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

Good afternoon, ladies and gentlemen. I'd like to welcome you to the conference for Q3. We'll present our -- deliver our presentation briefly. I'm here with Vice President, Lukasz. Good afternoon. Q3 is not a clear picture of our business because August is usually a little worse in terms of the sales period than we went into September, where sales started very good. Back-to-school in early days was very promising, 15% sales up on a very good margin. The beginning of September when we were comparing it with previous year, it was very warm and this had an adverse impact on like-for-like sales. Then October had perfect weather. We had good results. We went back to the path that we wanted to follow. So if we look at the quarterly results, so 3% -- sorry, PLN 3 billion sales revenue, up 7%. Please remember that when we talk about selling area, this is the retail sales area. This is slightly more than half. And this is calculated at the end of the period, so at the end of October. So we opened a large number of stores in October this year. That's what happened. And so the like-for-like sales for the group were negative was minus 5% with negative traffic of 4%. So let me mention that our group even though it's preparing for greater sales of apparel, 72% is still in -- 72% of sales is still in footwear. This gives us a big exposure to weather sensitivity. I wasn't supposed to talk about that but with September like this, it's hard to talk about -- not to talk about this. The entire year was such that we didn't have a spring for a long time, then we didn't have summer. Now we've entered the season. It's hard to explain that we didn't have a spring or summer period because of global warming, having in mind the weather turmoil, we can say that we had footfall, which was down by 4%. Traffic was -- we're talking about the traffic in footwear stores, not in shopping galleries. The things were different in HalfPrice. Let me give you an example. This shows you the breakdown from last year. And we had a lot of growth in September. So we had a sharp uptick in sales, which was much higher than in 2023. Now if we compare September to September, so then we had a decline against that September. But if we look at the last 2 years, we can say that we're up by 4% and HalfPrice is up by 3%. Well, HalfPrice is less sensitive, as you can see, because it was only minus 4%, and it was less sensitive because weather has a lesser impact on apparel or clothing. So let me show you -- let me talk a little bit about cannibalization, which will be a page later. This is an example of one of the cities. This is Bratislava in Central Europe. We're talking about our focus on the Central Europe where we only had 1 store, which generated PLN 29 million in 3 quarters. Now -- so I don't -- there's the year. So -- the network in Bratislava did PLN 26 million over a 12-month period. Now we want to have PLN 45 million. So on top of the stores in the downtown area of the city. So it's a very nicely structured city. So we have 3 stores now there in Bratislava. So our expansion in HalfPrice is going very well. And sometimes you have the cannibalization effect because it's a decline of 11% in the Bratislava store. So we might not have PLN 3.5 million, but we'll have PLN 2.5 million. But in total, we'll probably have PLN 6 million in earnings. So we're saying that the like-for-like can fall because we're opening a store not far away. But if we look at the total return on a city, we're going to generate more. This is a very important stage in the history of the company that stores above 2,000 square meters are hard to acquire in shopping centers, the ones where we want to be and not the ones that are there by happenstance. Let me give you an example of Warsaw and the surrounding area. We started in '21. We had a single store at the Warsaw shopping galleries. We had the HalfPrice. So we had stores that were quite large, too large for CCC alone. And this shows you what's happened over the last 3 years, we have 14 stores in Warsaw and around Warsaw. Here, you've got written down what sort of facilities those are. So we had Piaseczno and Wolomin customers, customers that lived in those communities were driving to Warsaw. So we still have a store in Warsaw. And if we look at the amount of money that we're earning in Warsaw, it's several times more today. So our plan is next year to have 4 new attractive locations. We're in the process of signing those contracts. So I can't divulge what we're talking about, but we're going to have a similar situation here in terms of the growth. And so if we look at the maturation of sales density and looking at stores, so we had PLN 470, whilst now we're at more than PLN 600 in HalfPrice per square meter. And if we look at all the stores, that are opened and generating at least PLN 470. There's a large number of those stores, and that slightly decreases our like-for-like performance. But everything is good, working well with the model because stores that have been open for a sufficient number of quarters, we continue to grow per square meter. So the model continues to mature. We have new business partners, and this is going to affect our margin performance. We're going to have more and more branded products. Let me talk about the short-term cannibalization effect. I say short term or ephemeral, we're opening HalfPrice with a lot of pomp and circumstance. And so we have accessories and footwear. Then we have another 200-and-somewhat meter 70% of that is shoes, 20% of the wear sold in Worldbox is shoes. And so it says 15%, 17% in HalfPrice. It depends on how much we're putting pressure on selling shoes in HalfPrice. So this is an additional 300 square meters of space with footwear if we add all those figures together. And then their neighbor is CCC. But in the long term, we're fighting for, running for the market. Our position on the market, let me say brutally. So somebody has to lose for us to sell more. So that's what we're doing. So we're fighting for greater market share. But please understand that with such a massive amount of expansion, we're going to have some short-term or ephemeral turmoil. If we look at the quarterly results in CCC, and we have the investments linked to achieving our goals. This is the overall group. So we have 14% EBITDA. This is a defeat. We were counting on much more. We had a lot of costs linked to opening stores. We opened a large number of stores in this quarter, and the weather was not spoiling us. This was a result of some inefficient or unsuccessful attempts of selling things. You can see that we've been able to lower our inventories. So we're fighting with our inventories. We're fighting with our results. And not all of the campaigns that we tried to do in September produce the outcomes, especially in HalfPrice. So basically, we can say that discounted wears in HalfPrice does leads to only giving or surrendering our margin. It doesn't generate more traffic. So this is a repeat of what happened 2 years ago. So we had an EBIT of 1% because we went a little bit overboard. Well, nothing bad is happening with HalfPrice, and we can show you the results in October. That's the entire group, what you've seen on the screen, and we have 3 different months here. And so if we look at October, we're coming back to an EBITDA performance closer to what we wanted to achieve, and we've also enhanced substantially our margin performance. And we've also improved our EBITDA. Here, we come back. This is what I said in the press, we're very happy with back-to-school campaign. And so we had very good sales performance, up 15%, 11% like-for-like, in HalfPrice it was up 15%. So we could say that we're very pleased with the sales performance. But after several days, the sales ebbed off. I don't want to invoke other circumstances. But on the 10th of September, that's when the drones fell into Poland on the Polish soil. Well, this affects people's mentality in terms of their consumer behavior. I remember that when the Pope died, the sales performance fell by 40% because -- and we also had a 35% decline in sales performance in April 2010, when the Smolensk aircraft accident took place, and so basically, traffic had fallen for 30%. It was very difficult to make up that. If we look at the margin that we've generated, we have a very high margin of 67%. So I think our business is generated by lower costs and high margins. We've not gotten to the level of total sales that we want to achieve. We're talking about Reebok here. So this is a good margin. So the question about whether Reebok is a good investment. It's, in fact, the best investment we could have made in the most recent period. And that's the end of my portion or at least the first portion.

