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

Good afternoon, ladies and gentlemen. Welcome to everybody. My name is Dariusz Milek. I'm the CEO of the group. If you don't know me or if you don't remember me, having in mind the conference of CCC Group, I want to say a few words about the results. I won't take a lot of time here. The results are the results. This is now the history. I would like to talk more about the future. So we'll recap the 2024 results. I have 3 slides, in fact. So we have record-breaking sales. So our ambitions were a little bit higher, but this is what happened. We exceeded the PLN 10 billion watermark. So the challenge for this year is PLN 12 billion plus. We have a record-breaking EBITDA at the annual level, PLN 1.6 billion, and we have a record-breaking net profit of PLN 1 billion. And so that's it in terms of 2024. I'll talk a little bit about wholesale sales, and then we can look at the Q1 2025 results. Also, we have a few slides here. As you know, the driving force in our business having in mind softer weather, we have slightly softer results. So I'm saying it's -- we wanted -- we had higher ambitions for like-for-like sales, so we had 28% over the last couple of years if we looked at the most recent quarters. So we're down by 2% compared to the record-breaking like-for-like sales figures. So we can say this is a pretty good result. Of course, the rest of the industry is doing worse. We're saying that our business changes as a result of footwear, but footwear changes just like tires as a result of weather. So we're a brand group now with accessories and fashion. So I should say that the like-for-like sales figures are okay. If we look at costs, we also generated a result, thanks to our cost discipline. Well, things can be done on the cost side of business. We have our own ideas. We will clearly drop below 40% cost ratio. Maybe in the future, we'll be able to drop down to some 35% naturally. That will depend on the magnitude of our expansion since I do not want to embellish the cost base. So the costs that we would have would be in the management of stores. So no element of the business is underwater in our overall business. So everything is going in line with our plan outside of the weather. But as people say, weather supports better people. So we've got better contracts, better terms and conditions. So in premium brands, things are pretty soft. There was a lot to be done in the negotiations in MODIVO. This is something that's happening. So we're thinking about conditions for next spring as opposed to the autumn. Autumn is pretty much contracted. Maybe we'll be able to squeeze something, we have longer terms of payment. We have better terms of payment. Everything I've been saying about MODIVO is starting to happen for the future. And as we grow by 20% in terms of the square -- per square meters, the number of square meters, then, of course, the cost of the head office should fall. So this is 40% year-to-date, right? So if we were to have better revenue in Q1, then we would have had even a lower level of cost ratio. So we can say where we were able to reduce costs, 1.5% across the group, and so it was 45.5%. Now it's 44%. So we had a lower level of revenue in this period. So we were able to reduce these percentage points, but in margins, so it's a total of 4 percentage points. So in CCC, we also reduced cost even though we had negative like-for-like. In MODIVO, we were able to reduce costs substantially. Costs grew in half price, but that's not disquieting at all for a number of reasons. One, we're opening a large number of new stores. And so these are logistics costs and preparing products. We're also doing training for our employees, and they're doing -- and we have 2 new areas in Spain and Italy. So these are costs. So all of this is under control in the upcoming quarters. This will balance out and we will revert to profitability under the HalfPrice brand as we've generated in the past. We're also improving our margin. So we've improved by nearly 3 percentage points in Q1. So if we look at the individual quarters, things look pretty good. Let's say, this quarter has not been bad. PLN 376 million EBITDA, that's 16%. If we compare that to the previous quarters, you can see that Q1 in our industry is the softest of the quarters. We had some periods in which Q1 had PLN 100 million loss. Now we have a very nice result. So I think there is no obstacle for us to continue this trend for subsequent quarters to get -- to become even better. Now let me mention what's happening across the brands. In CCC, so it's 21%. So this is 1% better. So the stability of profitability is in CCC, we can say this is a mature model. Will things get better? They should get better, having in mind the new licenses, attractiveness and quality of commodities of products. This is all translating into a better result. And so Q1 showed what we've been able to do. Here, we have HalfPrice. And here, EBITDA is down by 2 percentage points year-to-year. So this is what I explained. This is a huge undertaking basically to bring in new goods, purchase them, deliver them to open new stores. We're talking about hundreds of thousands of product ranges, a large number of categories, even just to go buy, pick it up, deliver it to the warehouse, plus all of the store operations. We have double teams that are being trained for rolling out new stores. So we'll have at least 85 new HalfPrice stores this year. So we'll show you in just a moment how that all breaks down. Then we have MODIVO. So last year, we had a 7% EBITDA figure. So Q1 is usually the worst. And so we've been able to generate a 10% return in Q1. That is a good portent of what awaits us. This is not a process that lasts 1 month. It's when we talk about the next round of purchase orders, so spring of next year, we also have some inventories that we have to sell off, less profitable brands. Other brands that we've discarded entirely. So that's why we had the 6 percentage points. So we're reducing costs, and we're improving EBITDA. And so you can look at the competitive market and think about what's happening with e-commerce in Q1 of this year with other players. So things are looking pretty good. So the real synergies are what we're going to be able to derive in the future through the MODIVOclub through servicing all of the channels. So I'm confident this is going to be the most profitable e-commerce business in Europe. Multi-brand e-commerce, I don't want to compare myself to IKEA or ZARA because they also are doing very well. But as you can see, you can earn money on e-commerce, and we're going to do that as well. That's it about the results. I think if Lukasz were up here, he would talk for an hour. So if you have any questions to Lukasz, we'll ask you to post those questions at the end. I wanted to talk to you and