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

Good afternoon, ladies and gentlemen. We'd like to welcome you to the earnings conference after Q3 2024. We're going to have 2 parts today's session. Briefly, I will discuss the financial results of the group over the previous quarter during the second part of the session. I'll give the floor to the CEO, Dariusz Milek, who will say a little bit more than just about the financial model, so generally about the operations of the group. Let's go ahead and take a look at the financial results. In terms of the operating results in Q3 2024, we have a result that is higher -- more than 4x higher year-on-year. So the result is PLN 330 million compared to what we saw in the previous quarter. So EBITDA is nearly PLN 1.5 billion. So we only -- we're only PLN 15 million short of that watermark. And so we hope in the near future, we'll be able to beat that watermark, so we're dealing with a record-breaking level of EBITDA in a single quarter. If we talk about the brands that contributed to these results, we see improvement in all of our brands. So revenue is up 14% year-on-year. Margin is up by 3 percentage points. In particular, we can see HalfPrice and the Modivo Group improving the brands. So we've seen growth by 5 percentage points year-on-year. So we continue the process of reducing on OpEx. So as a result, in Q3 2024, the cost/income ratio is -- has crossed a benchmark that we set up some time ago, which is 40%. It's now 39%. And so, we will continue to take efforts in this area. So we will not be sitting on our laurels by any stretch of the imagination. Let's go ahead and take a look at the results of the CCC brand. If we look at the profitability of this brand, so for the sixth time in a single quarter, row and row. So it's above 20%. So it was 23%. And so it's also worthwhile to note that this profitability of 12 months. So the LTM last 12 months is in excess of 20%. And so this is a level -- a leading level in the retail industry. I think what is noteworthy here, in particular, is that the footwear industry is even more demanding in terms of the retail industry. So we are particularly pleased with this. And so the CEO will talk about that subject. If we look at the sales results like-for-like, is 11% and so the margin is nearly 59%. So we continue the savings program -- cost savings program. As a result, the profitability is 23%, as I said, at the very outset. So if we look at HalfPrice, the profitability is 21% in Q3. So we can say it's a top level of profitability in the HalfPrice. So if you're looking at the leading players in this industry, we generally have profitabilities in the low double digits, 11%, 12%, 13%. So our 21% is an exceptional result against that backdrop. And so we can see that -- say that the quarter -- in Q3, the margin -- gross margin is up to 51%. So it's improved by 5%. So costs are growing much slower than revenue. We've opened new -- 9 new markets. So the profitability at the end of the day is 21%. So the LTM, last 12 months, is in excess of the 20% watermark. Let's take a look at Modivo. And of course, we can say that everybody was more interested in Modivo. And the CEO will say a lot more about Modivo. So in Q3, we can say that profitability is nearly 10%. It's, of course, clearly lower than the average for the group, but it's much better than what we saw in the corresponding period of the previous year. So it's up by 13 percentage points year-on-year. And so we see revenue is up by 14%. Margin is up 5 percentage points. So the product mix is much more attractive, better collections. We're utilizing licensing brands to a greater extent. And we also have the CCC owned brands. All of this means that we've contributed to the improvement of the margin. The savings program has made a contribution as well. And as a result, of 13 percentage point year-on-year improvement. So a lot is happening now and a lot more will happen. Synergies inside the group -- so having shared functions, support and things like that. All of that means Modivo and its efficiency and the overall group will continue to move upwards. Another -- or several more sentences about our liquidity and what's happening with inventories. So if you think about financial liquidity, our debt in Q3 of this year of 2024, we have reduced our net debt intensively in the CCC business unit. What has this followed from? We have higher cash. This is because we're utilizing factoring lines to a greater extent. They've been made available having in mind the refinancing. And so we've extended the payment terms. And so we are using the capital of our suppliers to a greater extent. And so we're utilizing -- tapping into our basically relationships with the suppliers, turnkey investments, accessible fit-outs. All of this means that the level of cash is higher than in the corresponding period of the previous year. And we can say that this will continue to grow. We're going to follow that path. The results of the group are improving. The rating is improving. That means our suppliers have higher and higher insurance limits available to them. And we're working together with Chinese suppliers in terms of negotiating credit limits, so insurance credit limits with Chinese institutions. And so all of that means that the structure of the working capital will be optimized even further. So we can say that 70% of our inventories is financed by liabilities, 25% in HalfPrice. Our ambitious goal is for all of our inventories to be financed with liabilities to suppliers. If we think about the mix of the inventories, we understand that there are questions and some interest that's out there because of the higher inventories, especially in the CCC brand compared to the previous year at Q3 of last year. I think what is worthwhile to mention here that at the end of Q3 2023 -- over the whole year in 2023, we continue to move inventories downward. And so we can say that this is maybe not the optimum level of inventories to make a comparison. If we were to go back 2, 3 years in time, then we can say that, that level of inventory was higher by roughly PLN 300 million -- was higher by PLN 300 million than last year. So we do have, of course, an increase in inventories. This is not something that we're going to overlook and we're going to optimize the level of inventories over the upcoming 2 to 3 quarters. And we believe that we can reduce that by some PLN 300 million, so that's at least half of that increase. And so the expansion that we planned will assist us, will augment our efforts. And so we have products in our inventories that are full year products. We have licensed products. So this is going to be one of the priorities for the upcoming -- let's say, the upcoming 2, 3 quarters. So ladies and gentlemen, that's it in terms of the results of Q3. I'd like to go ahead and give the floor right now to the CEO, Mr. Dariusz Milek.

