CCC Company News - 2020-22 strategy
CCC presented its GO.22 strategy (for 2020-22) yesterday at noon in Warsaw. The key take-aways include:-The company will take a more selective approach to openings with a plan to open 120 k sqm in 2020-22e (60/40/20 k sqm in 20e/21e/22e) with a focus on Romania, Russia and franchise markets, with a preferred store size of 500-800 sqm.
-The lower openings plan should translate into a significant decrease of the capex spend. CCC is targeting capex of PLN 150-200 mn p.a. (vs. PLN 700 mn in FY 19p)
-The top line is expected to grow to PLN 8.5-9.0 bn by 2022e (vs. RCBe of PLN 9.5 bn).
-EBIT margin is expected to improve to 8.5-9.5% by 2022e (vs. 2.1% in FY 19p and RCBe 21e of 5.4%).
-The lower capex requirements and improved profitability is expected to translate into net debt/EBITDA of 0-1x by 2022e.
-The dividend policy (33-66% of net profit) has been confirmed by the company.
-CCC is focussed on improving its products (design team now numbers 80) and has high hopes for the upcoming collections
-eobuwie is expected to grow to revenue of PLN 3 bn with an EBITDA margin of 8-10% (excl. IFRS 16) and with Modivo accounting for a 10-15% share of the revenue
-The IPO of eobuwie has been suspended, while further steps will potentially be considered once the EBITDA exceeds EUR 50 mn.
-Meanwhile the option to acquire the remaining stake in eobuwie (25%) for 12x EBITDA for 2021 is valid until Feb 28, 2023. The company stated it wants to be prepared for a potential further there year extension of the option (to be based on 2024 figures) or to exercise the option (via debt and/or equity financing). The decision would be made by the end of 2021.
-With regard to the DACH region the company intends to complete the restructuring of Karl Voegele (no more losses expected post 2020) and is continuing the restructuring of CCC Austria. In Germany the company wants to keep monitoring the process and potentially making decisions once the Swiss operations are out of the red.
-Management made it clear on the call that Swiss operations would not burden the group if they remained unprofitable beyond 2020 (implying readiness to close or sell if needed).
-The company promised not to conduct any more M&A for the moment, facing the challenges of integrating all the moving parts.
CCC is engaged in the wholesale and retail trade of clothing and footwear. Co. offers its products to wide range of consumers, from demanding clientele of trendy boutiques to value-oriented medium segment customers, to less wealthy customers seeking reasonably priced quality footwear. Co. pursues a strategy of brand diversification, which is reflected in its three autonomous distribution channels: a chain of official CCC stores, BOTI footwear shops and QUAZI boutiques. Co. offers more than 2,500 designs of footwear. Co. also owns more than 67 proprietary brand names e.g. Lasocki.
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