converse with you about the gigantic amount of work we've done as a team, and what sort of reconstruction we're in the process of doing under this model. So I promised you 250,000 square meters. I said we'll add 250,000 square meters. I said that's going to be an additional PLN 2.5 billion in revenue, but we're actually going to deliver more. So I'm also calm in terms about 2026 because we already have a large number of contracts. That's not expansion just to go out there and expand that we've made a bet with somebody. Basically, the square meters are looking for us. We're not looking for square meters. Square meters are looking for us. We have -- we have twice as many offers as we're signing, and we're choosing what we think is the best with a good fit out. Sometimes it's turnkey stores. So above all, -- and so with an OCR approach, it's a very safe model. If we don't generate revenue, we don't pay rental fees at all. So this expansion is very safe. As you can see, we have 4 brands. It's easier to negotiate. We have a large amount of synergy in our negotiations. So we have 85 price -- 85 HalfPrice stores we want to add this year, 100 CCC, 165 Worldboxs and 20 eFootwear. Everybody is interested in Worldbox. It's a blank map. So CCC is a mature network. So it's a little more difficult to find a new store location than it is for Worldbox. So we'll have 36% more store openings year-on-year. We're not talking about refit-outs or anything like that, renovations because we have to basically do designs. We have to get all of the permitting in place with the fire brigade and the health service and so on and so forth. But we've been doing quite well here. Here's the table that I had in mind. This plan is achievable, having in mind recent successes in Spain and Italy. So we'll have another 60,000 square meters in Spain alone. So this is not a major challenge since each store has 2,000, 2,500 square meters. So as I can show you, we have 56% of the expansion is in 85 stores because we're talking about the total number of square meters. So the stores on average have more than 2,000 square meters. It's not the case that these stores are waiting for us. We have to basically acquire them, seize them everybody. It's quite easy for us because we have been successful. People see our success. And so basically, people are looking for us, and they want to be part of the success. And then we're just basically getting started in terms of ramping up our product sales. So then if we look at this graph, we can say that things look pretty good, perhaps too good, perhaps too aggressive, but there's no reason for us to wait. Every store is earning money, and we have to utilize that chance today. We have to seize that chance today. So we have 200,000 square meters of HalfPrice and then Worldbox 94, 56 CCC. eFootwear is a little softer. Basically, all of our stores are going through lifting, a refit out. So physical sales of products, it's working better. So I wasn't wrong. I'll present that information what's happened with the first store since we made those retooling or reengineering. Here is the breakdown in thousands of square meters in terms of our expansion. So it's usually the case that 10% of the venues are pushed back to the spring, but we've secured that because we have new venues coming in this year. So I'm pretty confident that we'll be able to deliver that 250,000. And so this is broken down by thousands of square meters. So when we talk about earning money in our expansion, the 80,000, perhaps it might be at the end of July when we open that. So they really won't work for the entire second quarter. Just like the 35,000 didn't work because we didn't -- for the whole quarter because we didn't start on the 1st of February. We've been doing a lot of renovations. This is the softest quarter. That's when we do our renovations because we usually get the fit out for a new concept. And then we have to renegotiate the contract just like with HalfPrice. So it's a combined deal, we take advantage of that because just -- well, -- so 40% of our exhibition space is because of metal shelving. So it takes us a bit of time. So we can say that the square meters were basically flat. You'll see the effect because I want to get to PLN 12 billion, so plus PLN 4 billion. This is -- all of these things are going to be transpiring in Q3 and Q4 as they add up the additive impact. So at the end of the year, we'll have 1,200 stores. Some of them are going to be quite large. And if we look at the HalfPrice expansion in Southern Europe, so I said that we're going to try out in Spain. We started in Zaragoza, then we opened Madrid. And on Friday, we opened Italia -- Italy, in Milan. I was there. So it was Thursday, 120 renters. And so how you could put products into 5,000 square meters. So we have a full number of offers. We haven't even ended the day of Monday, so we had a wonderful store opening. And so basically, everybody came in to see us, and we did PLN 2 million in revenue in 3 days. So it was a record-breaking result. So we were 4x higher than elsewhere. So we're thinking about that Italian -- rich Italian customer is going to visit us because they're saying outlet in full prices, in off-price. I had to explain to people what off-price was. But there are 2, 3 brands, 1 brand and then people are looking at Versace and Brad and so on and so forth. But here, we've got all of the brands. So beer, batteries, toys and everything is at half price. So even when we sent some film clips because it was for VIPs on Thursday, so VIPs bought stuff for PLN 200,000. When I sent the video clips, they were asking what sort of discount we were giving for the opening? It was 50%. So the margin was 64%. So it's a wonderful outcome in such a model. So basically, people were buying a wide range of products in their basket. So after those 2 openings, we have a large number of offers. And so we have -- we'll open 19 stores. We've been doing this for 30 years, so we know what we're doing. So we have very good venues as well as very good terms and conditions. So it's EUR 13 in Spain, we're playing EUR 14 in Italy, all-in. So we had a big fit out for the stores. So in Marszalkowska Street in Warsaw, it's EUR 50. And so the stores are still making money. So I anticipated -- I had anticipated that it was going to be more expensive when we went there. But they believed in our model. We believe that we're going to be the anchor that we're -- they need us more than we need them, and that's the way we're playing things. Okay. Here, you can see some pictures from Madrid, big store, more than 4,000 square meters. And so we -- if we don't have enough revenue, then we don't pay any rental fees. We have a very good result at the end of the period. So here's a little bit of a propaganda and film clip for you to see what was happening there. [Presentation]

