Hi, good morning. Magda Kopaczewska, IR Manager, and Przemysław Lutkiewicz, CFO. Welcome at our conference on result presentation for the second quarter, and we are going to talk to you what happened in our company since our last meeting. We will discuss our financial results and our short-term plans. At the end, there will be a Q&A session. Let's start with the events. A couple of months ago, we informed you that as the first Polish company, we joined SBTi, Science Based Targets initiative. This is the world initiative supporting business in their activities, counteracting global warming. Before joining this initiative, we calculated our carbon footprint and our aims related thereto, and today, these aims were approved by SBTi in July, and they comply with the Paris Agreement, so a strive to halt the rise in global warming at a level of 1.5 degrees.
In our strategy that we defined, we defined our target as for emission 1 and 2 and for Scope 3. We did that separately. Why? Because the Scope 1 and 2, this is the Scope we have some influence on as a company. As for number 3, this is indirect influence. 1 and 2 emissions results from our buildings, distribution centers, or vehicle fleet, whereas Scope 3, these are goods purchased. This is this, green part, our collections and the transportation to distribution centers or leased area in our shops. Now let's move on to the targets. As for decarbonization, as for Scope 1 and 2, we aim at reducing greenhouse gases by 42% until 2030. How are we going to do that? By significant share, by increasing the share of electricity and increasing the share of electric and hybrid vehicles.
Our aim, as for Scope 3, is to reduce greenhouse gas emissions by 51% until 2030, and here we want to achieve that as relation to our, collections. We want to buy materials with lower carbon footprint and materials we used... Let's say, cotton from Africa or polyester, recycled polyester. We also want to involve our business partners, carriers or owners of, retail centers, in our, activities related to, reduction of gas emissions. In the last quarter, we started cooperation with Bolesławiec Ceramics Factory. We invite, outside companies to cooperate with us for special projects, and it happened in the last quarter. We developed, together with a Polish company, limited, Reserved Home line, and this also included, textiles. This will refer to a very famous, Bolesławiec patterns.
This was offered online and in some stores of ours, and we have a feedback that it was very well appreciated by our clients. Reserved Home worked together and in this project and our Warsaw office. August and September, this is Back to School season, so what it looked like this year? So we had a significant activity offline. We can see this tendency that during this period, people visit our stores more frequently, traditional standard stationery stores, and they purchase goods over there. We want to emphasize that our prices during this time were very competitive. It was significant in Sinsay brand. We adjusted our pricing policy to the market and to the present economic situation. Back to school, these are not clothes for school, but also presentation of new season, fall and winter.
We are very happy about it because it was very popular among clients, and it was, the response was very positive. In the last quarter, we had a couple of other events. Now I give the floor to Przemek, and I will get back to you during Q&A session. Thank you very much, Magda. Let's start with information about e-commerce. We talk about e-commerce a lot, and you know that online sale, this is 1/4 of our business, and we wanted to, give you a summary of the situation on the Polish market. What are the payment forms? The delivery, the payment on delivery and pickup at the store, this is something what we emphasize, DHL, DPD, but also InPost, Paczkomaty points and various payments. You know what are the options.
But the novelty that we added, these are free 5 installments, and this is also Klarna and PayPo option, but the last one refers to PayU payments. And the delivery of our packages to the client are not free of charge, unless the order refers to a certain amount. For Reserved, this is 200 PLN, and for Sinsay, it's 140 PLN. So we have some income from lower value orders. We develop mobile apps. We have 2 mobile apps for Reserved and for Sinsay. In both these applications, this is available in various countries. For Reserved, Poland, Germany, Romania, Czech Republic, Slovakia and Hungary. And in Sinsay, we also added Bulgaria, so Bulgaria, so we have 6 countries here. Moving on.