Good afternoon. Welcome, everybody. I'm not going to be able to say anything special. I can talk a little bit about our business model and what sort of benefits we're going to be able to extract in the future. I believe that so many things are happening in the company that I should share with some information in terms of where the company is moving towards. And so to give you a little bit more illustrative approach, so I can tell you a little bit about our business model. I believe that most of you are familiar with our business model. But for you to understand as well, we have an omnichannel approach in every one of our business models. We have CCC, eFootwear and Worldbox. I'll say a little bit more about what Worldbox actually signifies. So all of our channels in the omnichannel basically, we have e-commerce like Modivo. It has its own approach. And then we have the HalfPrice. And basically, I can say somehow -- that basically, we're able to retain margins by selling off any excess goods. And so that means that we have high profitability margins across the board. Let me tell you a little bit about profitability. And basically, this dotted line is when I came back to the Management Board. Maybe this is just sort of a strange consequence -- coincidence. Well, this was a tough year. We were involved in cleaning up our inventories, the structure, the composition. So we can see that EBITDA is growing strongly, robustly. And I'm confident that this EBITDA margin will go even higher. This is generally speaking. Now if you're thinking about our pillar. So the bulk of our profitability is rooted in CCC. So I'm sorry that EBITDA is a little bit lower. We continue to basically track ourselves, benchmark ourselves against the apparel industry. We know the apparel industry can get comparable margins or even higher margins. There's a higher margin. It's easier to produce clothes. It's easier to introduce clothes once again because you have the materials and the sewing shop. We also have technology. We have soles of shoes. We have to basically glue the things. We can't do this in Turkey. We have to do it in Asia and now transportation takes about a month. And so this is a very good EBITDA benchmark. This doesn't mean that this is the end goal. I can tell you in a few minutes why that is. So the margins are growing. You can see that our margins have moved upwards by more than 4 percentage points. So I believe that we will, in the near future, exceed the benchmark of 60% permanently. And so it's a very good thing that we're doing things locally. So our margins are growing because we're -- we have licenses we're doing on production. But then, of course, like-for-like sales figures are growing because of our licensed products. That means our products are more attractive to our customers. We can say that Lasocki is a wonderful brand in Poland, but it's not as well known a brand abroad. And so thanks to these licenses, we're able to drive up the margins. And so we can say like-for-like is even better in several other of our countries outside of Poland where we even have figures as high as 30% like-for-like figures. So this is a process when we deal with licensing. So what we have on the left side is what we've been doing across the whole year. So the more brands on the right side, those are licenses that have been signed last year, but the production process is in progress. And these are products that will show up in the spring of this year -- of next year. So we'll have new brands like Quiksilver, Champion. So basically Champion's in gray because we're in the process of signing an agreement, then you have DC and a couple of other things that will show up in the spring. In terms of the brands that we've already introduced to our stores, so I'm not, of course, disappointed or disenchanted with any of them. They're all generating very good results, especially if we're talking about the margins themselves. I would also want to say this is not the end of the licensing. Of course, we already have all the best licenses. And we have licenses for 10 years with options and so there are certain limits that we have to meet in terms of sales, but we won't have any difficulties in terms of hitting those targets. Those targets are not very large compared to the magnitude of our business. In terms of our brands, Reebok is the best brand for us. We have the biggest. It's -- nearly 6% to 7% of our total revenue was 1.5% recently, and we have a high margin here. I wanted to tell you what the licensing actually entails -- what the license entails. It's very complicated. A question was posed whether or not -- can Polish companies buy it for me? I said, no, they can't buy it for me because I have a distribution to my own channels. Everything is changing as a result of most recent negotiations. So we have to do -- so the owner of Reebok is the head of our expansion team and so own production, so we can produce Reebok ourselves. So the children shoes, all of the sandals and so the winter shoes, we can produce them. We have a license now for producing clothing apparel so -- especially children's clothing and so we can make a revolution in the market in terms of the offering as well as the price. We can produce underwear. We can produce a variety of things. Of course, the things that we really need. And if we took a look at Reebok, it's a pretty straightforward issue in terms of the collection. These are icons, which have been around in the market for 30 years and not much has been changing in sales. They're rather simple things. We can produce them on our own. I don't want to forget to say anything at this point in time. Let's take a look at this slide. This is a license -- we have a license for bags and then we have shoes. And this was for our own channels. So any place I open a store, if I do it in Mexico or Venezuela, I'm just joking, then I can sell Reebok in my own channels. So we have all of these licenses for our own channels. So if we go outside of Europe or Central Europe, then in our own channels, we can sell these products. And so we have distribution in Central Europe, so we can also deal with wholesale. And so we started with shoes then we added underwear -- undergarments. So socks, perfumes. These are totally different licenses, glasses. So this is the world of licensing. So if you have distribution of socks, then you sign a licensing agreement and then you produce it for the whole world, and you have your own central distribution centers, hypermarkets. You have Adidas, Champion and things like and you bring in those socks. And this is a lot of money, and they can pay a lot for a 10-year license of perfumes. You can't even imagine what -- how much money that is because it's distribution across the world. We have -- we don't have perfumes, but I can give you an example. We have good contacts with the company that's manufacturing perfumes. So if we want to sell a small amount, we're able to buy these perfumes at a very good price. I don't want to say that a 3-pack costs us $1. We can sell it for PLN 30, PLN 60. I don't want to get into much. We'll have a slide. We'll give you some examples, so we can try to get a license to produce sporting things because we don't want to do that because we don't have the magnitude in order to distribute that, but there's a separate license for that. I just want to tell you what's happening in the licensing. Well, there's perfumes, socks, glasses. They're specialists in these areas. So in most of the brands, we have everything across the board, even perfumes, Juicy Couture. I can tell you a little bit -- Juicy Couture. This is a brand that will be launched in the near future. We had some shoes, we have bags. And so one week after we launched sales, we basically sold everything at very high brands -- margins. These are emotions. This is a world people are looking at this in Google, and we're selling things a little bit at lower price points. So people can see -- like it's EUR 160 in our stores. It's less than half that price. So we had very high margins because of bag -- in production, it costs the same amount. So the backpack costs the same amount, whether it's Sprandi Jenny or Juicy Couture. It's the exact same cost of production. We're only talking about the world of brands and emotions. Let me have Hunter. Maybe we had basically the flooding in Poland but we were able to sell everything that we've purchased at very high margins. We have the cost of production, -- manufacturing cost. I don't want to drill down, so $9 versus GBP 150 in the Internet. So we have emotions to a strong brand. We got brand recognition across the globe. I don't want to complain DeeZee, Jenny Fairy, Lasocki, but these are brands with a local reach. Like we can even say they're Polish brands. It's hard to say that -- in Romania, the DeeZee's a sexy brand. You have to have a large amount of advertising and a number of seasons have to pass. And so Nine West is 1 of the top 10. And we had shoes. Now we have bags, basic glasses, apparel, bags because this is also from the group. Then we have MEXX. It's a wonderful brand. And so the sales of bags are going very well, and we're going to be producing other things here in MEXX. Then you have G-Star. And this brand is not so well now in Poland, but in France, the Benelux countries, Germany because these are G-Star brands. And so you know how much a G-Star shirt cost? EUR 150. I don't want to talk about the manufacturing costs of that. G-Star, very popular. All of this makes a big impression, Amsterdam, Juicy Couture, Los Angeles. So this makes an impression on our customers who are coming in through our doors and our network. Marilyn Monroe, very good sales figures in terms of the sales of underwear, blouse, shirts as well as lipstick. Things are being -- selling -- so we only have 2% of the production. So we have 69% margin. So everything's going in a very good direction. Then we have Shaq. I'm not really sure why it's selling. The guy showed up and he started to make a promotion and sales are spectacular and so the margins are even more astounding. So we're more than convinced that all of the brands that we've been able to acquire. So we have to spend some money on advertising, 2%, 3%, and then the quality of these brands will move up even higher. And all of this can be done with sales, and you have to Kappa. Everything -- everybody knows Kappa. We have basically a license for all of Europe -- for central Europe, or excuse me and for wholesale, retail. Then Kappa, Billabong and these are the brands that we're very satisfied with and have already been launched. And perhaps the breadth of the products is a little bit too great. But you have to produce 500,000 pairs of shoes for something to be noticeable. So if you have several thousand stores and you want to have 20, 30 boxes of shoes in each store -- I mean outlet, these are some big numbers. Then here, we have some new brands like Billabong. As you can see, most of these brands or licenses are related to apparel. So Billabong, these are emotions, the beach and then we can put things on basically people's flip flops, on their shirts. And then we have experts on skiing and we can also sell -- and glasses, and we can also sell some of these hats in the HalfPrice. This is the world. Then we have Roxy. And this is something that's an offshoot of this Quiksilver and so things are mixed together at the bottom end. This is a brand dedicated to women, young women, teenagers. And so this is very good in terms of Roxy. Then we have DC. This is -- we bought some products from somebody and so, I'm not sure basic -- all of the female products sold were a little bit different. We're trying different things, but we, again, had very high margins. So we have DC then we had the skateboarding community, the community is -- so I guess this is out of order. This brand is already in our stores. Please believe me. Our customer doesn't distinguish Ralph Lauren Beverly Hills. So we're able to sell Mustang because people don't recognize that this is the world of golf or polo because you saw a horse. So this is something so. I'm not complaining that things are selling. So 75% margin. That's the final result on this brand. Why does the customer buy