So we can go on. This is Italy. Here we go. [Presentation]

So it looks a little bit like propaganda. Perhaps they put in my video clips as well. Maybe it was a little amateurish. We're thinking about the customers. The fact is that we had a large number of people who came in because the film, the video clip we made prior to the store opening. Here, you can see the large number of customers who are in the stores. So inside the store, we had a line of 150 meters. And the bridge Northern Italian customer. So of course, the biggest fear is whether or not the concept will be embraced. I go in to HalfPrice, and I want to leave immediately. So I'm not the main customer. So I don't really understand. I don't grasp it, but the question, who doesn't want to buy things less expensively? So my wife, my son; Lukasz, you go there as well constantly. I had understood no at the beginning. So his position in the management team would have been at risk had he not said that. So customers embrace this. This is the greatest value. This is fresh information, new information from Friday, Saturday, Sunday. So we've got the adrenaline. We've got the power. So the first day, it's not the big Friday, it's not the beginning of the weekend really. Well, so we can say that the sales were a little bit under what we had in Spain. But if you compare Warsaw, and the figures to Milano. Of course, the figures will come down. We understand that it will taper off because this was the opening. We didn't spend as much money for the marketing. So now the question is to do a bigger network, and this is the jumping off point and continue to expand. So there are no HalfPrice in Spain and Italy. So if we do this well from the very first store, we're going to be the leader in that market. So if you can see Madrid, so during the week, it was not amongst the top 10, but in the weekend, it's doing just as much as [indiscernible] in Prague. Some of you were there during the Investors Day, you saw how big that store is. But I'm paying EUR 50 in Prague. Those are flagship stores. And in Madrid, I'm paying EUR 13. So I have to tell you one interesting tidbit, but in Spain, and I can say that in Millennia, so they wanted to understand the owners of those galleries in Italy and Spain. They visited Prague to see how you could actually put product on 5,000 square meters. So during -- we were in the midst of signing the contracts. Here is Worldbox. This is a concept I believe in a lot. This is going to be a better project than CCC. We have to give a little bit of time. This is a design where we'll see our own production -- licensed production. This will really begin in spring of 2026. Now we have other partners, brands. These are basically ends of collections and things like that, so accidental things. So we're going to have 20 licensed brands. So basically, in all of our brands, we have licenses that I can produce also apparel and accessories. And this is going to be a big thing because we have a higher margin on apparel, on clothing. So if we have apparel, accessories and footwear, I think my ticket is going to be higher. It's going to be a broader concept, a store that's more comprehensive, so hats, socks and coats, anything that you can buy in a casual -- sports casual assortment. This is a very interesting concept. We're opening this. And we will await the results and the high profits starting next year. The beginning is never easy, but we're going to be able to achieve a synergetic effect very quickly. We're inexpensively renting out this space according to me. But of course, it's at market price, so we'll have Worldbox, CCC and HalfPrice, so it will make it easier to do the expansion. Then we have the MODIVO World Club. The cashback is -- this will be available also in Worldbox. So we started with eobuwie, eFootwear with the campaign on the 5th of May. So eFootwear is also a big thing. So physically converting this into a brick-and-mortar store. So we have 4 stores that have been converted. We have another 15 or so that are in the process of construction. It's not just a matter of switching out furniture. You have to have permits and consents from the fire brigade to the health service and others. This is taking a little bit more time. But by the end of July, we should complete the conversion process of all of the stores. So by August, we should have a full offering in the stores. And then in the autumn, the segmentation that we're working on will be visible. And basically, as of the spring, we will not have any shoes that will be replicated. So we're going to make sure that people -- the consumers can understand the concept. There's going to be a price differential, so the cost, and there are going to be brands there that will never be seen in CCC. So Calvin Klein here and there that would not work. So then we can go on to MODIVOclub, and that's our group's new loyalty scheme, so we had the new campaign. We had the technical start in May. So for people to understand what's happening. So we're starting to blow on this a little harder, so 10% cashback. But -- that doesn't mean I'm going to give back the 60s for this. I'm only going to give 40%. That's the cost of the purchase. So we're going to give the customer back 24s, what is -- people understand that's what we're retaining. So this customer is more loyal, is spending -- the customer is spending more coming back. So this benefit is going to be bigger and this might make that consumer more loyal because who buy more because you can buy in MODIVO, eFootwear, CCC, Worldbox, HalfPrice, WS. We're going to take that over by the end of May cutoff. By the end of May, we're going to consolidate with WS, which is basically the basketball players and the runner stores. So everybody wants to be across the segmentation. We'll have the full range of segmentation in Central and Eastern Europe. And so this is quite a big accomplishment. So nobody else had thought this up. We were the only ones who thought this up. And so this tells you here, we're on the MODIVO website. And so a customer can buy concepts, can buy brands, MODIVO GOLD and then you can see what's happening with your money. So later, we'll say. This is in Europe. And so you have a platform of benefits, a special offer for club members. And so check out the details on the MODIVOclub website. There's MODIVOclub GOLD, so you'll get back 10% on your purchasing card and so a cashback on everything. So we have new brands and special offers for club members. And so set up your account with MODIVOclub GOLD. So there's going to be more and more benefits. Privileges. What's this type of sales called? MODIVO deals, we think about brands. First purchases, returns, packaging that's for a fee, not for a fee. So we want to make sure that the customers have benefits and they can buy -- they can participate in deals -- special deals on a pioneer basis. So we have quite a few people who are signing around. 6,000, 8,000 people per day were signing up. So basically, PLN 36. That's probably covering all of the costs of the loans. Of course, we're going to give that back to people in a smaller pool, so 40% of that. So our cost of purchasing the products will be given back. And of course, we're counting on people buying more. People on HalfPrice are signing up many fewer than in CCC, so this is the map of where people are signing in. So Worldbox doesn't have scale yet. It doesn't have the magnitude. As I said, we want to achieve a target of PLN 3 million per year, maybe not the first year. Once people understand the benefits, if we communicate well with them. And so here is your benefit as a result of the card. And so people are going to go ahead and want to extend their membership. And we can talk a little bit about Spain in these stores. Here's -- we have Poland, Spain and Czech Republic. Well, we have to remember that in Spain, in Italy, they're open on Sundays, whereas the store in Warsaw is closed on Sunday, where we have PLN 200,000 per day of revenue. Those stores -- so we have 5 million per store. So that's 2.5 million margin. So that's frequently sufficient to pay for the rental fee. And so we made some comparisons. So the traffic is quite good. The average value of the ticket is higher. The average ticket is higher, the items per ticket is higher and the gross margin is higher. And we're selling our products more expensively abroad. I'm not sure if this is a good tactic or not, but we're selling at a higher price in euro. So if that continues to work, we'll do that. Otherwise, we can always diminish the price. So there's a difference between ourselves and the competitors by 14%. So we're able to sell this with a good margin because I remind you that we also have a second margin. Now let's go on. When I talk about the eFootwear stores. These are the ones -- we only have a sample of 3 stores. Even though they've been reduced, their space has been reduced. It's sort of like half price, close to half price. So traffic is up by 128%. Revenue is up by 121%. And so revenue net of returns is up 55% and the gross margin is higher by 8 percentage points. So we're selling 18%. Here, we want to sell 50% of our products. And so with MODIVO, we'll be able to pump up that margin, but we're going to need several months or maybe several quarters, maybe 2, and then we'll be able to achieve our targets. Then if we look at the Worldbox stores. So with higher average store area, revenue per square meter is up by 22%, traffic is up by 11%, conversion is up by 5 percentage points. Wojciech? These are also -- so 22% is revenue. This is not a source of satisfaction because there's more product. So we have to be calm. But when our products are going to be delivered when we're going to produce our own caps for $2.15, perhaps the dollar has weakened. And so we're going to be able to sell that with an 80% margin, maybe we'll come in at 70%. Is that possible? Yes, it's possible. Let me show you another example. So if we look at wholesale case study, why is it a profitable endeavor for us to use a wholesale case. So the last time I'm going to explain -- I have to explain why we have such a high margin in wholesale. Other people are bragging about it. So if we're buying a pair of shoes for PLN 22. So at PLN 100 retail price, we have a 78% margin. So at the final stage, we have 65%. It's like 68% for licensed shoes. So there are discounts, clubs, sales. So if we have in mind what's happening here. Of course, in our own retail, it's most profitable for us to sell here because we have PLN 78 revenue. If we look at the wholesale impact, let me tell you how somebody else is -- so if we talk about the competition. So if there's a distributor, brand owner, all this sort of stuff. So you have 2 agents on the way or intermediaries, I'm not sure. I would call them by a different term because I got rid of all of those intermediaries, but let's -- every one say each one of them wants 20% to take. And so basically, the markup is 25%. So each one has to generate a margin. That's PLN 5, they're taking $1 or something like that. But you're building the negative price from the very beginning. So basically, it's coming out of China at PLN 34. Then you have a distributor, somebody who has a license or somebody who has a brand and then that person also has to have a margin and that person adds a 50% markup, which gives a 33% margin. Wojciech, you always do a good calculation. Is that correct?