So I'll take the floor now at this time. And now we'll walk through the results of the various brands. We'll start with CCC, which continues to be our biggest brand in sales volume, which is responsible for more than 40% of the business. If we look at the EBITDA margin in Q3, we're at 17%. As the CEO said, this does not reflect our ambitions. So it's down by 5% year-on-year. So I'll discuss that in detail what led to that. What's important here is that we're looking at our business not through the prism of a single quarter. So a 12-month margin is stable above the 20% watermark. So this is good or a very good level, robust level in terms of our EBITDA performance in the footwear industry. So with this type of weather, of course, yes. So having in mind, in particular, the costs of new store openings, well, this is fully transparent in this quarter, but in sales, the sales performance hasn't been entirely realized because a number of the store openings took place at the end of the quarter, at the tail end of the quarter. And so we didn't have -- we had a little bit of the cannibalization that was discussed a moment ago. In terms of breaking down the results into the individual constituent parts in CCC. We have Szopex and Boardriders. Here, we can see an increase in sales of 5% with sales area up by 7% like-for-like in Q3. Under the CCC brand is negative, it's minus 4%. And we ascribe that on one hand to weather-related factors and on the other hand, to the record-breaking expansion in the history of CCC. What is positive in terms of these ambiguous results is that the gross margin in omnichannel. This is the margin, which is the result of selling in our core business through retail sales, including e-commerce sales. While this margin is growing, it's up by 70 basis points year-on-year. It's coming up to 62%. This shows that the potential to generate high gross margins on a year-on-year basis exists. So even though the reported gross margin by CCC is lower, and we'll discuss that in detail on the next slide. The lower margin is derived from a number of side factors and to a large extent, it's derived by -- from one-offs. So if we look at the quarters, many -- multiple quarters of decline, we can see that it's up by 2% in terms of sales, it's only slightly less than 2%, 1.9%. And this growth is due to the newly opened stores. And of course, one has to prepare in advance for new store openings. And so we have rental expenses, costs of putting together the logistics, marketing and opening the stores. And so the costs are incurred previously. And so we didn't have so many openings in a single quarter, and this affected the mass of our business in this quarter. And as I've said in the past, we have a record-breaking pace of new store openings. And so that level of costs surprised us a bit. But over time, this will dissipate or disappear and the sales performance will, of course, be fully released if we look at the margins. What's also important is that on top of the retail margin, we're also improving our e-commerce margin in CCC. And so we have a higher percentage of licensed brands, and it's up by some 4 percentage points. Here we go. So we have a technical difficulty, but now we're at the next slide. So we can do a gross margin analysis. So despite the fact that the omnichannel margin trended up in CCC, we're reporting a lower margin year-on-year. And now we want to explain why that is the case. So if we start with last year's margin, which is very good and a positive, and this is something that we continue to work on is increasing the first margin by 1 percentage point, which is a result of the work on products and negotiating purchasing prices also to have a higher percentage of licensed goods in our sales offering. And then licensing costs are representing a higher percentage, and this is reducing the reported margin by 1 percentage point. We have 1.3% decrease in terms of a temporal impact of franchisee sales as well as wholesale sales. And of course, the margin there is lower. It has a smaller impact, but we have costs linked to those type of sales. They're minute. So at the EBITDA level, we're not actually diluting the EBITDA at all. But at the level of the gross margin, this effect is visible. And as I said a moment ago, in CCC, we also incorporate Szopex, which we acquired this year. And the size of these businesses is very small. It's not treated as a separate segment, but as a result of its nature, has a slower margin. So it's around 40%. They are expensive shoes. And that means that the margin itself is diluted the -- dilutes the reported gross margin. And the last important factor are gift cards. As you know, in the spring of this year, we started -- we've had gift cards for a while, but their importance is growing in order to loyalize customers. And we wanted to reflect their impact properly. So we had a provisions set up for those gift cards that were purchased but haven't been utilized yet. That's roughly 1.6% of the margin. It's a noncash impact, which means that when those gift cards are going to be cashed in, this will have a negative impact on the margin being limited because we've already incorporated it in the result. And so we have other smaller effects under 1%, which are basically differences in inventory levels. And that's more or less it in terms of the gross margin. Let's look at the results of the HalfPrice brand. HalfPrice continues its development. We opened 17 new stores in the last quarter. We've now opened 56 stores this year. In the near future, we will cross the threshold of 200 stores. Not too long ago, we talked about crossing the 100 store threshold. We're growing dynamically and this dynamic growth like in CCC, but it's actually at a bigger scale. This means that the cost related to opening new stores, which I talked about preparing goods, marketing for opening, training staff, rental costs sometimes during the renovation period, they burden the P&L from the very beginning. And so profitability is suppressed for the opening of new stores over a 12-month period. With respect to the industry, it's very good. We have a 16% performance. This is not something in terms of the profitability at EBITDA that satisfies us. So our goal is to move in the direction of 20%. And so this is something that we continue to work on in terms of achieving that objective. Let me drill down on the HalfPrice results. Revenue is up by 25% with a 49% increase year-on-year of selling area. At the end of the quarter, we measure it at the end of the quarter, so it's not the case that the entire number of square meters operated for the full quarter. We had an accumulation -- cumulative effect at the end or towards the tail end of the quarter. So if we look at the gross or the growth rate, it was slightly negative minus 1%. So we can say it was basically flat, which, on one hand, is not something that's satisfying. But on the other hand, having in mind the dynamic expansion we're orchestrating and the acceleration that's taking place in HalfPrice, we can say that this result is relatively decent, having -- we're not losing on any of the existing stores and all of the new stores from the day of opening are starting to add something to the pie. What we're working on is the gross margin looking at previous results. I know some of you were a little bit disenchanted with the margins generated by HalfPrice. We can say that HalfPrice is revisiting margins of 50% or above 50% because if we take a look at the results of October alone, we can say that we're nearly at 56%. So it's up by 3% year-on-year across the quarter, it's a little bit burdened by some of the sales efforts taken in August and in September. But these errors will not be repeated. As we said, we're going to be much more sparing in terms of our promotional activities, price discounts. And so we can say that, that margin of 50% is something that we want to achieve on a long-standing basis. If we look at the cost ratio, just like in CCC, but even at a bigger stage because the newer stores, newly opened stores have a bigger impact. So the cost ratio is up by 7 percentage points year-on-year. But this effect will flatten over time. And the growth in the size of the network across the period will grow. And so this will be fully in line with expansion. We don't have any above-average price hikes or cost hikes.

Can I add something here?

Yes.

Here, you see a picture about selling area up by 49%, and it says sales volume is up by 25%, and we have a minus 1% like-for-like. One could conclude that the 49% increase were basically they were opened at the end of the period, while the cost on the right side, 7.5% is a result of preparing these stores to operate in the season. So the best season for us is November and December. We're doing twice as much, a little bit like a jeweler in HalfPrice. So we wanted to do all of the openings on a timely basis for the season. So we have the marketing cost, the preparation of these stores, the logistics cost. It's not a matter of just sending the products. We also have to making sure that it fits HalfPrice in our semiautomatic fashion. So this is roughly 2% of the margin. It's a big -- it's 4% of the cost we have to accept it. We have to put tags. We have to put a new tags, use certain languages for it, add instructions. All of those things we have to do. So everything has to be flagged and put aside. And now we've got it ready now for the next openings that will take place up until the end of the year because this is generally the cost of staff, payroll costs and then you have training. Sometimes it's 1 month or 2 months, we're preparing staff to work on another store. So these are costs that we've had to incur. And if you were to take a look at this, we're well prepared, well poised for HalfPrice to generate a very decent EBITDA in Q4, I think we probably have 220 stores at the end of the January. So I really wouldn't worry too much about the cannibalization effect because it's a normal thing in our approach. So today, we're taking space for the off-price business model in Poland. So in the United States, it represents 15% to 18%. We're thinking that it might be as much as 10%. And we don't have much competition, whereas in Central Europe, we don't have any competition whatsoever. And that's why we're moving forward so swiftly in this business. So the margin is at 56%, which is a very good watermark. We believe that we don't have to do price discounts that we don't have to drop from half price to quarter prices because that doesn't do anything. So in a discount with it -- well, in a discount, is it discounted or is it cheap? Well, we will not do any type of discounts in HalfPrice. We do discounts in the first price stores. So 10% cash back is a wonderful thing in this form of sales, and that's enough. We made some committed some errors. And perhaps this was more a matter of panic, maybe we had promised or overpromised. But October is proof positive that 56% margin in off-price, that's a world record. Nobody in off-price has that type of margin. So you can read it from various reports. Most of the companies are listed on the stock exchange, and you can read what the margins they generate. And the margin won't dip, because we have more and more production of our own. And this is part of our model. It's more than 20% of the production is done through licensed products, and we have a higher margin than on average. That's one thing. The next thing is we're building a logistics warehouse. It's basically ready. The shell is ready. It's going to take a few more months in order to automate that. And so the costs will fall by half in terms of preparing goods. And so we'll have 50% of products prepared by ourselves for off-price. So we'll bring our costs down to 0. And so we'll be able to move forward in terms of our costs.

And that's what's going to happen. So in total, we think that we'll be able to improve our gross margin by 2%. You're calculating margins. I'm seeing the future. That's exactly right. So thank you very much for that addition.

For all of you to understand why are things moving forward so swiftly, 7% in cost is a tragedy. This is not the cost of rent. This is the cost of different people, of additional people, of marketing. There are other investment-related costs that can't be in CapEx, but they have to be put into OpEx. So billboards, advertising, things like that, there's quite a bit, and that was a little bit terrifying, but we have a very large scale of openings.