it? Because there's a horse on the picture? I mean, of course, the world of polo, we can transform into the world of the women's bags. And so all these things look quite nice. They're very attractive. We wanted to put the horse on the hoodie, but that wasn't something. But this is also a Beverly Hills hoodie. So these are 2 new brands where we've signed contracts. I think it was even done this week, Nautica and Spyder. You're probably thinking about very expensive jackets and we're doing Spyder Active. So we have very good prices. Then you have Nautica. I think most of you remember this brand. This will be a big volume, especially in the HalfPrice channel. So ladies and gentlemen, so I've introduced you to the world what stands in front of us. Some of the licenses are very good, but I can't say everything at this point in time, but we're really working on this arduously. So as a group, we're buying things and we're benefiting from all of the purchasing made in new licensing. And I can tell you how we're dynamically growing the share of own brands and licensing brands in the CCC brand. So we started at 4%. This was mostly Disney. So Children's clothing. Then we added Beverly Hills, Reebok and then the composition changed. And so we now have 24% of licenses -- licensing sales in Q3 2024. So we want to hit 35% watermark in the first half of 2025. So I'm confident that we're going to have 50% in the latter half. We don't get rid of Badura and Lasocki because that's the essence of our business. So we only have 26%, sometimes 30% of our footwear is sporting shoes. CCC is Badura, DC, Jenny Fairy, Go Soft As well as Lasocki because people come in here for special things. They're specialized stores for sports. But when we started looking at the margins, we want to reach at the end of the day, of the final margin after we think about theft, inventory returns and licensing fees. We want to have a target of 70% gross margin. So after all of the costs are incorporated, we will have a 70% and then 67% on own brands and 52% we want to have in the partnership brands. So we have 8 partners in CCC. They're very good, well-known brands. So this is not a business where we're earning a lot of money. We're earning a lot of money basically on licensing brands as well as our own brands, private label. And so we're going to be only available for the best partners. So we said 64% is the average value margin in the group. So let's say that's something that we want to deliver in the CCC brand. Let me tell you what's happening. I'll give you some examples in terms of the transfer of products as they're moved into HalfPrice. So if we start with a brand margin, let's say, 78% for licensing at full price so basically, we end up with a margin of 63% to 56% in HalfPrice. That means 95% in CCC stores, we have products that are not comparable and have good first price points. We don't have to discount them. So we can even go to lower rebates or discounts to 8%. We don't have to give special price offers to customers if we have a partnership brand. So it's 58% margin. We're not able to earn money if we go below. We have to have support. We have to get support from other brands to move into the HalfPrice. I'm only going to work together with partners who understand the schematic for my business. So my HalfPrice has to be just as important as the full price approach. I only see 3 rows because the lights. I don't see anybody behind or further back than 3 rows. I can see that there are more of you here, but I only see shadows. So I just want everybody to understand why we're reducing basically these partnership brands because they're not generating money for us -- for me and for us. And that's basically the proper path in order to achieve high margin performance. What sort of -- what is the target composition of our licensing brands? I want 45% licensed brands in HalfPrice. If we look at profitability, this is something that's quite striking. And if we have licensing, this should even improve things. But nobody in HalfPrice has licenses is producing on its own the same. We have 25% good license brands. No other organization in the world has that level of benchmarking. We can't reach that benchmark. Just to give you an illustration, so if our intention is to double trading volume in HalfPrice. So if you know VAS, you have to take products from somebody else, bringing it into your warehouse, calculate it, count it, then you have to take down -- take off the label and put your own label in. That cost us PLN 2 per unit. So if 45% of the product is going to come directly from the factories, everything will be VAS and so we'll only have to go through the [indiscernible]. So we're going to have savings of PLN 50 million, just on this process of VAS. And so that means we're going to be saving -- or earning tens of millions on every single approach. So with optimization, we expect a lot more. So 50% in CCC. And then I'll say a few words about what Worldbox, is 35% and 10% Boardriders. This is something that we've taken over 15 stores, half of them have been closed. We don't need the outlets. And so we're going to basically improve the imaging. So it's around 400 square meters, and there's going to be a high-quality products here. So 4 brands DC, Roxy, Billabong and Quiksilver. Those are the brands that will be sold through the stores. I'll show you that physically what that's going to look like. Then we have eFootwear. Why is the margin improved? The margin has improved because our own brands and licenses represent 20% of sales. If we're going to have 40% and 10% own brands, and then the partnership brands, we're going to be able to negotiate very good payment terms. And if they're going to participate in the retail sales, so if we're talking about the physical stores in eFootwear, and they'll have the support from HalfPrice. I'm all going to work together with those types of partners. And I can tell you, quite frankly, this is something that we're being successful at and everybody is coming back. They want to participate. Here, I can show you the pyramid, what our business may look like in the future. So HalfPrice, you know the brand HalfPrice. We -- this is what HalfPrice looks like. This is in Prague, in the Wenceslas Square, probably the best place in Europe. It does a look very good marketing. So this is a very large store. So we have a big store in Warsaw in the Marszalkowska Street. These are our flagships. So it's 2,000 square meters. So they have been embraced very well, 21% EBITDA. And if we're talking about EBITDA, so we expect that in December, EBITDA will be a few percentage points higher. So in this business, Q4 generates the entirety of the business in HalfPrice. So now here, let's focus on the subject. We want to open HalfPrices, we want to open these WorldBoxes and CCC. These are our focal points. This is where the market is today in terms of lowest price points. So I don't want to frighten anybody. I'll tell you about the time frame. So I wanted to stop for just a moment to pause. I wanted everybody to wake up. So I'll keep going, and then I'll come back. So if we talk about the development of space, so we will have profitable and well tried and true formats. And you can see the results that we have certain formats that have proven themselves. So we want to open up -- more than 200,000 square meters every year in HalfPrice. It's roughly 60,000. So these are large stores -- big box stores. So every store earns its keep. We'll concentrate -- so the focus is on Central and Eastern Europe. Nobody should think about us starting to open stores in Germany tomorrow. This is our main focus. We know this market. We know our branches. We know the head office in each one of those countries, and we know what to do. We have people there. We know how to rent space. We have a lot of synergies in terms of negotiating contracts. So we're taking 5,000 square meters in shopping centers. We're getting very good rental conditions. I'm not going to bring you into the fold in terms of telling you what good conditions mean. So with OCR, we're not going to -- there's a cap. We're not going to pay more than 10%, 12%. And then we have another important element is fit-outs. Most of our stores are already built and all we have to do is insert the furniture. And basically, every single unit has a very short payback period. And that's why I'm talking about it's 41% EBITDA in the CCC brand. Last quarter, it was 42%. So it's very stable. So the EBITDA in HalfPrice was 27%. Now, it's 30%. So if we're showing the EBITDA in fourth quarter, it will be 35%, let's say, so after we calculate the cost of the box autonomics, it's 200,000 square meters in terms -- multiplied by EUR 300, EUR 400. So we're going to have to spend EUR 100 million -- PLN 400 million, where do we want to finance it? We want to finance that with profits. If we don't have profits that type, we want to open that many stores. We want to finance that with our profits, with earnings. So HalfPrice, does a payback within a year? CCC stores open -- or payback within 6 months. So nobody's going to want to wait. We -- of course, we have to deliver the results, the revenue as well as the profitability but it's a good time to do expansion because it's cheap. Nobody has believed in retail as quickly as I did in Europe. And so that's why it's inexpensive to grow at this time. Here, you can see possibilities. Don't treat this as a budget or as a program. I'm telling you how much can be done in Central and Eastern Europe, having in mind our formats. These are square meters and what the big stores we should produce, so 700 meters, 450 for eFootwear, 400 meters for board riders. And so 2,300, that's the biggest store we have here, and that's for HalfPrice. Then we have the Worldbox. And here, the opportunity is to have a new number -- a large number of new stores in CCC. We have the potential for 400 new stores. So everybody in Poland knows CCC. I think we're a little bit like McDonald's in a way in terms of that brand recognition. So we can add 400 stores. That means we want to ramp up density of 100 stores, new stores in Romania, Bulgaria, Serbia. Ukraine is generally growing. So I don't see any problem reaching -- or adding 400 stores. There might be even more. We're looking at other communities. Maybe it's not odd, but it's impressive, I think. And then we have the high recurring profitability in HalfPrice. We now have an EBITDA of 20% for the last 12 months. So that means it's a recurring business. We're not coming forward to you and saying that we were successful just last week, we have a very good sound business model. And nobody else has built in this part of Europe. The parties that try to do HalfPrice in Central and Eastern Europe that's worked out is an American company that has a head office in England. And so we anticipate that this will continue to grow with good profitability figures. We only have 2%, 3% licensing, and we want to have a -- 40% of our sales should come from licensed brands. So if we look at the biggest operators in the world, nobody has the margins that we have. So we have 40%, 43%, and that's the general margin for HalfPrice. We're 50% and above, and we're going to try to make sure that, that profitability is going to be even higher. So in America, they really love HalfPrice. I had a meeting with [indiscernible] in New York, and everybody loves HalfPrice. This is a model that people are very interested in. And so if we look at the HalfPrice market in Europe. So in the United States, it represents 12% to 18% of the market. In the U.K., I can't tell the name of the company, it's roughly 4% to 6%, 360 stores. So if we were to look at that, we should have 300 stores in Poland. I want to have 200 stores in Poland. We have 103 today. And so it's 1%, 2%. But in the other areas of Europe, they don't -- they have outlets. They don't have HalfPrice. People who don't understand HalfPrice. So if we try to do it, we would be the first ones there. If we look across the market, so we have 330 million in U.S. Europe is 560 million people. It's a bigger market, and it's much more compact than United States. There are bigger distances in the U.S. than there are in Europe. And of course, Germany