Yes.

So basically, the price at this point, the input price is PLN 50.6. And then I'm looking at my price, I'm always less expensive. So I assume that they're selling at PLN 110. And so the retailer has to have a 50% -- 54% margin. Otherwise, he'll die because then he'll end up at 45% because if you sell off collections, stuff like that, you're going to come down below 40%. So the distributor is going to see what's at the bottom, PLN 16. That's nothing. Do you want to do -- I wouldn't want to be a distributor for PLN 16 because you have to have -- go to tenders, I have to visit customers. I have customers who don't want to pay. I also have customers who are still complaining, they haven't sold things. I've got a group of people who have to visit these customers. There's just too many costs, PLN 16 does not look -- and we're looking at the margin is 33% because we calculate the markup from the bottom price. So I give my customers the final price of PLN 100. So I assume that the customer wants a margin. This is a new environment. So I have to give them a 60% margin. Maybe I give them 120, maybe 150-day payment terms. Usually, it's 60 to 90 days. And so the person calls up at 90 days or 60 days and says, where is my money? Even though only 20%, 30% of the goods or maybe the season hasn't even started, you already have to pay. That's very inconvenient for the end customer here. So then they have to utilize cash they don't have to make those payments. Since it's for me a new market, I can give them a longer payment term. So I give them better margin. I know what margin means. And I understand why there has to be a margin because once he starts to earn money, he'll come back to me. And how much comes back at the end of the day? I'm selling at PLN 40 and I get 45% margin. There are no fees along the way because we're working directly with the factory. So I keep PLN 18. Is that satisfactory? No. So I'm not happy with that 45% because I prefer to sell it for -- I would prefer to have a 400% markup, 78% margin with PLN 78 for myself because I have to do that. So because in almost all the contracts, I have to have a wholesale network. So if I have a license for a region, I can't sell only through my own channels. I have to do it even if I don't want to do that. I'm not sure where the end game is because I'm going to have my own stores nearly everywhere. And so the wholesale I'm building, the question is, will it survive? But on the other hand -- so there's always going to be a market next to me where they're going to be selling Umbro, Fila. I'm not talking about adidas and Nike and Puma because they're not -- they don't have franchisee stores or anything like that. I'm talking about the smaller segment here. I should trade with markets, normal stores and other channels to make sure that the brand is the brand. So it shouldn't just be a brand for my own channel because then your brand comes dwindles and dies away. So then if we talk about the marketing synergies, if I'm advertising Reebok and I'm distributing Reebok, so then basically, the -- I have to do it anyway. So the advertising doesn't cost anything for other things. My marketing becomes less expensive as I do this spread, and it's more competitive across the marketplace. Has everybody understood the concept? All those people who understand the difference between margins and markups? So it's PLN 18 per pair. Basically, this is less expensive money or inexpensive money. So this is costing me looking at the purchase price, 3%, PLN 50. Then you have the logistics costs and then moving it through the warehouse, then there are buyers who are buying new collections. So there's a lot of synergies here. Teams, we have a small wholesale team, which is doing the settlements, doing the accounts. So it's maybe 10 people who are active in that. So basically, this is going to grow for wholesales. So now a summary of the key strategic initiatives. As you've seen, a lot of things are happening. Don't look at us and don't judge us based only on what's happened in the last quarter. Think about the future. This is the bet. We've talked about the PLN 25 billion revenue and 20% EBITDA. So MODIVOclub, which is the group's common loyalty scheme, that's begun. HalfPrice expansion in Southern European markets, I discussed that briefly, and I'm very proud of how this is working. And sometimes when things begin well, they end poorly, but we're doing everything we can to make sure it doesn't end poorly. We're not talking about the German-speaking countries. We're talking about more dynamic [indiscernible] or any other brand, and they're quite happy. And the bigger the brand logo, the more important it is. So then we have the fast pace of Worldbox development. This is very important. This is another link in our chain, which will continue to expand. Then scaling up the eFootwear store chain in a new format, this is happening. Then the rapid growth of the share of licensed brands in the group's offering. You didn't show how many brands we have? It's 30%. 30% in CCC is of licensed brands, so we want to get up to 50%. They have a faster turnover. They have a better brand recognition. It's easier to penetrate basically, international markets with branded products. This wouldn't be possible Gino Rossi or Lasocki. It's with the branded products in Bulgaria, Romania and so on and so forth. Then we have the product segmentation in our sales channels. This is something that's very important to us, segmentation. All of our buyers have separate collections for Worldbox and MODIVOclub and something like that. Bigger, smaller, different colors, different prices, but everywhere. I want you to understand that synergy will show up because the licensing is 3%. And so the products will be coming in the near future, so we're going to generate a lot. Of course, HalfPrice has to have brands. We're not going to have only licensed products. So we're not going to have our own brand for like toys or, let's say, dog food, but we're going to have a wide range of products, and we're going to look at those things that can actually generate a higher margin for us. And then we started to build a logistics warehouse. This is something that will help us we have a lot of cost because we're handling things manually. So we want to make sure that people aren't touching. There's no manual operations. It's going to be coming in, going out automatically. And so automation will help us greatly to make sure that we're going to have cost savings here. Then we want to achieve the maximum level of synergy within the group. So we're not talking about the channel any longer. We're talking about the brand. So nobody in the company has the right to talk about channels. We're talking about brands. If we're selling individual brands in all of our sales channels. So it doesn't matter if we're talking about one brand or another. We're selling it basically in eFootwear, we want