I'll explain it on the next slide. So I can tell you what could happen in terms of openings on the next slide. Now let me say a few words about Modivo. So EBITDA in Q3 was 9%. It's stable year-on-year across the 12-month period, it's 11%. Of course, our ambitions are greater as we promised, and that's the direction we're moving in. We want to have the most profitable e-commerce in the market, but we have to say justly that this 11% profitability margin versus the market is pretty decent, but we will not dwell on that. We want to continue improving our margins. If we look at the results of Modivo, sales are up by 1%, pretty stable year-on-year. So the margin is down by 3 percentage points. On one hand, this is a matter of optimizing inventories, but we tweaked our approach in terms of the tools we're utilizing. We're strictly limiting performance marketing. And so the costs of performance marketing are down by 3 percentage points. But as a result, we had to work with the margin. We had to invest in price discounts despite those price discounts, having made savings on costs, not only with respect to performance marketing, but also general expenses, overhead. So the reported margin is flat.

Can I say a few words about business itself? I can tell you this is the last time we're going to have such a low margin. We're checking and double checking our suppliers, our partners. Our model has to generate money if we're not earning money with somebody, that's the end of our relationship with that person. So we've been talking about this for 6 months now. We have certain purchase orders that were submitted 6 months ago. It will probably take us a full year to complete this process. I've got a -- what's the name of the campaign that we did yesterday? Simple Days, 30% of our products were sold at a higher margin. And as a percentage, it was even higher. So we're improving our product mix. We were preparing ourselves to do for product segmentation. So eobuwie is up to 500 and Gino Rossi up to 300, and we want to be able to generate higher margins. This is something that's gradually working out for us. We don't want to engage in raises in terms of what's happening in Modivo in terms of the size of the business. We want to improve margins above all. And so we think this is something we'll be able to launch seriously next year. So Modivo will be the most profitable e-commerce business in the region. And this is something that we can confirm even though that it's still flat. I think we'd even said not just in Europe, but across the world. But step by step, we're moving forward.

So thank you very much for that addition.

This is something that we can confirm. Well, this is not just a philosophy. If 50% of our products, our brands, our licenses are going to be sold, nobody else has that type of weaponry. The second thing, the Modivo fees for being members of that club will be accrued to Modivo cash back 10%. That's always better than giving a 30% discount on products. This is something that should work on its own. Then we have the stores that we're opening -- so we've revamped some 60 stores. It took more time than I had anticipated. We had to get new permits and approvals. We had to invite the fire brigade next time we had to get some checks. And so the costs we had to incur in terms of payroll and rents during that renovation period, everything has basically been completed. So we'll have a new product with a new segmentation next year. So today, eobuwie e-Footwear is not entirely -- this image is not entirely clear, but you'll see the difference between e-Footwear and CCC in next year, and that will translate into a higher margin.

That's more or less it in terms of the results of individual brands. Let me talk about the operating cash flow that's been improved substantially, and this is a result of activities that we've been undertaking over the last several quarters over the first 9 months of this financial year. We generated cash of more than PLN 800 million more than in the comparable period of the previous year in 2024. And this is a result above all of our work on inventories 1 year ago. That inventory was growing strongly. Now we've stabilized the inventory level. And in fact, we've reduced the level of inventories, and we'll speak to that in just a moment. And so the cash was not consumed as a result. Actually, we've added improvements in EBITDA in the year up to Q3 of this year. And so we're working on an unwavering basis on our payables. So we have reverse factoring limits, which we have the ability to use. And we're also renegotiating payment terms. We have more and more financing from suppliers. And as I said, we've improved our operating cash flow by nearly 2.5x year-on-year. And if we look at the operating cash flow, we're not dealing with special growth in terms of receivables growing strongly. So over the 3 quarters of the year, we see an increase, and it's similar to the growth we saw over the first 3 quarters of 2024. In terms of factoring, we will have reverse factoring limits used to a greater extent to negotiate with our suppliers to have supplier credit. And so supplier financing, which would finance our purchases of merchandise. So 50% of the volume will be financed through the factoring limits, the reverse factoring limits and the other 50%, we should have a 180-day period for making payments in terms of payment. And so -- so I'm responsible for that exactly. That's the agreement we had with the CEO. So he calculates and I arrange the terms with our partners.

Coming back to 180 days, let me talk about inventory, and we're falling within the 180-day period in the period. This is a good ratio. Well, we have the products on the sea for some 60 days, so 180-day period is pretty good since we're producing those goods ourselves. We're continuing to grow, so we probably won't improve that much.

But if the inventories are going to represent 1/4 of our revenue, then we'll be in a pretty good situation. So we'll get back to some of the positive elements in this quarter. We want to draw your attention to that. We've optimized inventories. So looking at the results of the previous quarter, we said that we had a peak at the end of Q2. This is a result of previous planned start of the season in 2025. And so you can see this looking quarter-on-quarter, we have a difference of PLN 300 million nearly quarter-on-quarter. That's a decline of almost 7% -- 7 percentage points. So we believe at the end of this year, we're going to be able to reduce inventories by at least 12% to around PLN 3.6 billion, so roughly by PLN 0.5 billion with respect to the midyear point. Maybe we'll be able to add something here, but we don't want to overpromise. And at the same time, we want to grow our revenue. We're frequently asked what's the optimum level of inventory? We would probably say this is somewhere between PLN 3 billion, PLN 3.5 billion because when we think about our projected sales, we divide that by 4, assuming that we have an average margin of 50% for the group and the turnover period of 180 days where we have goods logistics in terms of being on the seas. So this gives us more or less that level of activity, quite a bit has been done, we're very close to completing this process to be able to fall within that 180-day period. We're looking at the various brands, especially for CCC. There's a certain amount of distortion or disruption in terms of the reported inventories for CCC. On one hand, we incorporate Szopex's inventories and other smaller businesses. This is roughly PLN 80 million at the end of Q3. And then we also have licensed products for other, other brands. So this is nearly PLN 60 million because CCC is operating, or their warehouses are the warehouses for licensed goods for other brands. So this is something you should have in mind as you analyze the level of inventories. So optimizing inventories pertains to all of our brands, especially Modivo where quarter or year-on-year, we reduced inventories by 9%. And now as I gradually wrap up the financial portion on cash flow, we wanted to alert your attention to the current financial structure of the group and where we've come from. As you can remember, our balance sheets in the past and the reports and presentations, we were financing ourselves with net debt which is called traditional net debt. It's in their EMEX report where we're monitoring our liabilities. So this is financial debt. So loans, RCFs as well as -- it wasn't very much factoring there. And so the financial debt was quite extensive. Now you can see that we have an extreme reversal. We have factoring being the largest portion of that. And then we had PLN 1.2 billion. We're more than half, PLN 660 million of the debt was Modivo was newly taken out debt under SoftBank for financing the inventory. So the path that we placed and the path we wanted to move in the direction of reverse factoring. And this is something that doesn't cost us anything. We want to move in the direction of guarantees, which have a low cost and stimulate the extension of trade credit. That's the direction we want to follow on an unwavering basis. We've not said our last word. So the financial debt will continue to be reduced and we will increase the volumes of factoring that are available. We don't want to be, of course, entirely dependent on factoring. We're working with some of the suppliers. We want to have a policy of 50-50 with our suppliers that 50% of the supplies are delivered on a factoring basis, and then you have trade credit for the other 50% for 180 days. And so the Chinese suppliers can utilize their own insurers in China, and that's starting to look nicer and nicer. Now we have the CEOs portion.