Online is important, but you know that recently we can see a return of many clients to stationary stores. They are more and more popular, or they return to the market. We have opened the second Reserved store in United Kingdom, in Westfield Stratford City in London, and this is a well-known shopping center because the traffic that is generated by clients, this is half of what we can see in Oxford Street. So we can see 100 million people visit Oxford Street, 50 million Westfield Stratford City Shopping Center. This is almost 2,000 square meters. This is the first new concept store. I would like to say that last Friday, we have opened a third shop in London, second in Oxford Street, and next week we open fourth store. So we are going to tell you more about it.
The new concept, what does it mean? As in automobile company, every 3-4 years, we have a certain lifting of the appearance. In retail, it happens as well. We start to make it more pleasant for the clients to change the design inside the stores following the new trends. We have opened in London the new concept store, very open, very transparent, with a display of goods that is so easy, with easy access to these goods, with natural light, with plants and Polish elements from natural materials to give a bit of different character to the store. We focus only also on energy efficiency, so technologies that were applied over there make it possible to reduce energy consumption by 30% compared to the previous concepts.
What is also important, the light that we have over there and the interior and the shapes inside make it possible to direct light on our goods, not only from the sources of energy, electricity, but also using the natural light. So very open area. We don't have typical display windows. We gave up on that idea. So, usually we have these display windows. We don't have it in the new concept, so this is very open. There is a wide opening at the entire length. For the clients, it's easier to access these stores, so we are going to follow this new concept and a very recent debut of Reserved store in Italy, in Milan. This is also this new concept that was applied. On the fifteenth of September, we have opened our first store in Milan, 1,200 square meters.
Women's collection only because this is smaller than the usual stores we open, but we wanted to be there at the most prestigious street in Milan. At the beginning of next year, we are going to open 2, well, second Reserved store in the city, but also Mohito is going to enter for the first time the market. It is very popular in the south of Europe, so we want to launch Mohito in Italy to see how this is going to work in Italy. We also started with the expansion of Sinsay, also in Italy. So till the end of the first half year, we plan to have around 20 stores in this country, so Reserved, Mohito and Sinsay. We are moving on to the map, the map that you know very well.
In green, we have the countries with online and offline stores. In blue, only offline, and this light orange, only online shops. So you can see that the Polish market is the most important, over 1,000 stores here. Romania, this is the second market, but also the Czech Republic and Ukraine, taking into account the floor space in these stores. You know that, after we changed the strategy, when we closed down the Russian market, we focus on Central Europe, so from Finland to the south to Greece. We open stores in Central Europe, but we also move on to Italy, Great Britain, Finland, plus the German market. This is where we want to develop. In the table on the left, you can see over 2,100 stores.
Still, the majority in Poland, but abroad, this is catching up. You can see that from the numbers. In the second column, you can see the increases, 300 stores on a yearly basis. This is done in foreign markets. We will reach a moment when stores abroad will exceed stores in Poland. Let's move on to financial results. 11% increase as for the group revenue, and we are open in 39 countries. We can see this tendency that clients buy more frequently offline in stationary shops.
The floor space grows by 25%, and the sales in offline is 2 digits. In online, we have slight one-digit drops of sales, which is also due to the fact that we reduced marketing budgets for the digital market. Let us move on to the sales. You can see on the chart on the left, on the top, PLN 4.5 million of sales in... just in the second, PLN 5.4 million, just in the sales in the second quarter, and offline sales was growing faster with a slight drop of online sales. Offline was growing faster. In the table on the bottom, you can see that the fast-developing brands is Sinsay. It has developed the fastest. We have the largest number of new stores, which translates into 2-digit growth.
But also, it is worth noting the Mohito brand, which increased its sales by nearly 13%, and the development of the year stores was minor. So Mohito is developing very well online as the online-only our brand reported year-over-year sales increase, and it also has the positive like-for-likes. So it was very well reception of Mohito brand, especially in the south of Europe, which is why our strategy to move to that region is very good for Mohito. Reserved brand also had good sales, but we had bigger drops due to limited budget for the e-marketing, as a result of which, what used to be or last year was.
We promoted last year. We wanted to increase online customers for Reserved in countries like Spain or Italy or Austria or France. It was quite expensive because we bought clicks in companies like Google or Facebook. Today, we want to spend less on digital marketing. We want to generate more traffic on our websites, especially in applications that we are developing and extending to other countries.