to sell it in CCC, MODIVO. Market down, sell it in off-price. And so marketplace is also a sales channel. It's a sales place. It's not competition. E-commerce is not going to be a competition for us. Basically, our products will be sold across the marketplace. The most important thing for people to accept our brands, our prices and our markdowns. Then we have wholesale franchise and marketplace development. I've already talked a little bit about marketplace. So in footwear, we're #1 in [indiscernible] after the first month. Why? Because we have a large amount of product. So adidas has only adidas -- has like a -- only has small. We have 60 brands, which we can offer on high brand -- on high margins. So we're opening up these channels. This takes a little bit of time, corporations. I used to do that in 1 day or 1 week, but this is going to take a few months. Basically, everybody wants to have our products. We're very attractive in terms of the offering we have. And then we're going to enter marketplaces. So marketplaces can be a big business in the future. For now, they've not been developing. It's not growing for others either. But we'll be present in that segment. Then we have franchise in Europe. I don't want to have any franchises, but there are countries where -- small countries where they would like to have franchise. I have pilgrims. I have to open a list of a journal. So you're doing -- people are coming in across the world in terms of visiting us to try to do sales, but some smaller countries like Albania, Georgia, Israel, Kazakhstan, perhaps these are areas where we'd be willing to set up franchises. I don't want to have just 1, 2 or 3 stores. I want to have much bigger expansion. We have to do -- it's not to have one store. We have to have a big store. It has to be a big footprint and then HalfPrice and Worldbox because it's always -- if everything is together, then you have -- put a customer down on the map because if somebody is going to have enough stores, it's going to be easier to plan if there's a sizable chunk of the market there that would be held. So now then in terms of wholesale sales, in the report, we made an adjustment in terms of wholesale sales because wholesale sales took place jointly with the auditor. We came to the conclusion that it will be better to account for it once the payments are made. So a portion has been booked. We have payment terms that are rather lengthy, 120, 150 days. So basically, this will be booked in Q2. but we're not backing away from wholesale sales. We're going to show segments. That's what we said because nobody understands this. Ultimately, we want to change the method of presenting segments. It's not going to be by brands. We're not going to say CCC. We're going to say full price retail, HalfPrice, wholesale sales and e-commerce sales. And now we're thinking about whether or not marketplace should be treated as an external channel and wholesale or should it be somehow subsumed under e-commerce. We're not going to say that we've sold 300 units of Lagerfeld to get a license in different channels. So this is a matter of the near future. And then we'll -- it will be -- the presentation will be easier to understand, easier to grasp. I don't know if you remember our bet. We talked about my 5-year presence in the company that I'm working free of charge. And so the resolutions have been adopted. I don't get any salary. So my woman is paying the bills. And this is what our plan is for you. This plan is achieved in terms of the square meters and the profitability of 20% and I'm not going to allow us to do things that are unprofitable. So delisting things that don't earn money. This is a process. So it seems that it's very realistic that our share prices will improve in the future. So I don't want to hear questions what's happening in May. That's not why I came here to ask -- talk about what's happening in May. So is it a good question. We're selling sneakers. We're selling sneakers and -- which is not usually what we sell at the time of the year. But in the summer, it's less the prices down by 50%. But now we have -- it was minus 3% when I got up. And so we have these semifinished with these half shoes up to the ankle. So there are things, we have this type of weather in May. We're not going to complain about the weather. So different types of shoes are being sold as a result of the weather. So I feel very good in these type of conditions in difficult conditions. Why? Because now is the time to expand. Now it's time to set up the conditions of cooperating with partners. Now we have to get the best possible conditions for the company after my visit to Italy for 2 days. So I've got better conditions in 10 companies that I've been working with the repeat discounts. Previously, they didn't want to sell products of the HalfPrice because there's a lot of premium brands. I'm not sure if people don't want to buy anymore, but -- or they want to buy less expensive, they're not too interested in wearing branded goods. So things are going very well. There's a selection under taking place. So once the customer gets stronger, then we're going to be the winning part, just like we won in COVID. We took advantage. We leveraged COVID. We reduced stores that weren't working. We got rid of certain factories. We got -- we shed sports and then we opened HalfPrice, and we renegotiated the commercial terms with all of our shopping galleries with the owners. We even tried to negotiate with banks, but that wasn't a good time to negotiate with the banks. That's something we've all done in the past. That's the past. I'm not going to go back to. This is the program that I presented to you. And this is something that I'm pursuing very strongly. Here, we're talking about our declarations. We want to have a 20% EBITDA in 2025. We've got a less expensive dollar. We have very inexpensive freight, $2,000, $2,500 depends on who you're talking to. The dollar is secured or hedged at a low price. So it's 3.8 in terms -- we were at 4.01, but we hedged a little earlier. So we're up by like 2 percentage points by -- in terms of the dollar, the freight, goods are getting better and better. Our licenses are starting to function. So I have a very optimistic mindset looking into the future. And then opening up -- having opened Spain and Italy. So there are 48 million people who live in Spain and 58 million in Italy. So that means we have 106 million. We can add it or round off to 105 million. Then you have some people who don't have passports, let's say, it's 110 million people. As you can see, the customers who visit our stores vary greatly. So we have people who are more wealthy than in Romania and Bulgaria, and this is happening in 2 different markets. We're not going to expand our business in Kosovo or Albania, where there's 1 million or 2 million customers. We're going to leave that to basically franchisees. So thank you very much.