Okay. Thank you. Let me talk about our expansion a little more. 320,000 square meters will achieve that contrary to various opinions. In the red circle, that's 125,000 square meters, which we will open in Q4. A number of the costs were incurred in this quarter and so we've opened quite a few stores. So this is a historical moment. We're opening more stores in a given quarter than we've done in the past in a full year. This is a major extension or a major undertaking for us. Very few people or very few entities are capable of doing that. And this is something that we can be proud of that the entire company was capable of beating these expectations. Somebody might allege that we're going too fast, you could have done things more slowly. But of course, that's true, but we're getting very good offerings because we're working as a whole group. So we have Boardriders. We have Modivo, CCC, HalfPrice. So we have 20, 30 new stores for our image in Poland. So we're a very good customer for shopping galleries. Nobody is developing. So if we look at countries outside of Poland, there's no network that's growing as quickly as we are. And so many of these developers are starting with their commercialization of parks with us. So we have a big percentage of the total number of square meters. And so we're getting very good conditions with fit out. So OCR. So we have a large number of our new contracts with OCR, so 40%. So this OCR, we pay basically rent. And so it's 12% max. And if there's no revenue, then we don't have to pay anything. It's totally different in COVID. We got rid of Switzerland and Germany. It was very difficult with German funds. To talk about changing the rents, and adidas tried and didn't do very well, and they wrote in the press that they were stealing from German retirees, and that's why they had to reverse their approach. So we have 50% of our costs are OCR. And so the new things, well, there are countries where we have 90% of our rents are OCR like in Bulgaria. This is not something we'll stop doing. We want to expand our profitable stores. That's a certainty in our group. We're learning less in e-commerce or Modivo. Modivo is still like a limping child. We want to improve things there, but the HalfPrice, the CCC businesses are going to be able to generate extensive added value. We have the economies of scale, the marketing impact. And so all of these stores are much more efficient. And so we'll achieve that 125,000 additional square meters watermark. And so we're going to be able to exceed the plan. If we talk about the other plan that I've indicated, it's enough to have flat like-for-like and add 250,000 square meters per year. And then we'll be able to achieve that PLN 25 billion watermark that we promised you. There's a lot of business growth here. So the EBITDA store is 38%. That's the pure store EBITDA, is very high margin. And then we have the unwavering growth in licensing brands share. So we'll reach 50% watermark next year. Is this better than private label? Not entirely in private label, we also have high margins of Lasocki, Gino Rossi, and Badura, Sprandi, but they certainly help us in terms of having recognizable stores like in Serbia, Bulgaria, where Lasocki doesn't mean anything. And here, we start with brands like Nine West and G-Star, and these are well-known brands in Romania, where they had single brand stores. We also had a license with Guess, Guess Kids, Guess Jeans and many other nice things. So 35% in Q3. So next year, we should exceed 50% watermark for the percentage of branded sales. This is what we want to achieve in the CCC brand. We don't have such strong brands for our franchise Worldbox. So there's no Lasocki. There's no Gino Rossi there. And so this will represent some 80% of the sales in apparel. Let me talk about wholesale sales and franchise sales. There was a lot of emotion triggered. So we didn't like you in Q2. We didn't think it was material. But as you see, the sales here is only 2% of our revenue. And we have to split between wholesale and franchise. For us, these are 2 totally departments. So wholesale is to individual customers. So we have 70 customers. And so these are markets like Lidl, Biedronka. I don't want to portray the information who we're selling to. But we also have individual clients, small stores that want to buy Reebok stores or Quiksilver or other brands from our portfolio. We have 70 customers. This is 2% of our revenue. This is PLN 300 million in sales over the last 5 quarters. But this is only 2% across the group. And this is a separate department. They have their own calendar. They have their own patterns. And there's a big discussion in China, whether or not we should deal with this because it absorbs a lot of time, contracting customers want to see samples. They want to see things earlier because they want to understand the budgeting. They want to do budgeting for their own networks. So this is 3 or 4 months in advance. We're not always ready with the collection because we are ordering in a different calendar, having in mind our retail sales network. So in franchisee network, this is -- they're in our main calendar. They follow the same diary we have. That's the difference between wholesale and retail and franchise network. And so it's somehow within our brands, whereas wholesale is outside of our brands. I'm not sure if everybody understood. These are 2 totally different viewpoints. Wholesales, we have a duty as a license holder, we have Boardriders or Quiksilver or Billabong or whatever. They'll give the license to somebody else if we don't offer these products on a wholesale basis. So we have to do it by license conditions. And so we're not going to sell it. We have Nine West across Europe, G-Star across Europe. We have many brands across Europe. And this is a topic, well, I can't sleep should we continue this or not. On one hand, if we're doing wholesales, and it turns out that we're opening a large number of stores in the region, then the wholesalers might say, take those goods because you've been doing a campaign. I have the same problem with my own suppliers. If I have products in the store, it's a little bit a sensitive issue. And this is a slightly it's at odds with the idea of being a retailer with -- who's a license holder, then you have maker. There's a bit of truth there, but our final margin in these operations is 13% in this quarter. Since August, we're utilizing a slightly lower margin. It was twice as high in the past. But as this cooperation is working together, we have a 13% margin. So you can't -- a 13% margin won't allow you to do the full business, having in mind the logistics and having the payment terms, please believe me that you can generate a financial result having those kind of terms and conditions for there to be total clarity amongst us. So we'll continue to develop our franchise operation in markets where we're not interested in them, having a direct foothold. So our presence because they're smaller markets, and we're growing in the bigger markets at present. And so this model is very attractive. So we're ready with the HalfPrice and CCC in order to move forward with them because those are models that have been ironed out with our risk models, and we would only generate basically the margin derived from wholesale sales and also in franchise margin. Let me tell you a little bit more about MKRI. What was this done for? What we were guided by? So we're taking market share. So with this network, MKRI was generating PLN 200 million in revenue. So we want to take that. And there are 150 KSRs. These were small stores, on average, 180 square meters. So they had better results. Then CCC and HalfPrice, they were doing PLN 370 per square meter. And there were years when they were generating even higher sales. Why? Because they had a smaller number of square meters. The second thing, there was a bigger range of products. So the Worldbox, which we're creating today, it's a new concept, has apparel. It has coats and undergarments and bags and basically dressing gowns or night gowns. And these are all things that you can sell under a licensed brand. But we don't want to have everything as if we were a Christmas tree, but apparel is 3x bigger business than footwear. So it's less sensitive. And some people say it generates higher margins. But today, Worldbox is -- doesn't have better results per square meter because it's marketing, it's all new. It was established recently. But in terms of clients, we're able to extract more from a customer coming into a Worldbox store because they're buying 2 products per ticket, while in CCC, there's 1.5. So we're selling footwear and sometimes we're adding a bag when we're selling things in CCC. Sometimes we might have discounted socks, and we're not able to do much more because people are coming in to buy footwear in Worldbox, the smaller communities and the people who live there on top of the discounts, which show up in these strip malls, we're going to be the only people who have products where we have apparel with a slightly higher price point, but this would be branded products. And so this is something we're going to be able to generate quickly. This was a way in which we could use this to achieve the licenses from the license holders. And so when we talk to Reebok, we'd like to add your -- HalfPrice wasn't attractive to Reebok, for example, in terms of us selling shoes and then suddenly wanted to add apparel because there were stocks, SMUs, special collections. Now we're doing things on our own. The effect or the outcome is as follows: that we're producing apparel ourselves on a license. This is going to be 80% of our business in Worldbox using very high margins. An additional bit of success is that HalfPrice is utilizing these very same licenses. And so HalfPrice is producing products under these license. We have higher margins. It's well prepared. It enters the warehouse and it's a cross-dock that moves into the store. And so it's a very simple operation. So it's a type of off-price, but done according to our principles. And so what's clear here is all of those off-price companies across the world don't have licenses. They're utilizing the services of other entities. We're starting one floor above. I thought they maybe turned by microphone on, not yet, off, not yet. And so the result we reported in October can be repeated, and this will guarantee a big expense. We've also acquired some skills and competencies from people. So it's best to do work with the services of somebody else, people say. And so this is more or less it. What we can say about the Worldbox. So we have the consent of the Office of Consumer and Competition Protection, so we can acquire Worldbox, and we're going to be able to then consolidate the results next year. We have a small technical problem to change slides, okay, it's been solved. Do we have the number of stores? Okay. If you can put up here the number of stores. I think this is the number. I don't see it. Let me tell you what we have in mind. MKRI today, that's the owner of 109 stores or 103 stores. There was 120 in the