We also want to continue developing the network of the shops, especially, of course, with positive like for likes. The Cropp and House were always very good in the rest of Europe. Now, we are not in Russia. We have to change our approach to those collections. It takes some time, but it is on a good path to sell more to customers in Central Europe. Good sales in Sinsay, good sales in Mohito. Reserved, Cropp, and House are also doing quite fine, despite the slight drops in the second quarter.
...Moving on to online sales, you can see on the chart that from quarter to quarter, we oscillate around PLN 1 billion of sales. We crossed the PLN 1 billion in the second quarter. The chart on the bottom shows that sales in Poland is stable. It is about half billion sales per quarter, and the drop that we reported was due to the foreign markets, as I said, reduced marketing budgets, but note that it was not reduced to zero. We still have several hundred million PLN marketing budget funds, but we spend them in different countries where our brands are known, where it is cheaper to buy the clicks, and where we develop the applications so as to encourage our customers to use the applications that we are developing.
So we can see that our activities aimed at, on the one hand, reducing the marketing budget, but on the other hand, also reducing the logistics costs, improved, significantly improved our profitability of e-commerce activity, which was our goal. So I can say now that all our brands are profitable, and all the distribution channels for all the brands, offline and online, are also profitable. So the goal for this year, that we have set for this year to improve the profitability in all the possible aspects, is on the right track to be achieved. And the applications that we already have in the six or seven countries, they generate significant turnover. Half of the sales is generated through those applications. Let us look how the sales are divided between Poland and foreign markets. Poland is still the strongest developing element of our strategy.
More than 60% of the sales is, is, in foreign shops. You can see it on the table on the right. The growth of floor sales is 25%. Most of it is outside in Poland, more than 30%. It's nice to see that still we have room for development in Poland, especially for the Sinsay brand. We are entering smaller towns and retail parks, and we have some significant growth of 15% year-over-year increase in floor space. Looking at other countries, the countries that have the most shops, of course, generate the most turnover after Poland, like Romania, Ukraine, and Czechia. Still, we are always doing more in the south of Europe, like in Bulgaria or Serbia or Croatia or in Greece, where we will soon be opening every month a store every month.
So by the end of the year, we will have five or six stores in that country. Speaking about the margin, the trade margin, you can see it on the right, on the chart on the right. The margin is lower than we would want it to be. It's about 48.39%, and the same was in the last quarter. The margin was nearly 48%, which was due to a number of reasons. The margin is under the pressure of... Because we have or had quite a lot of goods that we bought previously to expand fast to the east, the markets. But because of the markets, the war, the expansion was stalled, so we had a lot of goods that we had to sell on discount prices.
The exchange rate, Polish zloty to dollar, was unprofitable, but also the development of Sinsay, which has lower margin than other our brands, the margin is being diluted. Another element, that we did not mention, but is also important, the eastern markets always had higher margins, trade margins, so losing those markets results in average margin being lower than what you used to see in the past. But what we want to do is to have the EBIT margin grow, and I will talk about it in a second, because we are in the right path to achieve that. But please take a look at the chart on the bottom. The inventory, the navy bars are the inventory about PLN 3.4 million inventory in last quarter, and the gradual reduction of inventory.
Now we have about PLN 3 billion in inventory with the 25% growth in the square meters. So when you look at the line where we show our inventory per square meter, at the peak, it was over PLN 3,000 per meter. Now it's only PLN 1.7 per meter, so we are close to the optimal levels. We can see some potential, some minor potential, to continue reducing the inventory towards probably PLN 1,600. So this is the work that we will be doing over the next quarters, but now we are close to the target level. So we are improving the turnover of the goods. We want the working capital to come back to normal, so now we have the inventory lower than our trade liability.