We have Wojciech Latocha, [indiscernible] and myself. Are there any questions that you'd like to pose? Maybe you have some questions that you want to pose to Karol.

So this is a little bit of a surprise for [ Easter ]. So my question is to Karol in terms about MODIVO. Has this problem been resolved? Where are the press?

He just took over this position. Come on, Karol, you can speak. Go ahead and try to give some explanations.

So maybe I can give you a few words of explanation. So there's a lot of demand from consumers. There are things that we changed in our systems. And the third thing is that we're cooperating with one of the suppliers. Those 3 factors contributed to us having some turmoil in terms of fulfilling a large number of orders. So this week, we should complete that. All of those customers had to wait for a longer period of time. So individually, we're apologizing to them, and we're giving them some compensation. Of course, we understand that people weren't happy. We're very sensitive to that. But we want them to stay with us, and we're offering them some incentives to do that. So we're counting on that we're going to be able to extract ourselves from the situation in the near future. And in the future, every company, e-commerce company, every now and again faces some technology changes. We don't differ in this respect. But in terms of what happened, this is also a lesson for us, and we're going to learn from this lesson and react more quickly to these type of challenges. This is not about MODIVOclub. This was an external supplier. Well, the 3 factors I had in mind. Well, the club is totally different. This did not have an impact or didn't contribute to the situation that I talked about.

I have a follow-up question. In terms of wholesale, I understand that in Q1, we had PLN 40 million EBITDA because of wholesale, which theoretically took place in Q4, plus we had the positive gains on FX translation. So that would suggest that there was a lot of pressure. Does that mean we're missing a quarter to achieve this year's targets, especially since we have inventories. So sales are below expectations, if I understand things correctly.