past. We reduced that because Worldbox was being open in the city, then it's closed. Well, today, there's 96 stores, Worldbox stores. And so this is 199 stores. So this year, over 3 months, we'll add another 65 stores. Take a look at that pace, and we'll wrap up, next year, you're supposed to write a 120 here. So 120 new stores next year because we know more or less what's being prepared. So we'll wrap up 2026 with 400 stores. And this is going to be like Martes Sport. If you take a look at the landscape in Polish business, Smyk has fewer stores or Martes Sport. So having 400 stores that will be set up in the course of 18 months, our expansion is going forward very quickly. We have good terms and conditions. And then we will add our own margin to that. So if we can take a look at the slide with the brands we're going to have. So it's not in the presentation on purpose. Can you show it on this slide? No, we can't show it on the slide right now. Well, let me read you. We'll have 4 partnership brands, PUMA, Nike, adidas and Prosto, which is a Polish brand, which is enjoying a lot of popularity. We've talked with Sokol. We'll have a license for the shoes as well. I didn't know who that was, but they let -- they played one song, and it seems that all the people know that. So it's selling well. I'm not sure why, but it is selling. So we're going to have 4 partnership brands, and we have a license for the shoes. We have our own brands Jenny, Americanos. We're going to finally use it Sprandi and Go Soft. This is a new brand, which is doing very well, and that's it. So that's 10% of own brands and the rest of partnership brands. And most of this is going to be produced on licensed brands, Reebok, Kappa, Roxy, Hunter, Champion, Spyder, Shaq, DC, Nautica, which is a very nice logo, Beverly Hills Polo Club, [ Milbank ] Guess Jeans, Element, Quiksilver, Guess Kids, Luca and [ Joyce Couture ] and Disney. These are licenses that we've secured for production. And this is all the work we've done over this last year. And I can tell you quite immodestly that nobody else has something that would even parallel that. And so this is what we're going to start with in the spring of next year. So if you look at the margins, if you could show the margins, Wojciech, why is the MKRI business not being profitable? Here, you have a table with margins. Today, MKRI has 80% of products from other partners. So large brands. And those are brands which we don't need in the future. I don't want to mention that publicly and officially. But the margin is only 30%, and that's 80% of the product volume. So 21% of the products are from us now, that's footwear, which we're producing. And the margin will be at 36% at the end of the day. So I can tell you, this is what the margin looks like. This is what the margin would look like if it were to be consolidated. So we're going to use our hands, and that means that person is going to have less than 30%. He's not able to earn money. So basically, he's losing. He's burning money. So a 28% margin with cost of 40%, then basically he is losing ground. So those stores aren't as good as the Worldbox store. So he's burning even more money. So what's happening in 2026? So 56% of the products, I can't see, I have to say. Do we have that cheat sheet? I don't want to say something stupid for somebody to remember later. I don't think we have that cheat sheet. 56% is our own goods in the spring. So this would be the licenses, the licensed goods. Let me turn around. Let me turn around. Now I can see it. These are the statistics. Why am I talking about that? Because we've already ordered the products. It's all in the catalogs. We know when the product is going to show up, what margins are going to be utilized. We have all that information. 56% of the brands will be partnership brands in the spring on a 57% margin. The final margin is 40-some-odd percent. And so own licenses or private licenses is 10%. So the final margin in the group will be 53%. But the margin in the fall, in the autumn period, when we would have more of our own brands, so I have a lower margin for us, it's 74%, 75% here, but for -- we use 80% and the dollar is hedged at PLN 3.6, and we've got really good prices for transportation. So we're going to have 8,000 containers. And so that's a very big impact with the price we're achieving. So that's why I'm saying it's going to be profitable immediately because we're going to have high-margin products. So if we look this year, that store is selling brands that don't fit our image. And so he's selling that off. And so if you take a look at what's going to happen in 2026, we'll have a margin of 58%. So this network should generate profitability at the store level of 28%. And so 30% would be costs. And so we can talk about the revenue because everything is going to depend on revenue. Most of our contracts are OCR. So that's 12%. The payroll is matched that are 12%. So 30% of the store costs, then we have some depreciation and they'll have a margin of 50-some-odd percent. But in the next season, we should have a 62% margin. So basically, this will be the CCC model in apparel. When we talk about the scale, Worldbox is going to be bigger because it's a more complete store because it also has shoes. If we have to choose something, if the city is too small, we'll choose Worldbox in a given city because Worldbox is more efficient. We'll have 25% of the stores -- 25% of the products in the Worldbox store would be footwear, and it can go up as high as 40%. So we can always add footwear to that concept. So I think we'll be specialists in producing apparel. As I'm quite product of these -- quite proud of these products. And so you can sell -- so you can build or you can actually produce these T-shirts, nice T-shirts for, let's say, $2 and sell them for PLN 49, PLN 59. And so I'm pretty confident that we're going to be successful. Let's revisit the standard flow of the presentation, white deck. So we talked -- did we already talk about the acquisition. I think you started to talk about -- I got lost a little bit. You already talked about the acquisition or the consent from the Office of Consumer and Competition Protection. So we're going to do the full due diligence. We'll acquire the majority stake, and then we'll do full consolidation. And so the full consolidation will begin at a maximum of, say, 3 months. Yes, 3 months. So we already have that stage behind us where we were considering -- whether we would acquire or not we already have the consent. We had to give some responses to questions. We have an unconditional consent for the acquisition. So this is something we'll continue. So there are questions about what that means for our financial statements, for our consolidated financial statements in terms of our P&L, consolidation will take place. So the external revenue and costs will be incorporated in terms of the balance sheet, we'll get rid of the reciprocal receivables, but assets and liabilities and equity will be measured at fair market value and be put in the balance sheet of the group. And so we're talking about noncurrent assets. So CapEx, which is around PLN 100 million, PLN 120 million. That's what we estimate at present. And so the right to use these lease contracts and inventory, this is around PLN 200 million, PLN 220 million, then the cash receivables, and these are VAT receivables that are then settled in the subsequent period. And then we have payables and provisions with respect to third parties. So the specific amounts that will be incorporated will depend on the exercise done on the acquisition date and then we'll have -- then we'll allocate the purchase price. That's more or less the overall material, the overlook of what's the impact is going to be on our financial statements. As I mentioned to you, through margin, through expansion, Worldbox will have a positive impact on the group's results. So I'm not worried about this. So I know which products we're going to have. We'll have a high margin and greater synergy in the group also in terms of marketing. Worldbox or MKRI or Worldbox will be part of our club. We'll be able to talk to our customers about Worldbox, we're selling footwear. We'll send out text messages, 30% discount in Worldbox just because you've purchased shoes for a 14-day period. So things were growing by 100% or doubling because we're able to explain to people on our traffic that you can buy something attractively elsewhere. So we're confident that we're going to be able to deliver on that. And I think that's something we've already discussed. This is what happens if you deviate from the main flow of the presentation. So let me wrap up Worldbox, and then we can talk about another really nice initiative, which is the MODIVOclub. Please imagine that some 5,000 people per day are signing up to the GOLD CLUB, and they're paying us PLN 60, and that's something that's happening every day. We have 820,000 members. We have other markets, Slovakia, Czech Republic. So more people are signing up there than in Poland, but the pace is twice as high. We're going to launch Romania in December. We are launching Spain. So all of the major markets will be in the network. And so we should have maybe 10,000 people entering the GOLD program every day that could translate into 3 million per annum. I presented these figures previously, and I wasn't wrong about the numbers of people, and we'll give this discount back to -- this rebate back to the customers, but we'll give it back to you with our margin. So we'll return that 1/3. What's important is the customers are buying much more. So they have PLN 30 on the card, but they'll spend another PLN 170. So we want to bring people into the store more quickly, not wait until they have the PLN 200, but bring them in once they have PLN 50. So it got started in May. It's been successful. I wasn't wrong. This is the sole loyalty program of its sort in the world where we've decided to treat different customer segments and put them into a single loyalty club or program. That's very important in a large organization like ours. So we have multiple brands. They try to maintain separation. So not to show that the premium channel is linked to the inexpensive channel. So we've done a platform of benefits as a single platform. So you've got cash back, you've got benefits. And so you've got basically a free bag in the store, I mean, in terms of a sack. and so these benefits give us more and more information about customers. We have 14 million club members in MODIVOclub and so 14 million in MODIVOclub and then 21 million in total. So we can actually take a bet. We'll write this down. We can take a bet, for example, that will reach that 3 million watermark. So this is something that's been done very nicely. At the cash register, we're signing people up immediately. And so there's a competition or contest in each store. There's the rules and regulations that's working very nicely. So if you sign up and see, it works for HalfPrice. So if you sign up elsewhere, it works everywhere. So this is something that's really attractive. What's next? Well, let