takes a lot of space, and we're -- I can't imagine working in -- work in Germany. I prefer to fly over Germany. And so France is a difficult country, mentally. But if we look at Italy, Greece, our eFootwear business is going great in Greece, and Spain is quite similar to us mentally. Then you have Scandinavia and some of these other countries, but we want to keep our focus trained on Central and Eastern Europe. So we're opening in Zaragoza. We're going to open a HalfPrice store in Spain. We have a good shopping center next to [indiscernible] Zara, a big Nike flagship store. It's the biggest shopping center. And somebody are going to ask me, we're not overpaying for that, and it's actually we have the fit-out paid for as well. So it even says here on the slide, great conditions. So after 1 week, we're going to know whether or not this has worked out. In all of our countries, up until now, everything has been spectacular. Everybody wants this off-price. I can't -- people are coming to my house to offer their off-price formats to me. I'm being quite serious, people showing up from abroad in my home. And so in March, we opened in 2020, and there was a lockdown. So I'd set up things -- open things for a couple of days and they close the stores, but we can start from May 2021. And you can see how quickly we've developed the network. So we now have the same level of brand recognition as our competitor does. So 1.5 years, I've created a network that has the same level of brand recognition as our primary competitor. And here is something that might surprise you, but I'll try to explicate this -- explain this. Our business idea, CCC, HalfPrice and the licensing idea and the scenarios that we have for opening stores in good conditions, turnkey stores and using OCR, we wanted to transplant that into an apparel network. So the apparel market is easier to overcome, T-shirts and hoods. It's -- we don't have as any problems as you do with footwear. It's less vulnerable or less susceptible to changes through season -- seasonality and so I was thinking this is a very good business a few months ago. Over the last 6 months, I've been focusing on all the licenses. I wanted to transfer the licenses to apparel. We -- I didn't have the licenses for apparel. I had it for footwear. And now I have the right to produce apparel. That's very important, the right to produce. And we're going to open up a network or a chain called Worldbox. We're going to do that with our partner. This is the stores, Kaes. They have 150 stores. They've never earned money. These stores have never generated -- so this guy in COVID opened, a true entrepreneur. He opened 100 stores. You have 37% final margin. That's impossible to do. I'm counting that our margin -- our business will have 65% first margin in apparel. And that's -- they have certain skill, they're producing apparel. So we're going to use franchise. So franchise operation is less risky, and so we have -- the margin is higher than the EBITDA of our company. So to be brief on that, so we're going to earn on the sales to the franchising operations. So we've signed contracts yesterday, and we're going to start operating. So these stores will gradually be converted, rebranded to Worldbox. These are small stores, 170. Having in mind my approach of 700 square meters, so all of these stores need to be replaced with larger stores, but they are functioning. What's interesting, they have a higher ticket than I do. They have a better sales results per square meter. And so, why? That's because from head to toe, people can buy their clothes there, 20% accessories. And this should be a casual and sports brand store. And so in small and medium-sized communities where there's no real competition and these are the brands that we want to sell. We only want to use well-known brands so Reebok, Kappa, Shaq, DC, G-Star, Hunter. We have a very good platform of brands or array of brands. I've mentioned the ones, I've put together here, the partnership brands. Maybe there's one that I haven't mentioned here, but I've enumerated all the ones that are really important. I'm not going to say loud which brand that is. Then we have our own brands. We also have Sprandi. We've tried to do basically manufacture. And so in Modivo, that was impossible because we didn't have the physical stores, whereas here, we have the brick-and-mortar stores. And so this is a brand that's been basically dormant. This is [ Danny West ]. This is not the world for Gino or Lasocki. This is a sports and casual network or chain. There's a very high first margin and they're selling products at a very good first price point. I wanted to give you some examples. It's more -- it's easier to understand using basically examples. And these are prices -- these are the first prices without discounts. And as you can see, G-Star, a very classic T-shirt, PLN 169. Kappa PLN 60 through hypermarkets, they've actually downgraded that brand, PLN 99 for Reebok Mix. So the price points are different. And here's the cost of producing a single shirt in Bangladesh, not in China, but in -- so it's $2.15. And so we can anywhere between $1.8 to $3. So if you want a Beverly Hills, Colors, $3.2. So I won't buy anything ever again in a store. Really, I'm not even going to buy a water bottle. So it's PLN 89 in a store, and it costs $2 to produce it. These are brands and brands make the difference. Brands make the difference. So Boardriders. So PLN 159. I'm giving examples because this applies to underwear, socks. We have PLN 139 in Boardriders. Worldbox PLN 99, HalfPrice is PLN 79. This is basically an SMS I've received from the head of HalfPrice. So the quality is very high. The margin at the beginning is 85%. And you can calculate what that margin is. I want to sell this at PLN 99 in Worldbox and PLN 139 in Boardriders, there's a different logo. It's going to be different colors. I'm going to have to mix things up. But it's still DC. Everything about it is DC and it will sell like wildfire. So in Poland, I have to pay PLN 30, PLN 40. Somebody in some companies are selling these T-shirts for a few PLN 50. And we're at that price in the stores. So I wanted to show you an example of a small community, Nowa Ruda. What does the Polish trade sector look like? Usually are always, you have Pepco, you have Rossmann, you have Sinsay, you have Media Expert, and you have Axion in Biedronka. So -- and we'll have CCC and we'll have Worldbox with the apparel. So we're going to be able to clove customers in small communities where they're going to be able to buy the whole set, shoes, footwear, cap, basically a backpack, shoes, as I said, already pants. This is [indiscernible]. It's a little bit larger product. We're going to have a 2-story HalfPrice in the same architecture, Sinsay, Cropp, House, Rossmann, and there's some small piece of joints, and things like that on the left side. So basically, maybe these are the only escalator that's available in [indiscernible]. Basically, our stores are bring people through the doors. It's a big event. And so we can see if people are buying in big cities and they buy them in small cities as well. If we have New Yorker, they can take 1,300 square meters and they only have basically one brand for youth. We have 15 categories, food, toys, gifts, things like that, footwear, home in HalfPrice. We're basically able to open a store in every community that has at least 30,000 basically because you have 30,000 inhabitants, then you have 100,000 in the area. So we have the same array of stores in East, Biedronka, Pepco, things like that. This is [indiscernible]. Here's a slightly larger park [indiscernible] where we want to add footwear. So e-footwear, CCC, if and then Worldbox, we can actually move the wall if we need to, so we can take an entire segment. So we can do whatever we want. That's -- so I can give you hards of examples and sometimes I can spend all night looking at this stuff as the offers are coming in. This is Boardriders. So this is a more image-related store. This will augment the prestige. So CCC, HalfPrice, Worldbox. And so this should be our business card, 100 stores. This is the entire region from Pri-baltica to Greece. So maybe in Poland the 30 biggest cities. So 85% first margin. That's what the results are. Then we have e-footwear. It's a great idea. The stores are very nice. So this concept isn't done elsewhere a lot of bragging model. So you can basically it was a dumb idea to try on shoes before you pay them. People weren't paying for the shoes. They were asking for 10 shoes, and they made 30% of the people didn't come to pick up their shoes that they ordered. So now they have to pay. And so we only handle actual orders, purchase orders. I want to change things. I want to have a physical store, a brick-and-mortar store. Why? Take a look. 21%. That's the share of e-commerce. Only 20% is sold through e-commerce. 80% is a retail customer who walks back in through the door. E-commerce is around 9% and 21% is apparel. That's why is that the case? Because there aren't stores. Can you buy Lacoste, Boss, Armani in Suwalki? No. There are no stores. There are no price licensing stores. You only have CCC. So if we create an offering for 400 square meters, where 200 square meters is basically the local warehouse, and we can have a warehouse there, a local warehouse, 100 square meters and media expert, they say they have basically exhibition. We'll do the exhibition, but we're selling things physically. So the law is that people who buy thing -- there's a law that says if you buy things in brick-and-mortar stores, you get better conditions than e-commerce. I want to give good conditions. I want to get good conditions. So we have OMS. So it's in our integrated warehouse system. Why do I need to have PLN 1 billion in inventory in [indiscernible]? Some exaggerated PLN 100 million for 50 stores, but it's better to have that product in stores as [indiscernible] . So in some cases, there's too many stores of footwear. So if we're going to run our business this way, we're going to have 200 stores. And we're going to -- I'm not going to talk about the results. I had a store in [indiscernible] was doing very well, but I closed it because I said everything has to be modern. We're going to come back to traditional trade. We're going to have things on exhibition. We're going to sell things also in e-commerce. But then we have HalfPrice, which will give us the support. So we have 30 partners, that's it. We're going to have the most important brands, 20% or 20 brands will generate 80% of my business. This is something this rule won't change. And we had 600 brands of just shoes in footwear. So there were things that didn't rotate at all, and we had 20% margin at the end of the day, having paying 19% for traffic. So we're going to change. We're going to tweak this model. Here, we're looking at Modivo. So I've told you the results of the best e-commerce operators in Poland, in Europe. So this is their annual EBITDA performance, one sales in euros, one in pounds, one sells in Polish Zioty. Those are the annual EBITDA figures, 6%, 2.7%, 1.4%. It's very difficult to find any net profit. I don't want to have a business like that. That's why we have to change the formula of how we sell in Modivo. It has to be much more profitable. Let me say this differently. Sales leaders, omnichannel players have a lot of e-commerce Zara, LPP, IKEA. These are companies that have their omnichannel, their own omnichannel. They don't use other brands. I'm not sure how much they earn because they don't report things. I have 32% EBITDA in e-commerce, 32% in CCC and here, 6%. So what do we have to do then? These are our results, 9.7%. Somebody was clapping. I'm not interested in that level. It used to be 3%. Let's forget about that. Let's forget about running a business this way. Here, let me show you one thing after another. What should Modivo look like in the future? 