. And we have investments in certain retailers around the globe. And the biggest question is how much CapEx are you going to spend to actually get your systems up to par because they are so antiquated. And these CEOs, they don't have a good answer because they have to spend an enormous amount of money because like -- if you think about it, a lot of these retail companies are actually on analog phones. I want you to think that. I mean, how many of you in this audience have an analog phone, put up your hand. How many in this audience have an Apple phone or a Samsung phone. And how many are you going to buy a new phone that actually has AI technology in the next 12 months? I would say pretty much every single one of you is going to get a new phone with AI technology in the next 12 months. So think about that. Now you're going to spend $1,000 to do that. Well, it costs a lot more than that to actually upgrade your systems at the retail front. CCC has done that. And that's why CCC is really poised to jump the competition because their systems are brand.

[Interpreted] Thank you very much for those very nice words. So I think Jamie was mentioning to appear talking about a period when we were overinvested. We were in the COVID period. We had basically the business shut down for roughly half of a year. Now the business is up and running. It's open. Maybe it's a shame that Sundays aren't trading days, but we've been able to manage and navigate this path and things are moving forward and doing better. So I think we've exhausted all of the questions from the room, and we don't have any more questions from the chat. I guess there's one more question in the room.

CCC brands, the margin buying out them and manage time as Authentic Brand Group. In general, what do you think about those brands? And the second question is, my understanding is that you entered the market last year, the CE region. We all know that Poland and other countries here grow very fast for the past 20 years. Have you had been here before or it's your first business cooperation in the region?

So I think the question is have I been to Poland before? The answer is yes. I've been to Poland before? Have I been doing a lot of business in Poland up until last year, the answer is no. And that's why we've come here and we've got an unbelievable partner. The Eastern part of Europe, it's an interesting region, right? And I think that if we continue to invest in this region in a big way, I think we can take a lot of market share. Look, we've been incredibly strong, obviously, in the Western part of Europe. This is the sort of the eastern part of Europe. And I truly believe that we should continue to overinvest in this region, and we will continue to prosper. And look, Poland is a great example. We are doing an incredible job here, thanks to Henry and our EMEA team. But I think that we're just getting started as well because Poland is only one country in the Eastern region. Did that answer your question correctly?

As for the brands.

As far as buying brands with our friend beside me, we've discussed it. And I don't know that we would necessarily buy a brand with CCC, but with CCC potentially by a percentage of a brand that we buy, yes, if CCC wanted to buy part of a brand with us, will we entertain that? The answer is yes. I mean, look, we have a very interesting model, right? I mean, we don't make anything. It's kind of crazy, right? We do $32 billion and we don't make anything. We pick the best-in-class partners around the world and we collect royalties. So we're effectively a landlord. I can tell you, if CCC does do that it's very beneficial for them because, yes, they're paying royalties into the IP, but they would own a percentage of that IP, so they're sort of paying themselves. And the interesting part about IP, IP trades at a very high multiple. Retail trades at a lower multiple than IP. And why does IP trade at such a high multiple? Because it's kind of guaranteed rent, right? You're a landlord collecting rent and you got these long contracts. So you're collecting sort of 85% of your rent is kind of guaranteed, right? So if your budget is to do $1 billion in that brand and collect sort of 6%, right? That's sort of the average rate on retail. 85% of that $60 million is guaranteed for the next 10 years. And the renewals, if you sort of look at our history, most companies renew. So CCC investing in that model could definitely boost their margins as well. And the good part about our business is there is no CapEx, right? So it's 99% cash conversion. So your EBITDA is really your EBIT, okay? So that's the difference between sort of our business model versus an operating model. Hopefully, that answers your question.

[Interpreted] So perhaps I can add some explanation. The smart brands that we have like Lasocki, Gino Rossi, they are responsible for a certain portion of our sales in Poland, a little bit outside of Poland. When we talk about the recognition awareness of these brands elsewhere like in Germany, those brands don't mean anything. It's a little bit like German brands. They don't mean anything here in Poland and especially Scandinavian brands don't mean anything. There's a lot of locality to these brands. But Jamie, is an exceptional person because he's been capable of bringing together all of the global brands, which means something everywhere. They all -- they mean something everywhere. And he has a large number of American brands, very strong brands, which I don't think you're in Poland will have much of a career in front of them, but many of them are globally recognized brands. And basically, Jamie is an exceptional person because he's done something that nobody else has done at this level in the world. And so if there's anything that Jamie could take from us. This is maybe sales segmentation. I don't think there's any other company in the world they would have nearly a 40% market share in the sales of footwear. And I think Jamie would probably subscribe to what I it's usually the case that you have a few percentage points of market share, maybe 10%, 12% of the footwear market, but somebody having 40% is unheard of.