me tell you the results of 2025 are below our expectations, your expectations, my expectations, we'll probably not achieve what we had promised and certainly not achieved what we promised. We will certainly not achieve what we had promised. The results will be closer to what we've written down here, PLN 1.8 billion and not PLN 2.4 billion. we didn't need to -- because an EBITDA of 20%, that's not a major problem to achieve that, to deliver that. We're -- we've experienced some turbulence. This is a single stage. We're preparing to participate in the Olympics. We're an athlete who wants to win the Olympics in 2030. Well, that's going to be in the winter period. So it's not really linked to what I like. But in any case, we're going to be an Olympic athlete. So people are preparing to achieve an outcome in 5 years. So this quarterly period is basically the start of the race. We're still doing and adding the square meters of selling area. We're signing these licensing agreements. This is very important. So Mr. Reebok across the region, not everybody is aware of that, but this is a strong brand. This is, in fact, a strong brand. We're opening the HalfPrice stores. We're launching new initiatives where we have CCC in the apparel world through Worldbox. We're improving, and we're adding the MODIVOclub as the sole club of its type, loyalty club of its type across the world. And so we'll have an EBITDA of 24%. So I think an EBITDA of 20% is a problem for us to achieve. We're still selling enough brands or rotating them in Modivo to the extent that we would like to. So cost in the stores won't grow. So we're anticipating that our results quarter-on-quarter will continue to improve. And here's the best summary. The cannibalization period, I explained to you that it exists, but it's basically a price we pay for like Rossmann and other networks, and they're opening store by store. I can see that in my shopping galleries. There's basically a decline of 10% and then it grows and then [indiscernible] shows up and then it continues to grow. Well, somebody is less organized, bigger costs. And so we continue to win share there. What's the most important thing here is the off-price market. This is the strength in the powerhouse. We're going to have 250 stores quickly in Poland. That's the amount of space there is. And so I think it will take us another 2 years to do that, and then we're going to be a very strong leader in this HalfPrice, and this applies to other markets in Central Europe, things are going very well. Everybody wants to have this off-price. They want to have our HalfPrice store. I don't want to brag and talk about the visualizations and how things -- it's a wonderful thing. If the margin is aligned to what I said, I said 50% margin is not a problem to achieve in HalfPrice. So it's not a problem for us to achieve that. And I think it's going to be -- we'll exceed that. That's more or less it about the results. We can say the results are soft. Well, we've been in the pack without a successful outcome, but we're well prepared to continue. And so the assumptions for next year for 2026, we have 70,000 square meters more of selling area. We'll have licensed brands representing a larger percentage of our sales, HalfPrice, eobuwie, so e-footwear, Worldbox, this is just the beginning of the race for our licensed goods, licensed products. What is the brand? If you take a look, I frequently think about whether or not Lasocki is a brand because it's just footwear. If we look at others, in some cases, it's just something -- it's just a logo on shoes like [ Polano Radoskór. ] This was just a name on the shoes. If it's not advertised, it doesn't have its investment. It's only a single product group. Here, when we advertise, Reebok, and we show shoes. Nobody will be able to sell apparel because I also hold Reebok for apparel, then home and then sporting goods is also me. And then we have bags and then we'll have apparel, we have perfumes, and then we'll have glasses. So we're moving very strongly to invest in marketing. We can get to the next slide. And then the next slide, this is Nine West. And then if we go to the next slide, I think we should do some -- here we have Badura. Maybe that's not the best example because Badura is not going to be present in apparel. Here's the next one, just one slide before that one. Here, you have Gino Rossi. So Gino Rossi, today, shoes and bags, we're adding perfumes and apparel. And of course, we'll have this in Worldbox, and there's going to be a lot of Modivo with a high margin. And there are a number of things we're going to be able to do. We can have kids shoes, we can have -- in our HalfPrice offering, we can have nightgowns. We can have pajamas. And so we'll have the billboards and we're going to do a lot in marketing because we're well prepared to do that. So bus stops. And so I think it's going to represent 2% next year. That's nearly PLN 300 million. So you can imagine the scale we're talking about. But we have to earn money on that. I assume that we're not doing a lot of marketing today. But please imagine that on one slide, we're talking about MODIVOclub and then everybody is thinking about the Modivo e-commerce. And then we're talking about the brand and the climate, and we're talking about cash back, and we're going to talking about where that cash back is operating. So we're selling a lot of synergies in a single marketing approach and one contact or one point of interest. Of course, I'm enthusiastically aligned to this concept because I was the one who thought up this concept. Okay. Let's continue. Perhaps I'm speaking too much at too great length. And we're not going to let HalfPrice go because we have a large number of square meters, so 250 stores x2,000 square meters, that's 500,000 square meters. Very few networks have that many square meters because the effect is measured per square meter once we will have -- why is Coca-Cola doing marketing? So for other people not to do marketing because they're capable of doing more. So they can afford more. So it will make it much more expensive for others. And that's the similar effect that we want to achieve. Then, we can continue the execution of our long-term goals. We want to show you that it's not 38%, 38% more. We're assuming that e-commerce will be flat. So growing by 38% doesn't mean that we're going to grow sales revenue by 38%. So we're not going to spend money on performance. And so basically, this is one of the things that we want to do. We want to have a low level of like-for-like. We don't want to basically -- we want to have flat e-commerce, and that should give us PLN 13 billion, PLN 14 billion in revenue next year. And so if we look at the margins, if we're able to increase our margins from between 17% to 19% because that's a realistic approach, having in mind these new things, then the EBITDA would come out. These are internal plans. This is what we are thinking. This is not a forecast, but this is something that we can give some guidance on. But we continue to thank the entire team that were involved in the Olympic track plan for 2030. So I want to show you what my objective is here and what the program I'm following to achieve that. And for the major -- by 2030, maybe earlier, we want to achieve the results that we've laid out, including the EBITDA. That's the major obligation or the major goal for our organization. I don't want to make conclusions and pull out my hair because of the results in a single quarter. This is basically a race, sometimes along the way, you have a mistake. It's not always our fault. It was cold or the weather was bad and somebody might explain, well, I had a flat tire along the way. It was cold, it was windy, it was driving more slowly. There was black clouds. I'm not trying to say that this quarter has been lost because we've done quite a bit. We've moved forward strongly in terms of our expansion. So as I sum up our business model, we've created the most effective business model in the industry. And perhaps not everybody is aware of that, but nobody has this model like ours, where we will have a full price store, a long -- a strong e-commerce, either you're usually strong in retail or e-commerce. It's hard to blend those skills. We have our own production. So 80% of the products will be produced ourselves, then we have strong brands, in-house brands, Lasocki, Gino, Badura. These are very strong brands. And then we have wonderful licenses. We have our own sales channels. We're not asking anybody to sell products for us. And we have our strong e-commerce. We have an HalfPrice channel, which is a nice safety valve, and this has enabled us after COVID to manage our difficulties. And these are things that will enable us to achieve success. And all of this has been built. And if we look historically, following COVID, we've been able to act as a leverage for the company. So we've talked about -- we're talking about all the things that we've been able to achieve, with the exception of the result in Q3, we've brought the company out of the crisis. Basically, we've been able to refinance the group with the banks and others. And so the banks have trusted us in terms of the results. We've improved the model of CCC, where everybody said that it wasn't working very well. We've opened up the new HalfPrice model. The skeptics said that we would never be successful, and we're on a good path to repeating the success achieved by other American networks. And I think this is something that's also quite important, and there's no threat to this model at all. I see the premises we're renting, I'm seeing the products that we're producing and what we're selling, so there's no threat to us. And Modivo is the next stage. We've basically straightened out the path of the Modivo brand, and we have MODIVOclub as the next successful undertaking and now Worldbox over the next 2 quarters to show you that this business works well. We've cleaned house in terms of finance. We've cleaned house in terms of our inventories. And all of these things are happening. So one cannot say that we haven't done anything. So next year, we've secured the entire spring. So 80% of our exposure, we've got -- we've hedged the dollar. We've secured products for spring. So we have another [ handicap ] of 2%. And then we have freights surrounds -- we were paying PLN 4,000, not too long ago for freight. Now we're at PLN 2,000. And so we have everything in place to deliver good results next quarter. And what's also important, we have segmentation. We've completed segmentation. So it's quite important that we have these products. We won't do dumb promotions in HalfPrice. We won't make that stupid mistake like in September, and we'll generate better results next period. Anything else? I don't think so. I think that's it. You don't have anything else to add? I don't have anything else to add. I think we've exhausted. What we wanted to say perhaps now we could see what sort of questions you might have to us in order to -- some people say that we're not really that transparent. We want to have -- like your questions.