10% of sales should come from own brands, 40% should come from licensing brands and 50% from partnership brands. These are the brands that give you the opportunity to earn money. If a partner doesn't allow you to earn money, then he's not your partner, and he won't be around any longer, rolling and retain those ones who understand my model. My model is that I have to earn money. The second part of my model is that you have to give me support to go through off-price. I have to have a discount to make sure that the transfer is a profitable undertaking, a viable undertaking. Otherwise, if we don't have that, the brand won't be in our doors. Modivo will handle all of the brands within the group. So we had HalfPrice. That was -- it was a very good thing. We removed e-commerce from HalfPrice. It would never earn money. It's totally different to sell or send out food through e-commerce or send shoes or anything else. You have to handle returns. Basically, that wasn't a smart idea. So we're very pleased that we don't have e-commerce. We just have physical stores, everybody in the organization is quite happy. So basically, we have this channel that's moving downwards. Then we have Boardriders, Eobuwie. We're talking about premium. Maybe we'll think of something else in this in this pyramid and top. I'm not going to say what we have in. So CCC, Worldbox and HalfPrice are the most important in the base of the platform of the pyramid and we're going to have all that through Modivo. Can you imagine that there would be no e-commerce in CCC? So ladies and gentlemen, each one of these brands, Worldbox, CCC, Boardriders, Eobuwie. So the customers in CCC, you join the [indiscernible] , you want to buy CCC shoes, then you get the message. So the final sales will be made by the Modivo entity. And so you get the club, the subscription card benefits and everybody will be integrated in one single e-commerce world like [indiscernible] . They're selling brands. Every brand has its own approach. I want to go a step further. I want to have one e-commerce for all of my brands. So assuming that we don't lose the partners. Nobody is going to cry about these partners. This is the business that generates money. I want to create a business that will have an EBITDA margin in e-commerce in excess of 20%. Gradually, we're moving in that direction. Last month was very good. We had a large number of new ideas. What will Modivo be? Modivo will render services for the entire group. So do all of the logistics, e-commerce, photos, call center, transportation, logistics, all of that will be done by Modivo for the whole group. And so business will continue to grow. So Modivo will have one club. So the club in CCC will be added to the Modivo Club. I have 20 million customers. So we'll have one club, which will be called Modivo. There will be one subscription like Smart, but it will be for apparel and for footwear. That means customers in CCC will have -- you'll have a PLN 60 annual subscription fee, but you're going to have a lot of benefits, a lot of advantages coming from that. And if you buy 2 pair of shoes, then you'll get the money back. So basically, this has worked very well in HalfPrice. So a CCC gets a rebate or a discount for HalfPrice. So you get PLN 5 discount and you're going to be able to utilize that in CCC or basically in HalfPrice because people are buying more than just the PLN 50. So we're buying customers for PLN 20. So basically, it's a lot less expensive than payable traffic. So we did some traffic of PLN 130. So this is working very well. These are future forward-looking discounts. This is how we're able to bring the customers. So we're saying to the customer of Modivo, which is in the club of the subscription. So you can buy from CCC, Worldbox, Boardriders, you can buy premium full, whatever, [ PINKO ] and so on and so forth. And this is something that will work. So ladies and gentlemen, we've spent PLN 600 million. We spent PLN 600 million for payable traffic, PLN 600 million in 2024, 17%, 18%. This is a joke. My intention is to reduce that to PLN 200 million very quickly. I want to spend PLN 50 million in TV, radio as well as cinemas about the subscription, the one club and CRM. We have one of the best, if not the best CRM system in Poland. We know everything about the customer. We're able -- we'll have more than 20 million customers in Modivo. And so we have a lot -- the majority of our customers are active than world by HalfPrice. Customers will be persuaded to move into the Modivo. We need to have natural traffic. We have to have our own customer in the -- we can't pay 18% to somebody else for the traffic. So we'll give money back to people in discounts, but we'll have basically loyalty. And this is something that will work. And everybody will have -- every network will have its own customers. So some people will be in CCC, some people will just want to be in [indiscernible] , but people will look at products in the network before they walk into the store. So at the end of the day, an entity from the group will serve these customers. I'm not going to introduce myself, but let me mention once again, Jamie Salter. He's a wonderful and great authority. He's got ideas that even I wouldn't have thought of. And this is a guy who will never stop. I understand what he's thinking up, what he's cooking up. I'm going to be the beneficiary. Our network here in Central and Eastern Europe is going to benefit from the majority of his ideas. So some big things are in the works. I don't want to say anything. I only know certain things because he's trusted me with that, but I know what's going to happen, what he will bring to the table. So ladies and gentlemen, we had the strategy go '25. In a way, we forgot about because it was essentially impractical. We forgot about 2 years ago, after COVID, we said that nothing else could happen, and we're going to move forward. And so basically pumped up revenue in paper in Modivo that is going to work. We were supposed to grow. It was like PLN 10 billion or something like that. So look at the EBITDA, it's only 8% to 10% CCC, basically, we're trying to execute to deliver. So we have fewer square meters, but neobuwie, we're bigger. So the GO25 strategy talks about PLN 20 billion in revenue. You understand the top line, but it talks about PLN 12 billion. It talks about a 12% EBITDA. That was the strategy that we published, I think, 2.5 years ago, something like that. So now our target is a 20% margin at [ Levita ] next year and PLN 12 billion top line. That's our estimate, as you estimate. And this is something that's achievable. So if we have PLN 12 billion next year according to you, well, that means that I'm not really fit for purpose. That's not ambitious enough. 200,000 square meters plus PLN 2 billion plus positive like-for-like, which we want to generate. Maybe this is a challenge for us for next year. So let's not buy the strategy, you wanting to dismiss me. So ladies and gentlemen, I want to take a bet with you, a big bet. So I'm saying for the next 5 years, I won't leave this seat for the next 5 years unless you throw me out. So Silvia is looking at me now very strangely. So we know once again, two people will make a big difference in the circumstance. One of those persons is me. And then Jamie Salter is the other person. And so you're going to see the benefits of that and the FX, the outcomes. So for the next 5 years, I won't leave this position because the company needs me. And for 5 years, I won't draw a salary. So I have a very small salary anyway. So we can say that if you're the CEO in 4 companies, then you should be rewarded. I don't want to be rewarded. I don't want to be the most highly paid President in CEO in Poland. I want to be the most effective President or CEO in Poland. And there's a motivation program I want to put forward, and I put it forward to Jamie, and Jamie will help me realize this. Like Americans, everybody wants shares. What sort of shares? What sort of equity do you want to have? So we have this motivation program, incentive systems. So it begins at PLN 300 and then there's a premium or a bonus for tojiment. Basically, I can do what I want with these shares. I don't have to take those shares myself. I can give it to an orphanage or whatever. I can do anything. Basically, I will -- so the absurd price is PLN 1,000 because it will be more difficult if the price is higher than that. So I want to show you. So it's the difference -- this is the difference. I have the right to purchase shares at PLN 200. So you can see how much money that is, how -- what sort of motivation. So when funds came to here, I had a bigger motivation. In order to do that, you didn't do it. So that's going to be the next subject, basically summing up the key directions for development. So we want to continue developing licensed brands. Licensed brands are very profitable business for us. Let me once again confirm, nobody has the licenses we have. The licenses are dedicated to distributors who are producing and running around the country. Nobody has basically licensing for its own channels of distribution and such important licenses. We're going to continue to expand that. So CCC benefits from these licenses, not other channels. I want other channels to benefit from these licenses. So this is the problem we have with Sprandi. Nobody knows Sprandi because we're only selling shoes. The same is true of Lasocki, only shoes and bags. The same is true of Gino Rossi. We don't have apparel, and it's too late to have apparel there. But I'm coming in with licenses, which basically they're -- I'm buying apparel brands or I should say, apparel brands. So we have 200,000 square meters contracted for store openings next year at very good terms and conditions. It's impossible for us not to achieve this target. The only problem we could have if we were to say that we're not as profitable, that the 6-month payback period is no longer in place, and we're growing more slowly than we do fewer stores. So I know the margins and the prices for next year, we're going to generate. So we've basically secured our position in U.S. dollars. We have very high margins and we're able to afford that. And we're going to use our own capital. My model has to be predicated upon the phone. So we're getting some financing from the shopping centers. Then we have our own results and then we have factoring for 180 days. So our factoring lines are too small, having in mind what we're producing, what we're selling. But my idea is that things will get better and the financial results will allow banks to give us more opportunities and more leeway. Then we have Worldbox and Boardriders. Maybe this is a bit of an astonishment or surprise to you, ladies and gentlemen. In Worldbox, I believe more in Worldbox than I do in HalfPrice because it has a bigger first margin. Worldbox will have higher than 60% first margin, whereas HalfPrice is at 50%. Of course, I did mention this. We're using the franchising approach. We'll see the company is in restructuring, but it's selling well. It has to solve its problems but we're going to have our own stores of Worldbox abroad. We're starting to rent some space. We'll have 30 new stores. We have products. We have the merchandise. And so basically, this is a response to the question about why inventory is a little higher, but everything is being prepared. And then we have the tweaking of the business model for Modivo to ramp up profitability. So I need two full quarters in Modivo. I need to bring down inventory to around PLN 600 million to sell an Internet. I was always asking why do they have similar inventories like me and they're selling across Europe. So we have to move downward in the inventory in Modivo. It's enough for us that we won't have to buy as much for the fall. Well, will reduce basically brands. We don't have to take such big risk in form or external brands. We would only take that risk in our own products where we produce things. So it's only costing us 4% for half a year at a high margin. That's something that you won't even notice. So I think I've told you everything. So once again, very good start and development of HalfPrice. New concept, Worldbox. So we started well with the licensing, and we're going to add more licenses and then we're going to change the strategy for Modivo. And I'm convinced that all of this will be successful because I already see the initial outcomes. So that's about it from my side. So I'm not sure are there any questions that you'd like to post at this time?