Again, we are generating positive cash flow on our working capital. I will come back to that, but let's now move on to the costs. You can see that we have done a lot of work in terms of controlling and reducing our costs. Our results in the second quarter are good because the costs were under strict control. Please look at the chart on the top right. You can see the costs of our own stores that dropped by nearly 14% during the year, from PLN 193 to PLN 167. There are 3 elements of the cost. The rental costs, PLN 62 in the last period. In the middle is HR costs, and on the top are other costs, like energy, consumption of materials, and use of services in our stores.
We spent a lot of effort to reduce those costs. In case of rental costs of floor space, we continuously develop Sinsay brand, big—as a result of which, the average rental cost is dropping, and the trend will be continued in the next period. The HR costs are also lower, the lowest in the recent periods. We are also saving on energy consumption, and we are reducing use of services, and provision of services in the stores, as a result of which, the costs are record low. On the bottom, you can see the chart with total costs, so the cost of stores, and e-commerce, and central costs broken down by square meters. Here you can see a very low result, less than 300 per square meter, which is less than in the first quarter.
The indicator, which is indicator of cost per sale, is also record level of 35%. You will ask me, what is the outlook for the coming quarters? What will be the costs like in the coming quarters? In the third quarter, the costs will remain on similar low level, and the indicator of 35% will probably be around 35%-36%. In the fourth quarter, there will be a slight growth in the cost because we started reducing costs in the fourth quarter last year. So the baseline is low, but I think that by the end of this year, our costs per square meter will remain at around 300 PLN. Before I tell you about the financial results for the second quarter and the first half year, I need to tell you...
I need to make a note and explain why the comparative basis for last year has changed. As you remember, in 2021, we had big reserves for write-offs for the Russian and Ukrainian business. We closed down the financial year in January of 2022, we continued the closings, and the war broke out. We decided that, while we knew the situation would have a negative impact on our financial results, we predicted write-offs in the next year. The Financial Supervision Authority told us that our approach was not correct, and they told us to make some restatements of our financial reports, backward restatements, so that according to the International Accounting Financial Standards, to take into account write-offs of events after the date of reporting, to include the costs of 2022.
We did, as we were told by the Financial Supervision Authority. You can see on the slide, a simplified calculation. General, we reversed 2021 write-offs, which increased our profit in 2021, but we posted the same write-offs into 2022, which of course, reduced our profit in 2022 by PLN 608 million. The next 2 slides will show you the results of 2023, and comparing with the past period, our ... will be showing you 2 different baselines. You can see 3 column. As we reported to the stock exchange, our financial results for the second quarter of last year, the middle column is the column after restatement, according to the recommendations of the Financial Supervision Authority.
Here you can see the difference only in one position, the middle of the table, other operating activity, where we have a write-offs for the loss of the Ukrainian assets, the stores and the goods. Below, which you can see on the table, because we only show you continued activity, but below is also discontinued activity, so the write-off of a part of Russian shops.
On the right, you can see the column with the results of 2023, no changes. The last column, year-on-year situation compared to this column with restatement, so as we were told by the Financial Supervision Authority. So you can see the number of sales. As for the margin, this is 4% lower. This results from various aspects. So the excess of goods that we had, but this is the last quarter with low margin. In the following quarters, we are going to present a significant increase in our margins. G&A costs that are much lower, 12% lower year-on-year. Here, that was the most significant contributing factor. So that was PLN 6 million lower than depending on how we present that. So that was the operational profit and minus negative financial activity.
The profit for over PLN 400 million. This middle column shows the results. It's a bit less than what we presented to you at the very beginning. One more thing based on this slide: when you look at our results, we have 3 elements: sale, margin and costs. We want significant sales and better margins, but in such a situation like this one, when the increase of sale is not so significant and margin is controlled, then we have another element that we can take into account as for our results. These were significant savings. As for the cost, when you look at the second quarter, this was much better year-over-year. The sales was lower than the situation in the first quarter, but then the third quarter will be much better in terms of margin.