I'm from Bosch. My first question is about your forecast for Q4. We have the forecast for why -- how much wholesale, what's the cost of openings? And should HalfPrice effectively work because it's a different season? Or is it going to be a high base effect? There was a -- is it going to be overstated?

Well, we won't have any more costs because we've already incurred the bulk of the cost. We'll have some costs. We'll have the standard costs. HalfPrice is very well prepared for this quarter, and we should have a harvest period and the scale is very big, the scale of the business, it's in the best period. So things should be pretty good. What else were you asking about?

Why do you have the assumption that the EBITDA will be flat.

I don't think we're assuming that we're saying PLN 500 million, PLN 600 million. We're not assuming it's going to be flat. It was below PLN 400 million -- PLN 500 million in the fourth quarter last year. So we don't want to overstate the expectations or inflate the expectations. So we believe that we're going to be on a pretty clear plus or even more than a clear plus, but we're not going to be flat. Okay, flat.

The second question that's bothering me. Will customers get lost in your platform of benefits, the MODIVOclub, if I understand you correctly.

Well, the customer understands pretty well, and it won't get lost between the price points and the brands. I think customers could get a little bit lost. But we assume that CCC is -- I can give you an example. Well, CCC will be shoes up until PLN 300. It won't be PLN 299. Gino Rossi is above that because you have to have price points. But e-footwear, you want to have a good quality. So it's up to PLN 500, maybe PLN 600, but different quality. So you can see the quality. And so that there's leather. It's a totally different sole, totally different top. And we want to show that segmentation very clearly. I don't know if you've seen the e-footwear. It's not really a boutique. It's more self-service. So it has to be -- I can't scare people away. And so we have PLN 300, PLN 500 range for products. So we're going to do segmentation. If we're going to have Gino Rossi for PLN 1,000, then we'll come back to e-commerce. And then we'll probably discount it by 30%, but then we'll earn quite a bit of money on that.

Is this not the reason why everybody wants to treat private brands, private labels and other brands separate from one another?

We're going to have stores of 400, 500. We don't have boutiques of that size. So we believe that everything will be a multi-brand approach. So if something is not working, then we're going to be able to change it very quickly. So it's a single brand store. Well, the single brand stores aren't earning money anymore. Even the best aren't earning money. They have mono-brand stores in order to sell multi-brands because multi-brands is more beneficial. If you have 7 sporting brands, then 2 or 3 will bring people into the doors, 1 or 2 do really well, then 2 or 3 are doing very well and the other ones you are wondering whether or not to retain them.

So should the store even retain those other brands, the last 2?

So our model is everywhere -- is to have a multi-brand. We don't do mono-brand stores. We could do a mono-brand for Gino Rossi, but then there's 100 square meter stores, and I can use 30 meters of e-footwear store. I'm thinking that in the same club, you have CCC, World Box in the future. I'm just wondering -- once we teach the customer, then the customer won't make any missteps. So we're at the beginning of the path. You're not going to buy a rucksack for PLN 100. You have to pay PLN 300 for a backpack.

What about the marketing spend? It's PLN 300 million? I was just sort of mentioning it's 2% of sales revenue. What is it going to be this year?

It's more or less closer to 1%. So we've come to a point in time where we have the size, we have segmentation. We have wonderful licenses, and we can start to talk about that. People don't know about these shoes, us having these shoes.

And my final question, what is going to be the inventory in MKRI when we do the consolidation?

I think I stated the amount according to the Q3 level. It's around PLN 200 million. That's in Q3. So we'll see how much can be sold. I don't think it's going to deviate strongly. Let me explain. We have a picture here. MKRI as a warehouse, external warehouse in Gdansk is taking care of our stores in Worldbox. And please remember that its inventory has 65 new openings that are in Gdansk. And we have the history there that with that type of expansion, you have to invest in product and merchandise. If we have PLN 100 million in renovations in the Worldbox. Please remember, this is 96 stores. That's PLN 100 million gross because this is a liable on a net basis, it's PLN 80 million after you deduct the VAT tax. And so this is EUR 270 per square meter. That's too small. So these are not big numbers. For EUR 270, you can do some furniture for a store for that price and not an entire store. So everything is really consistent, internally consistent. If somebody might say, oh, you spend 100 million for furniture. Well, everything is consistent. You have to look at the numbers and understand the business, what it looks like. That was in Q3. Today, we have another opening. So we're opening 4 stores every day. And this is something that's being prepared to do much more quickly. So recently, the Polish FSA was talking about the aging of inventory. So it's 1 day because we're selling to Worldbox apparel that we haven't ordered. We're just an intermediary, a middleman. So we have the -- we have put a guarantee. We are present in these factories. We have a guarantor or a guarantor of receipt. This is just basically the sale of apparel that we're not talking because MKRI is responsible for apparel, for the entire Apparel business. And these are some things that you can extract and maybe this is -- absurd conclusions can be drawn as a result. Well, we're not dealing with some sort of excessive inventory. We don't assume that this is going to have a major impact on the inventories that we talked about.

So we've just sold inventory that we're not even -- some apparel that we're not even producing. But it's good that people were asking it. It's good that the Polish FSA was asking about the aging of inventory. I'm from mBank. I want to ask what's your plan for CapEx next year? And how much of that will be for Worldbox since you're going to consolidate the entirety?

Can I tell you. Maybe it sounds stupid if I were to say, I don't know. We're in the pace or we're in a period of such strong expansion, we don't have a specific plan. We've assumed if you want to have a precise response, probably a couple of hundred million. But once again, every store earns money from day 1, even the smaller stores have a 20% EBITDA performance in the store. This is what I'm certain of. So we can't let go if we have an OCR and a fit-out, a partial fit-out from the owner.

How much will be done?

So nobody knows about it. It's PLN 500 million, PLN 600 million for next year. But if it's going to be PLN 800 million, then we'll also survive that because that means there's a lot of nice opportunities to open up new stores.

How do you intend to finance that? I'm thinking here about if you're not going to have 100% in MKRI, will this be in exchange for equity? Or how would that be solved?

In terms of the financing, it's a commercial transaction. And so MKRI will finance that through payment of receivables just as up until now. We financed as a result of the contracts that we've entered into with the suppliers and with the landlords with respect to lease contracts, and then we'll re-invoice that, and we'll have a much better control over the payment of receivables. We'll have full monitoring of how the business is developing, and then we'll be able to adapt the pace of expansion and monitor the payment of receivables. And that seems to be the most effective. I would also say that Worldbox is a partner only in Poland. In abroad, those stores would be -- those companies would be wholly owned by us.

And the second question, you suggested that the gift cards was one of the reasons? It wasn't basically the provision for future utilization of the gift card. Could you remind us how you're booking gift cards when a customer buys a gift card?

Well, a customer buys a gift card and then we have the revenue of sales, which is the amount that's actually paid by the customer. And when we issue the card, we also book a provision, a percentage of that. We make an estimate in terms of what percentage of customers come back after what amount of time. And then we have a provision against the margin in terms of the future utilization of the benefit derived from that gift card. That's one of the estimates we make. And every month, we update that estimate. And so when the customer comes in and utilizes that gift card, then we don't charge the margin. We utilize the margin that was set up, we utilize the provision that was set up when the gift card was purchased.

In your results, you showed gross margin in CCC brand and the omni-channel profit before tax, it's lower than in the omnichannel. So in CCC, this is not so obvious. What is the cause?

The mix can affect the percentage margin, but this would suggest that the impact of other elements is bigger. It's not a negative margin. In some areas of operation, we might have a smaller margin, a lower margin. We had a few slides that was -- explained that.

What is that caused that year-on-year?