My name Sylwia Jaskiewicz. My question is about the IPO of Modivo.

I know you were going to ask this question or somebody was going to ask this question. For an IPO, IPO of Modivo, we have to have profitability. In the upcoming months, we're focusing on profitability. So Adam, you're still here. I think you know him. He represents our partner. So [ Tomek ] was here. We have a big agreement. All of these things are happening, having in mind the permission of the shareholder, SoftBank. So we have -- I have the tools to do this. If we want to have a big business that's profitable. We're looking -- so other people don't have production that have stores, they don't have licenses, they don't have off-price. So it's not possible for our e-commerce not to generate money having these type of synergies. That's impermissible. Over the next 2 quarters, I'm going to show you that this is possible. And management Boards who said that technology, things are going to be better. We had 360 IT experts in Modivo and we only have a few that have remained. We had 60 projects. Now only 40 remain. Basically, everything has to be ordered, and we're going to talk about that, what sort of form we're going to take on maybe purchasing. We're going to talk about things. People are patient. Thank you for that.

So the next 2 quarters have to be -- have to give us confirmation of our plans, having in mind that is it -- does that mean with these type of close ties that it's more likely that you'll buy back those shares? Maybe I'll go on. So you're not responding to my question.

So thankfully, that it's starting to earn money and it will continue to earn money. So investors who bought e-footwear is upset that they didn't buy CCC. So SoftBank is earning interest. So 2 gentlemen, don't know what's going to happen, what the price is going to be, what's the strike price, what sort of the settlement is going to be. But we'll agree in several months how things are going to work.

Based on data, consumers are soft. Where is the consumer soft? I don't see that. Do you see that?