So I think this is a question more to me. We was -- Q1, PLN 35 million sales revenue in Q1. So there is PLN 15-or-so million in profit. If there -- FX translations are positive or negative, we don't -- we just report what's happening. So we hope that we'll always be ahead of the game in terms of FX translation. Well, the inventories, this is the tall bar that you showed in the dynamics of opening up new stores. It's not a major burden. This is linked rather to the pace of growing or opening up new stores in Q3 and Q4. And so in the second half of this year, this is when we're going to achieve this year's results. So the first quarter is always the softest quarter. Now we're moving up to nearly PLN 400 million. So I would give a different commentary. Ever since I came back to be the CEO, things changed in MODIVO. Products are delivered on time. The history was that we received products in the middle of the summer. So we -- by the end of this year, we'll clean things up with inventory. You'll see we'll reduce our inventory by some 20%, 25%. That's the plan in the company. So last year, we didn't do so well in the winter. We stopped panicking because we have a loan is 10x less expensive than the valuation of the shoes, and we're going to purchase 35% less in the winter. So trappers -- so nothing is going to happen with some of these winter shoes. If it's resorted, repackaged, it's going to be quite okay. And this is going to be a much more beneficial undertaking than marking things down. So basically, we want to move into a cycle. So basically, we have to sell as much as possible at first prices. So we should have spring in February. So today, we don't have the spring collection until the 15th of November. We want to be the first on the market. There's going to be a point in time when products are going to be showing up a little faster. We're going to say that 31st of January, you'll see a much market improvement in terms of the product. The shoes will be sold off and we're going to be ordering much more reasonably for the summer period. So all of these declarations for this year. The key thing is profitability. So of course, inventory is very important. We're incurring costs. Banks look at the inventories. So we have to drop down that level of inventories. We're talking about financial expenses, we're talking about refinancing because we have another good piece of news probably. I hope that we'll have the committee meeting this week that we're going to be able to reduce the cost of the credit in SoftBank. We're not talking about replacing factoring. So we want the supplier to pay for the costs. I had a table, but I didn't want to talk about that. I don't want to say today what I'm going to say in Q2. We're talking about PLN 330 million of financial expenses in the COVID period. So we want to drop down the financial expenses across the group, and we want to drop to 1/3 that. So I mean, the group is going to be much bigger. We're going to move in the direction of PLN 12 billion revenue. So actually, we're working in every element, and we're trying to connect all the dots. So if you don't see something today in our results, you'll see that in the results in the near future. So we -- you think I'm not pained by the inventory. We're pained by the inventory because we pay for warehousing space. So additional costs of roughly PLN 100 million per annum. So we have to clean up this topic.

Okay. Next question. I'm from mBank, [indiscernible]. My question is about investment, so cap expenditures, CapEx. So we have targets that are higher in terms of the rollout. What sort of CapEx do you anticipate this year?

I'm not calculating it at all. Wojciech is calculating it. You're calculating that. I'm saying for them not to calculate it. Basically, what should we calculate? Every store basically generates enough revenue to pay it back in the course of a year. So if the stores are earning money, then it would be a big problem if we were to see some -- this is from opening stores, we're earning too much to worry too much about CapEx. So most of our stores are turnkey stores or with a large foot out. So what we have to pay for is furniture. So the factoring is there for 180 days, so we can actually earn enough money to pay for the furniture before we actually have to pay for the furniture. So I'm not calculating. Of course, controlling department is calculating that, but our stores are earning. If the stores do not -- if they stop earning money, then we'll slow down the pace. There won't be any problem whatsoever. I guess I made a statement. Okay. The controlling department is -- that's why I said we actually are making those calculations. But the question is, why should -- what is the name of this committee? It's Kickoff? We had 12 people coming down to the Kickoff Committee. And they said -- they had some calculations that -- I wasn't invited to the committee meeting. So basically, stores are now earning PLN 4 million a year. So there's no reason they're calculate it because people calculate these things in corporation. This is not a corporation. If I feel that I earn money, I'm jumping into that topic and start earning the money. That's my instinctive reaction. So Spain, Italy, 2 big markets where you want to build a strong position. The question is, is there any other market? Greece and Portugal, these are the most spontaneous markets and countries where there's no competition. In HalfPrice, there's no competition. In footwear, it's a tragedy. I have so many inquiries, requests for CCC to show up. This is a problem. Is it not too early for that? So we can do some pilots. I don't need a pilot, but I'm sure we're going to earn money. So let's say, we have 4,000 meters for HalfPrice, and then we can do 100 meters or something like for CCC, that's a bit of a problem. I would have stores made available for like the half price conditions, so basically. So basically, retail. There's no network that can compete with us. We have a good level of our stores. We have great brands and high-margin brands. I know that basically, these are distributors, intermediaries. And so the footwear networks have big problems. This is also the problem of markets. So we can say there's no footwear store. It's a wonderful gallery there in Milano, but they don't have a footwear store at all. I think JD is there. And then these mono brands where they have 10 or 12 shoes. Basically, those are -- they look like warehouses. And so they don't fit the model of that shopping gallery. This is where there's an opportunity for us to appear and emerge. That's why I'm talking about because HalfPrice without MODIVO is -- basically HalfPrice jointly with MODIVO, I'm talking about the loyalty club. We're talking about synergies. So if the loyalty club works for us and if it's going to work well, and I believe it will, then we don't need anything else then to reduce the number of countries, but we have to catch the synergies by having the proper brands in terms of rents, operations, products, marketing, the loyalty club. We think about synergies. Synergy is the name of the game. How advanced Portugal doesn't have any locations, venues? Very small number of markets. They're all occupated and the rents are higher. So the thing is the worst with Portugal in Greece as well. You have most of the stores that are on the streets. So there's no shopping galleries. But Italy and Spain, there's a large number of markets. So don't treat this seriously. This is -- so basically, I don't want to scare everybody away. Thank you. On the other hand, our model is for us to defend ourselves. The CCC model would do well in Germany, but we're not doing that. So for 3 years, I'm not going to do anything in Germany. We can have that arrangement. I can sign in a contract with you on that. But it's a very demanding market, but Italy, a very spontaneous market. so CCC -- so I'm going to pull back a little bit in terms of CCC showing up in Italy, but we're going to observe what's happening with HalfPrice. So HalfPrice is doing well in Spain and Italy, shoes. So footwear is selling very well. So the Spanish networks are doing quite well in apparel, but not so well in the footwear, but for us, it's going very well. Any other questions? Wojciech, no questions?