This is the second element into our results. The costs will be controlled. As for the sale, we will see. September is very warm. The weather is a factor here. The weather is not helping, so we believe October, the last month of the third quarter, will be much better. We are counting on increased sales year-over-year, but thanks to costs and better margin, the result in the third quarter should be much better. In the fourth quarter, we believe that the sale will jump. The base from last year is rather low, so we can see great response as for Reserved and Mohito and Sinsay brands. In the fourth quarter, the sales should increase, so we should have good results in the fourth quarter.
In the first half year, we have 11% better sales, we exceeded PLN 8 billion. The margin is still controlled, but the costs are lower by 3%, and we have PLN 800 million profit in operations, PLN 500 million. Some information about operating capital. So here you can see our receivables, inventory, and liabilities. This is clear in these 2 slides, in these 2 charts. So the inventory decreased. So the working capital is beginning to normalize. This is what we aim for. The cash cycle improves. Operating cash flow was very good, over PLN 1 billion zloty this year. The company debt this is 1.3. Here at the top chart this is IFRS 16, included.
Together with the deposits in various currencies, we could have it here around PLN 70 billion, so there is no debt as for the company, which guarantees further development. With CapEx, you can see, basically investments in stores, PLN 266 million investment. It's a bit more than last year. The majority, these are stores. Our plans, PLN 1.1 billion, and we will move on as scheduled. So, summarizing the first half a year, this is high dynamics. As for online sales, we maintained a cost-saving policy. The operating margin, that we want to increase is going up. The operating margin reached a bit more than 10%, good cash flows and safe level of debt. And, a couple of slides related to our plans for the nearest future.
We can see, positive outlook for the second half of the year when the weather is going to decrease. Privately, we want the sunny weather, but with the fall, the dynamics in sales will improve, especially in offline. What we saw in August, a slight increase in online sales will also be present in the following months. Last year, we started some savings and performance marketing. Looking further in October, December, January next year, we can see that the collection, collections that we bought with lower zloty to dollar exchange rate, they should generate better margins, and we will also have some savings. So the target increase in EBIT and improvement in profitability, these goals are going to be fulfilled. Some information about Western Europe.
The change in our strategy refers to the expansion in Central Europe, but we move on to Western Europe more frequently. We want to be present there. Here in green, you can see Western Europe stores, where we plan to develop much further. Germany, United Kingdom, Italy, and Finland. This is the plan for our new stores to be open. This is the number of stores in Western Europe countries. London, 4 shops. In Germany, no changes, 17 stores, but we want to open more next year. 25 in Finland. Still, stores are being opened, not only in Helsinki, but in smaller cities as well. In Italy, we have opened a Reserved store, soon the second Reserved store, Mohito store, and the expansion of Sinsay brand.
We want to develop on these markets in a way that can generate profit. Here I need to mention one more thing. How is it with these openings in the U.K. or in Milan? You remember 2017 and a store that we opened in Oxford Street that is not generating profit, so can these new stores generate profit? Our business plan that we provide for every single store says yes. Why do we think that? The level of rent that we pay for floor space is totally different, much lower than what we paid in 2017. These new stores in London or the store in Milan will be more profitable, so the rental is almost twice as low as in 2017. This lower rent generates more savings, and with significant traffic, this should generate profit.
The stores that in the shopping centers, then the rent is much, much lower than we have at main shopping streets, the main streets in various centers. So this is comparable to what we pay in Warsaw, for example, for top-quality floor space. So lower rent in these stores show that we should have profit in these markets. The other area where we focus, this is Southern Eastern Europe. Here we have 500 stores, and we want to develop. This is Romania, Bulgaria, Serbia, Croatia, plus Greece, the newly opened market. We are present there online. In Bosnia and Herzegovina, e-commerce is going to be open, so these countries are presented in green, mostly. In Romania, we are going to open our logistics hub. We have a warehouse for e-commerce over there.
We are almost opening the warehouse for our stationary shops, so we want Romania to provide stores from various shops in this area. It's closer, the costs are lower, and the time is more efficient, so the stores can enter... The ships can enter the Baltic, so we can decrease lead time by a week. This is extremely important to speed up delivery and to reduce costs. Of course, the Greek market, we are going to have more and more shops. Every month, we are going to open a store. Online and offline looks profitable, and we want to be available for our clients, especially for Sinsay clients. How to do that? We want to adjust to southern markets. You know that Sinsay is developing the fastest.