I don't want to make comments on erroneous reports. So the consumer is down by 12%, but everybody has positive like-for-likes. So I have very good like-for-like in November. I don't see the consumer. Maybe the consumer is coming to me because I have brands, I have sales channels, which are response to this tough time. That's why we're focusing on CCC Worldbox. I want to give people licensed products, T-shirts for PLN 59 in small towns and communities. So I'm going to be able to do that. As you've seen, how Polish trade is -- you don't have bazaars anymore. Retail parks, I'm earning more in small towns than in big cities. So there's no competition, lots of rotation. Everything is working very well in small towns. And I'm very pleased that these retail parks plazas are opening up.

Does that mean the development of Sinsay is contributing to your volume growth that the market is growing as a result?

I don't think I've understood the question. Are you saying are we taking -- who are you taking market away from? American investors ask me that question. I don't know. I know that I'm growing. Generally speaking, -- this is the problem. So maybe customers prefer to have a Reebok as opposed to a mono brand. So I'll earn money even if I sell things for PLN 20, I'm trying to sell things more expensive because in retail business, I'm interested in a margin of 40%, 45%. I want to have 60% margin in apparel. All this is possible, thanks to licensing. I'm trying to explain to everybody that licenses engender value. I'll show you something, give me my -- I'll give an example. So basically, a pair of Wellington's is $9, and I can sell it for $250. So people are saying that I'm selling them too inexpensively. So I've looked at the German, the French, Spanish Internet because people are telling me that I'm selling things too cheaply, but this is where the customer is. McDonald's has a different price point in Russia and a different price point in France. So this costs $2 and the price is PLN 89 and PLN 69 is an HalfPrice. So I received this today. So all of the brands generate high margins. I want to tell you this. This is what I'm trying to convey. I've never seen margins. So the margins that we have today were never seen before. That's why I have such arrogant goals. If we talk about these subscriptions, payable subscriptions, -- this is -- I'm going to give you a 10% discount. And so basically, you'll get your money back after you make the first purchase and then you'll get another discount for other family members. So it's going to be like a family card. So basically, every one of your family members can benefit. How popular is this model across the world? In the U.S., basically, everybody has it. In Europe, Carl, are you here? In Europe, how much he's the one who's created. He's the executor.

How many payable subscriptions do you see in Europe?

I think there's quite a few models even here in Poland, in retail, [ Allegro and Peak ]. There's a lot of smaller players, clubs. I'm not trying to persuade anybody. So there's -- basically, you can choose. I'm not forcing anybody to do that. You can choose what you want to do. I'll sell more at first prices. I'll rotate things more quickly. And basically, I want to loyalize customers. I'm not trying to persuade you. I'm going to persuade, but I'm not going to compel people. So 100 million people who come through our cash tills will learn about that. A lot of people will join Modivo right away. So nobody else has done this model to combine 5 different channels under a single channel -- under a single club. This is not just an apparel club. We're not going to compete with the biggest seller in e-commerce. That's -- we're talking about Modivo is the language of benefits, about service. I'm not sure where we -- I don't remember where we have the results. 5.9%, that's the cost of logistics. I can't -- I guess it's not here, maybe somehow misplaced that slide. I think it's almost at the end, okay? Cost of logistics is 5.9%. Our competition has 70%. You know what my marketing costs are 70% and the competition has 8% we're going to stop paying for traffic. We sold merchandise in marketplace at 14% commission. And they were saying, and then the 17% for traffic, where is the benefit? Well, the customer came to you -- visited your site. That's senseless. Well, somewhere in the results. Well, the data are quite impressive, I have to say. Where is that [indiscernible]? I can't find the slide. Just give us a moment, we'll set it up. It's in the appendices. That's why I was -- I misplaced it.

So next year, we have savings of marketing of PLN 550 million plus. We have a secured dollar.

I think you've made a mistake. It's from PLN 600 million to PLN 200 million, it's PLN 400 million. We're going to spend PLN 50 million in other channels, but I'm talking about subscriptions. I'm going to fatigue you in the radio and the TV in the cinema, but we'll have money. If we add more than PLN 3 million at PLN 60, then we'll have that. This is a plan. This is something we'll start maybe in March. We might be a little late with that. Radio, TV, cinema joined the club and you'll get benefit. We're going to tell customers about that instead of spending PLN 600 million on this payable traffic, and we'll have customers. We won't spend PLN 600 million. It would be impossible to spend PLN 600 million on marketing.

I understand. And the dollar is at 3.9 versus where you're secured.

I think the bulk, we have hedged that. And this is not something that will cover 100% of our exposure, but it will -- so the containers, we have containers at HalfPrice that we had last year. So we're talking about tens of millions and 5.8% in logistics in Q4. It's going to be -- in Q3, it's 5.8% logistics. Take a look at other players in logistics. These are the warehouses, all these stupid ideas, these stupid projects, if you have 10 warehouses that you'll be able to serve customers more quickly. That's just stupid. It costs a lot of money. We're getting rid of -- we don't need that warehouse in Romania. It costs us too many. It's basically have to have double -- I'm going to centralize all of the warehouses, the decision-making systems, one CRM, one source of knowledge for our customers. We had 3 different information centers and the 3 different centers didn't talk to one another. And CCC was replicating that. So it was redundant. So you can't see the effects of synergy yet in Q3, but the effects -- so this is something that you'll see in Q4. You'll see major difference in costs at the Modivo level. So I need 2 quarters. The key to success is the warehouse. So if we have half the level of products, then we're going to be able to sell more at the first price. We won't allow ourselves to be -- to retain too much product of any brand. So we want to have a very high margin across the Board. So if our products will have our licensing products, so we have 63% margin. So basically, we're going to be running the business and everybody else has to be fatigued by the situation.

So next question. I'm from -- I wanted to ask you -- we're talking about KIS that you purchased a stake in this network or this chain?

Well, they have to clean up. They have PLN 100 million in debt. They have to do the restructuring of the group. We're happy with the wholesale sales as well as franchise. Maybe this is an idea to do franchising across countries, different countries. Basically, with that type of margin, there's things you can share. So we have 50%. So we're negotiating on their behalf for new sites. Our IT programs, we can see their volume. So this is something that helps us that everything will be secured. We have a variety of ideas maybe in the future. So let's forget about that. This is a franchise, and we're going to have a high wholesale margin. That's the most important thing here.

This is an effective approach because we're going to start trading immediately. It's not that I have to open 2 stores will be successful or not successful. Basically, they are experts. People are well -- they know the merchandise. They're going to Bangladesh and other places. They're getting the margins. When will the stores be in ebuwie? When will we see them?

So I have 50-some-odd stores, I want to replace. So the first store will be in Poland. We're doing it right now. But the decision, will we have this.

So will shoes be out on the shelves or will they be brought in from the warehouse?

So -- so I don't see a boutique in a large number of communities. So basically, we will have PLN 250, PLN 600. I think the shoes being sold for PLN 250 to PLN 300. If we're talking about CCC. So we have a problem to sell shoes that cost PLN 250. And Gino Rossi is not a brand for CCC. So it's -- we have 4% sales. If we give Gen Rossi to eobuwie, we need to sell Gen Rossi for a PLN 1000, not for PLN 600. We want to do the segmentation. So we're selling shoes for PLN 300 in basically CCC and in HalfPrice because the production price is $15. So I need that. I need to have a large number of brands. Otherwise, everything will become CCC. Lasocki is a CCC brand. We're not going to be able to do anything. We're not going to be able to bring that into eobuwie. Everybody understands that Lasocki shoes costs PLN 200 to do a group thing. You probably don't buy them. But -- so I have to do segmentation. Everything is being done. That's why we're showing everything because licenses will rip my head off if I don't do the segmentation. So this is the strength of brands. We're in multiple brands or multiple channels. I see you have a horse on your shirt as well. So very good. You came here with a horse on your shirt.