Look, there's definitely a few brands in the CCC portfolio that I think have global not necessarily global reach today, but have the potential to have global reach. So could we potentially buy a brand from CCC and then effectively license it back to CCC potentially. There's 1 or 2 brands in his portfolio that I think are...

[Interpreted] Jamie, because it's not the case, don't we have better ideas on this one. And I think we have many better ideas than that as opposed to trying to sell Lasocki brand in the United States. I don't think that's...

I think the biggest opportunity that CCC has is expanding CCC on a global platform. CCC will move into other markets around the globe. CCC's business model is so good that it will transform into America. No problem at all. If you look at Deichmann, they bought Rock Room, and they're doing okay with it. I think that CCC could move into USA and dominate in the category that they're in today from a family footwear I also think HalfPrice is incredibly interesting retailer because if you -- look, one of the most successful retailers today, T.J. Maxx, Ross and Burlington, all off-price retailers. I don't know if you saw T.J. Maxx just made an investment in Brands for Less in the Middle East. They just invested $350 million and HalfPrice stores are much bigger than Brands For Less in the Middle East. So I think that HalfPrice stores has the potential to be licensed all over the globe, which that, for me, is more interesting than taking sort of one of his brands and licensing. Not to say that those brands won't travel with, obviously, CCC or HalfPrice by signing a license for a HalfPrice store or CCC store in Japan or Korea or Saudi Arabia or Qatar, I think there's huge potential for that. And if you sort of look at some of the best retailers in the world, whether it's Foot Locker or JB or even Sports Direct, they are all moving sort of around the globe. So I think that that's really the biggest potential for CCC from a licensing standpoint on a global footprint. And the nice thing about that is that's all royalty driven. That's all high margin and there's virtually no CapEx in that business. So I would count more on that than necessarily one of his brands going licensed around the world.

[Interpreted] To recap, basically to dispel any doubt, Jamie doesn't want to buy our brands, but if we're talking about global expansion basically have to have global brands. We're not going to do expansion in the United States using Lasocki. We made a mistake when we went into the expansion into the DAC countries, the German countries, [indiscernible] some of these other German brands, commodities. These are brands that are totally unknown in Poland. But if you were to develop in the United States, we would probably take [indiscernible] which is the owner, which is a very popular brand in the segment that's aligned to Lasocki or Gino Rossi. So he would like to license those brands into our region, but those brands don't have any traction in our region. So we have to have global brands. But I can imagine that we would sell our products, Lasocki under a brand and then sell it in the United States, perhaps it would be a franchise model, maybe it would be a wholesale model. There are some other ideas that will be fleshing out in the future, but having good licenses, thick margins, then we can think about franchising model. We can think about wholesale, but I don't want to talk too much about the subject because we can essentially do anything. You might say anything and everything, but you actually have to have everything, the timing put into place. It all has to be within the framework of a masterful plan. I think that should be basically the wrap up statement for this -- today's session. I don't see any more questions here in the room or on the chat. So I'd like to thank the speakers today, Mr. Dariusz Milek as well as Jamie. Thank you very much, Jamie, for joining us today.

And I think it's early days. CCC is just getting started. We're just getting started in the region. I've seen their business plan.

[Interpreted] So we started today. Officially, we've kicked off today.

For sure, but I've seen their business plan, and there's just so much opportunity in this region for CCC and obviously, their HalfPrice stores. They can double their business just by growing their store count around this region. So I think we're going to stay focused. And as we build that out, then -- and we get this region under control, once this -- we sort of have this entire region, then I think we'll start to move to other regions. But there's a lot of, as we say, a lot of low-hanging fruit just around here now.

[Interpreted] So thank you very much for joining us. We invite you to join us for some refreshments, and we can continue the discussions behind the scenes. Thank you very much. Bye-bye.