We have several questions from online. Maybe I'll read out the questions. The first question, the pace of expansion, which is aggressive, will it not dilute your margin and get rid of the...

Well, as of now, we're not making any of the mistakes from the past. Expansion for us is a matter of synergy. I was trying to explain how much the stores are earning. So the stores generate more EBITDA than the head office. So we don't add costs, maybe a little bit, but we will not have the same pace of growth. So then we will be 1 to percentage points ahead of the game in terms of our EBITDA performance.

So this is a question. There was a graph, 5 years of growth. And now today, people are worried. They have fear in their eyes. The next question then. You already partly responded to this question, but I'll read it anyway. What are your plans in terms of paying down or refinancing the liabilities of MODIVO to SoftBank? Can you roll out a rights offering?

There will be no rights offering of CCC. We preclude that. And it's -- we've got the free financing for less expensive debt at SoftBank. I don't know if you know we pay interest, contractual interest. If some sort of period transpires, we haven't gone on to -- we haven't gone public. And so we're going to be able to pay millions less per annum than we're paying right now because of the step-up costs, and there's a major difference there. So that's why we're -- and it will be a 5-year period. So we'll have a 5-year payback period, so some sort of bonds or something of the sort. But I think a loan would be -- or credit facility would be less expensive.

What level of inventory does the management team consider to be optimum, having in mind the expansion of the sales?

So inventory at the end of the year has to be down by 20% with 3 major expansions.

Next question. To what extent is the cold May affecting your sales?

I didn't come here to explain what's happening because of 11 days in May because when we talk about revenue, we don't have margin or cost here. Our sales is up 4%. EBITDA is up 25%. That's making the difference. I don't want to explain because of 11 days of May. And I don't think I'm going to make any explanations of that sort over again. I would like for our reporting to be more understandable, graspable, wholesale, off-price, retail, e-commerce, marketplaces, and for us to match that to our costs and to our margins. And then at the end of the day, then you'll see the result.

Could you give a comment on the most recent changes to the management team of CCC S.A.

Maybe Karol can give a comment. Well, Karol?

Can I speak?

Yes.

Listen, these changes were needed in terms of the point of the group. This is about focusing in terms of the value and the results. I left CCC, and we talked to the boss that MODIVO is the expansion that we need. We've agreed what's going to happen there. So from my point of view, I'm happy that most of my -- I'm happy not to be in the management team that I can dedicate myself to a very highly prolific thing, which is MODIVO. Not so much administration, but there are a lot of things that can be improved. I strongly believe in the plan that we put forward on the screen. So I'm going to focus on delivering that plan. And the benefit to the group is the most important thing here.

We also talk about Easter. Something that was supposed to happen on Thursday took place on Sunday, sorry, but the -- Karol is the last guy from the old management team who was run away. He wanted to get off -- he wanted to get out of people's sites. So he wanted to hide himself in a daughter company. So it doesn't really matter. We're all laughing. It's a lowering of my position. Basically, you're going to be able to rule there and rain over the people there. So there are 2 people who have already been ruling that. So your results have to be -- defend your position. So I'll walk off the stage at this point. So thank you very much for your questions.

Well, we're talking a little bit here in [indiscernible] and this place is a little bit dangerous. People on this position are changed quite frequently. You know what you're playing for. You know what your point -- your end game is. So it's synergy. Synergy is the name of the game. So things have been cleaned up. You can't ruin things. It's more a matter of managing customers, CRMs, the campaigns, the payable traffic. So we have better products. We have much more products at a higher margin. And then we want to make sure that we sell even more products. And it's not just a matter of having a higher margin or high margin. We want to have G-Star, Nine West, Reebok. We want to achieve the volume. And for our products to be sold because we have the highest margin and our partners will earn as much as they deserve if there's a margin, we're the only ones who have the brand, but we're not trading that. We won't change the proportions. We want to sell more of what we're actually -- what's generating or contributing to our profit. So even when we talk about reporting because wholesale sales is going to be e-commerce. So sales revenue might fall by 20% because of the shift to wholesale. So e-commerce is e-commerce. So it will be more profitable. CCC customers will be able to buy a shirt or a blouse in e-commerce or you can do it in MODIVO. What the benefit we have is, e-commerce in CCC, it's like 90% is buying in the store. 90% are making the returns in the stores, it's enough just to start charging for the returns. Well, if a return is made to the store, it's packed in 20 units and then sent back to the head office or it's basically the customer contact. So 35% of the customers who make returns are buying right away. Otherwise, if they weren't doing that, they would go somewhere else. These are important synergies. So we're looking how we can earn money PLN 2.4 billion. That's what we're trying to -- having such a soft result in "Q1 2025". In second quarter, we have much better results than we have the synergies in the U.S. dollar in freight costs. So we have 6,000 containers. It's enough just to multiply that, that's more than PLN 150 million savings on freight alone. So we're going to calculate all that. Also the returns to the -- so PLN 600 million, I was trying to explain that we are returning -- making returns through the benefit card. So we're not losing our margin. And we were losing that margin because the customer would get the money back in cash and then spend it with the customer, the competition. So customer has -- the question is whether or not people would accept this. And so people have accepted that they're going to get their money back through the card. So this is something that we should do. So I'd like to thank you very much for your attention. There are no other questions. So it's time to have some lunch. Okay. Thank you very much for your attention. I'm going to be here for another few moments. If somebody has some follow-up questions, I would invite you to join me. We can talk a little bit.