That in CCC, we have Szopex, we have Boardriders, and we have the gift cards, we have wholesale. There were several factors -- contributing factors where we have a lower gross margin. And then we blend that together. And this -- we have franchise, we have wholesale. And so MKRI is one of the franchise. And so we have the consolidation that will no longer exist as an impact. We won't show the franchise margin, but we'll show the full margin generated by the business. So the pure CCC margin has grown at the store level. So the first retail margin has grown and it's a 67%. So this is something that we've never achieved any time in history. And then we'll have the wholesale where we have 13%. Well, this has to reduce the over -- the total blended margin. So I think we have to show that for everybody to understand that because we're talking about the marketplace. We're starting to have better and better results. And then we might have PLN 200 million. And so we're going to have to show you how that works. And then we'll have the marketplace and then we're going to have only a commission. And then we're going to have to show how that works to make sure that we don't have those type of anomalies that you're reading our financial statements when you say that our margin, the core margin, our core business has fallen. This is something we have to show. We're going to show that through channels, through retail, e-commerce, marketplace, wholesale, franchise, retail, off-price. There's quite a bit of variety here. Next year, let me add that we have a model that each company is operating on that Modivo, is selling all of the e-commerce across the group for you to be aware, then we have Modivo EU, we will do purchasing for the entire group. So we'll have a single purchasing hub, and then we distribute to various channels even through that segmentation. As you know, one MODIVOclub will be responsible for the entire loyalty activity. And all of the countries abroad, we have -- are called Modivo in Czech Republic, Slovenia, where we had a problem recently. And we have the permit there after the court's resistance, then we'll have CCC S.A. and then Modivo S.A. because today, with such broad channels, I can't imagine that CCC is going to be used as the name abroad in [indiscernible] so each channel, there's going to be a single company that would be responsible for handling the entirety. So we've gotten rid of all of those structures and the organization will be straighter, more straightforward. So it will be Modivo everywhere.

Okay. Can I ask a question? I had a couple of questions. You mentioned the franchise. You said that CCC and HalfPrice are concepts to go abroad. So if they're ready, when at the earliest, the HalfPrice franchise can show up abroad, which countries, which country we're talking about, what sort of scale?

You have to -- I said I'm going to try. And you're already talking about this scaler. So if you're trying to enter, you're not going to start with 2 stores. Well, it's a matter of putting your leg in the water. And so you have some controversial in small and big. You have Israel, but the war is underway there. And so we're thinking about how to approach that. We have other countries. So we had some people from a big partner from the Balkans, a very big partner, the largest partner there, which has shopping or commercial parks and shopping galleries. And there are smaller countries like Moldavia, Georgia. And so over the last year, a lot has come forward. And so the world has talked about the great success we've achieved. They're [ holding/heralding ] that. And so partners are coming forward. And so we're not able to focus on small countries. And so we have 2 million people in the Baltic states. And so we don't want to focus on small countries. We want to focus on the markets where we're present. We're developing our position in Ukraine during the war, and we're doing pretty well. The business is earning well. So we have low lease rates. That's probably not going to be the case once the war comes to an end. And we're trying to work across a number of planes. But I'm not going to talk about where we want to begin with the franchise operations. We're at the initial stage. So something will be successful there somehow.

And the second thing is general expansion. How much of the expansion, what is contracted here in Poland and Spain, Italy and what's happening with those positions?

You're not going to be able to do as much everywhere because you have HalfPrice because you have 2 or 3 HalfPrice and CCC are ready-made concepts. And so Worldbox, eobuwie, Boardriders are not ready concepts. And so in a year or 2, we'll be ready once we'll have an EBITDA of 40% like in CCC and then we'll develop in other markets because then we're in a safe position. But CCC, now we're trying in Spain, Italy, and we have some offerings in terms of locations. They're not inexpensive, but they're in the best possible locations, venues. And so in Italy, one is doing pretty okay. And then we have another top venue. So in the Western countries, so I think it will work even better. So we're selling in euros and the prices don't seem to be expensive there, but we're purchasing everything at the same prices. And so these payroll costs are a little bit higher, but you can sell everything at a 10% higher price. So everything is done. So if you're asking me about the plan where we're going to offer next year, I can't tell you. There's still a lot happening, and it's showing up suddenly. And so they've been asking, first, the CEO came up to me and wanted to open something. So there's a lot in the market like in Italy. And so we have large-scale grocery stores that want to reduce their footprint and so they're willing to turn over half of their space, then you have France. I'm not even sure what the form maybe, it would have to be an agent almost there because social affairs and what to do with those people, how to deal with that. They want to earn money, but they don't want to work. Every country is distinct. You have to find a partner in order to -- because selling through a franchise and having a franchise margin is pretty good. So in HalfPrice, we have a 25% margin. So we always have -- without incurring any cost, we have a certain profit for ourselves. And this is a nice way to accelerate our expansion. And these are things that are sufficiently mature. This is something we can do. So don't catch me with, by this statement or others, there was a lot of people who were interested in the wholesales, and we're purchasing goods at good prices. But as I look at the time perspective, I'm not sure that this is the correct thing because expansion has sped up. And so this suggested that we're going to be everywhere. And so with CCC and Worldbox, it's hard to sell to somebody who has a small store. So we have major consolidation and only the biggest players are doing well. And so the market is changing. So we have a big success with Amazon, Allegro. And so we're #1 in footwear with Allegro. And so we're #1 across the board because we have the biggest selection of shoes. Nobody else has that extent of offering. And so we're across the portfolio in Amazon, and things are going okay. I forgot the names, but -- so we're going to be everywhere. So the marketplace is a big thing. So it's another -- so we're not treating this as competition, this marketplace. So this is the sales channels for our products. We're worried about brand and products and not about -- we're changing our philosophy. The Allegro client is a different customer than a customer from Modivo or Zalando. So it's more a matter of just buying shoes. So it doesn't have to be fashion.

So -- but we have these type of shoes?

So the results of these marketplaces are quite surprising. So I don't see a reason for us not to do that. But if you are asking me, so we have PLN 150 million, PLN 200 million in sales next year, and you're going to have to report that because otherwise, people are going to lose their results.

So are there any legal activities in terms of this [ research ] company because you had made some statements about the efforts or the steps you're going to take?

So to sum up, we're focusing on operating activities in our business. Well, basically, this was a mix up about freedom of speech. We didn't have an impact on that. So as we show you that everything has been stated, legal steps. So we have a major lawyer. And so we issued a notification about a crime being committed, basically a suspicion of many diluted shares price, and we're thinking now about group of advisers how to continue this case. How should we say, Bogdan?

I don't want to say too little or too much. We're considering further legal steps. That sounds better. It's clear that a lot of energy, it's going to cost a lot of energy, and that's why we're considering it. What else can we do if these things are allowed, then we have to do it as a company. So it's not allowed. But -- so we have the decision of the Office of Consumer Protection. That's about it. So the focus and concentration is on something else. So I already said that we weren't going to let things go. So now I have to bite my tongue.

So I wanted to ask a question. I am from [ BDM ] Brokerage House. So I want to ask about HalfPrice. And then we can talk about the cost of opening that have already been incurred. You wrote that for the renovation stage, you're also paying rental fees. That's normal. How long?

That was just an overstatement, it's not such a normal thing. It's not always the case. We're not paying rents. I wasn't going to pay a rent without being able to trade. Perhaps that's what I understood from your -- the problem was with eobuwie, and it was difficult to discuss. And so basically, we had to renegotiate things and nothing has ever happened that we paid those rents. And so we're not paying. And so this is the direction that's going in. But these costs are linked primarily to the fact that we had to deliver the goods, marketing expenses, and these are personnel expenses, payroll expenses. So we have 100 people, and then you have to pay for 1.5 months to train them for other stores. This is a big expense. So it's 100 people. And so this is all in a single month. But then later, then we have personnel costs, payroll costs, is like 9% or 10%, like in HalfPrice. But today, we have 5,000% costs because there's no sales, but there's a cost to be borne. And the same is true when we don't have revenue, but you have to basically put price tags and change the labeling of products. But when you have the new warehouse, then we have a business plan that will come back the investment, we paid back -- PLN 250 million will be paid back over a 4-year period. So things is fully automated because I don't find enough people in Polkowice to deliver on it. So I have to automate. So these are big stores, 3,000 square meters. So there's a lot of people there. Then things are working and then it closed down 9% costs, payroll expenses. So we have signal, we should end because people in [indiscernible] are starting their conference. We have to complete at 2:00 p.m. Okay. It took a lot of time. Okay. Thank you. That was a provocation. Okay. Last question. [Foreign Language]. [Statements in English on this transcript were spoken by an interpreter present on the live call.]