I did this not by accident. Okay. Glad to hear it. Thank you very much for the question -- for response to my question. So we have to have physical brick-and-mortar stores because people don't understand the concept. It looks nice, but they think a little bit like [indiscernible] or a place where they can dressing rooms.

We have PLN 60 million per year we're paying for empty shipments. So you can only get -- so basically, if you -- people will pay and get to pick up their shoes free of charge in the stores, but they'll pay for the last mile. So I stopped -- so I had a 12% higher margin as a result of stop discounting and saying no in certain areas of the business. Everything has to be profitable. That's the key thing. Everything has to be profitable. And the same is true in eobuwie. We got rid of people in CCC. Is that right? And we have higher sales and lower returns. People had time, and that's why we had more returns then. So psychologically, it's not even why these things work with it's people sell off closing a store. So basically, you're able to sell more when you say that because people think that's a liquidation of a collection, everybody does that. And so these are certain things -- these are things you have to know in order to utilize them. So you can even give me hard questions, post me hard questions if you have difficult questions you want to post.

I wanted to ask about the incremental growth of square meters of selling for selling purposes.

200,000. It's going to be a linear growth generally 1/3 is in the first half of the year, 2/3 is in this latter half. Developers do it in such a way to open things for the bulk in the latter half of the year. So the expansion is basically something that we've checked off, we've done it, we move on. So I'm planning 3 years in advance. So there's so much expansion and so many offerings we can select and pick the top locations.

One other question. If we talk about the 200,000 square meters, are you starting with HalfPrice?

I already said I already have 200,000.

Is it an equal distribution of France?

No, no, no, no. HalfPrice generates the book. More than 50% of those new square meters will be in HalfPrice, everything. CCC is somehow saturated, and then we have Worldbox that HalfPrice is basically a firecracker. It starts earning money immediately. We have lines, people queuing up. And this is something we need to continue. There's no competition in this area of the market. And the model is developing very well in small towns and communities, surprisingly. We don't have to have another product. So you can give Benetton OVS basically, people are reacting to the magic of HalfPrice. It's HalfPrice. That's something that people react. Maybe it's sometimes not the HalfPrice realistically, but people are buying things. It's not half of the original price. We're not -- we only put one. We're not going to -- you can -- people sometimes fool others and say that you can give a higher price in the Internet and then you can say the price is now half of that. Well, people believe that there's no first price, second price or gifts or these Christmas gifts. If people believe that it's less expensive when you just come into the doors of HalfPrice. I'm surprised [indiscernible]. I'm really surprised sometimes. So we have 30% incremental sales growth at a 5% margin for retail. These are the type of offers. I'm not going to reject offers of that sort. So somebody doesn't understand what 5% of the trading volume. So 9% on average in HalfPrice and 5%. We're only paying. So if the customer -- sorry, if the store doesn't earn money, that becomes a problem of the owner of that store. So the same is true in some of the operators of large. So you have 6% fee -- so the owners are crying. The renters are always earning money. So 6% of sales is only 6% and you can match basically the cost of staff very closely. You can mirror to the rental costs, 8%, 10%, whatever you want. And so it's basically linked to the exposure that a given store generates. So any other questions? I guess you know everything. We have a lot of questions online. Let me read out 2, and we're going to have to wrap up. The first question, how long will you stay close to the company after bringing the company? This is a quotation turning around. Will you move aside? I said 5 years, and then we'll take a look at things. I'm not a person who wants to sit in the background. You've learned who I am. That's not my -- on top of that, I have a family, a son, a woman, everybody is a lot younger than I am, and everybody is highly involved. Basically, I'm insured they're sitting in China, they're working on collection. We're not going to give the collection. The collection over to somebody else in a sales company. That's the most important thing. We had forgotten about that for a few years. So I'm not going anywhere. So if my health remains intact, I will continue to serve in my function. Do you maintain and uphold that CCC will be a dividend company in the future? Of course. So I have to live with something I don't get a salary. 3 years, I can survive. Of course, I have other sources of income. I have shopping centers and things like that. But 2026 is a period when we can start paying dividends. Basically we're trying to explain that we want to be a company that's developing at the cost of the landlords. We want to be a company that generates products or gets products at the cost of the suppliers. So on HalfPrice would be [indiscernible]. In HalfPrice, we have the best products rotating at 90 days. So you buy things on site and then you sell. Some of the product will have to get here by ship. So our rotation starts from the date when the issue -- sorry, invoice is issued in China. So it's roughly 2 months in transit. So I think if we get a much higher factoring limit and the next very important process, we're going to work on invoicing. The next big goal is for us to be financed through Chinese factoring systems. They have a lot of opportunities there. And then money is less expensive there, too. So our credibility, what can I tell you? We're today at a totally different wedding party in terms of the Chinese insurers, insurance limits in terms of suppliers from China as opposed to what's happening in Europe and the opportunities are totally different and all this has an impact on the working capital. So the magnitude that we wanted. So when foreigners come in here and look at what's happening, everybody wants to be with us. But we don't have to persuade people to give us products and merchandise. They want to work basically owner-to-owner relationships. I can tell you it's very important to me that I own -- I work together with the owners of licenses, factories, the owners of producing. So I don't want to work together with the manager who's not might not be around a year. So it's not cooperation. I want to have a 20-, 30-year relationship period. So for 30 years, if I'm going to purchase 80% of the production capacity of a given factory, I want to work together for them to know our standards and work together for decades. And what was the question about the dividend. And we ended up with suppliers. Well, the dividend depends on the conditions for us to purchase goods to have deferred payment conditions. This is what we're striving to get. So we want them to be able to -- we're going to be cash neutral if they pay for our inventory. But the company has to start earning the money, and we're starting to earn real money now, and that's the precondition. Now we have to wrap up the question-and-answer session. You said there were going to be a lot of questions. There's a lot of questions. Give me one more question. Maybe somebody here in the room would like to post a question. If there's somebody in the room who wants to post a question, we have one question about the licensing. The licenses that you have secured come from one entity. Do you want to secure licenses from other players besides ABG? Well, we have Max, Beverly Hills, Cappa. Those are G-STAR are licenses from others, but IBG is the absolute leader in terms of good licenses and what it wants to secure is very impressive in the future. And we will clearly benefit from those new ideas. And so Jamie is really involved. And there are so many ideas and things should go really well. But there are too many details. If I'm going to know something interesting, then I will certainly share with you in terms of what's going to happen in Modivo. So I'm trying to explain to -- I want -- things are simple, and I'm trying to put this -- what I -- my message is very simple. You have to be able to bring the dots together, connect the dots. You don't have to do anything else. And you have to have a team of people who actually believe in that and actually do it. You can't have somebody who's trying to basically flip things upside down. If people are going to do what I'm saying, things are going to be done very well. You know what it's like in a large [indiscernible]. Everybody defends his or her own ideas even if they're dumb and don't earn money. People are saying, that's great. You have an idea, but the image and all that sort of stuff -- so the [indiscernible], but that doesn't generate any money. The only thing is that you're buying more. I'm not sure why. He's buying more in the [indiscernible]. But this value doesn't support the idea of having departments to maintain all the inventory. And so when I suggested try on all the shoes, they wanted an anecdote that they wanted to try on different colors. If you had 4 colors, people were trying on all 4 different colors, but basically, it costs money. These are process -- well, this is a little bit of a joke and anecdote. So this is the way things work. So well, basically, nonprofessionals think that a different color is a different size. Well, this is again a joke, sorry. So ladies and gentlemen, I want to thank you very much. I hope that things were sufficiently straightforward. [ Vitec ] has my phone number. If somebody doesn't feel that his or her questions weren't really answered, has some additional follow-up questions, get in contact with [ Vitec ] and then we can walk through that. So thank you very much, ladies and gentlemen, for your attention. [Statements in English on this transcript were spoken by an interpreter present on the live call.]