This is the highest, this means the highest share of sales in the entire group, but the shops that we open, this is 1,000 square meters ±10%, so from 900 to 1,100 square meters. In Southern Europe-
We don't have much of these stores, especially in Greece and in Southern Europe. Moving on to South Europe, we need to adjust that to stores that are available over there. Right now, we can open Sinsay store in locations, let's say, with 600 square meters. Our opportunity for opening stores increases, so we will have more and more stores. This year, we are going to open over 300 stores. In 2024, again, around 300 stores. At the end of this year, we will have 1,000 stores of Sinsay. We can have 1,300 next year. This is good news because we can increase pipeline for Sinsay projects for next year.
Now moving on to our target. We want to increase our floor space. We developed the floor space up to 2 million sq m, by 20%, but next year, we would like to increase the floor space by another 300,000 sq m, adding more than 300, 350 stores. The floor space should increase by 15%, of which you can see today the potential for the Polish market for 7% increase and more than 20% increase outside Poland. Looking further ahead into the future to 2025, we think that this Scope, 10%-15% of increase in floor space, is not threatened, given how we can develop Sinsay today and our visibility of new projects, construction projects for the coming years. The goals that we announced previously are safe. The financial goals for our company are safe. Increasing profitability is the priority for this year.
We also maintain that the revenue, the group revenue, should increase to PLN 18 billion. The gross margin should be 51%-53%. It's, as of today, we think it should be in the middle of this range. We also maintain the half billion zlotys of savings, cost savings. In the first half year, we achieved these savings, and we still see the potential for another 150, maybe 200 million savings, of course, in the next half year. So the EBIT goal, 10% at least. The 10% has already been achieved after the first half year, and the second half year in our industry is more profitable, so we think that this goal will even be exceeded, but for sure, ten percent is not threatened.
The CapEx is above PLN 1 billion, mainly for the stores, and the company has. We are on net cash level. We are not in debt, and we are normalizing our working capital, so the inventory are much lower. What are the opportunities and the risks for this year? First of all, in terms of the opportunities, our collections, the beginning of the season was good. The clients receive our collection well. Our another opportunity is development into the Southern Europe. We still are developing online applications. And how about the risks? The risks is the economic slowdown and the question, how the customers will behave in terms of their shopping behavior in the coming months. The inflation is not disappearing as fast as we would like it to.
Another risk that we have is increase in minimum wage in Poland, although it seems that on one hand, this is a pressure on cost, but on the other hand, increasing minimum wage is also higher revenues for our customers, so it will translate into opportunities on the other hand. Of course, competition is high, especially in the value for money segment, in which we are strongly developing. Because we have online and our competitors do not have it, it's an additional competitive advantage for us that helps us continue growing. This is all on my part. Thank you for your attention, and now let's move on to the question and answers question. The first interesting question is about the new Reserved concept. The new Reserved concept relates to the main brand of one of the competitors.
By introducing it, will it affect the collection in this brand, like, prices, structure of the products, and inventory per square meter? What is the Scope and timeline and cost of the project? The new concept, of course, will not be rebuilding all our stores. It never happens like that. All the new stores that we will be opening will be according to the new concept. It is important for us because it helps us achieve our goals that we have set ourselves and the decarbonization goals, reduce energy consumption. Also, there are some trends that are common for the whole market, so most probably, the comparability of our stores to competitor stores is also— There are also global trends.
Looking at the changes in commerce, the design of the stores, this is the direction the world is following to be more transparent, to display the goods more transparently, but also the technologies, the modern energy technologies help us display the goods in the store, we do not have too many goods in the store, but we can quickly supply it with the missing, the lacking goods from our back offices. The concept is not much more expensive than the old concepts. The budget of this concept is about 170-150 EUR per sq m, so it's similar level for Reserved so far. We have to change and adapt to the latest trends, especially if we are entering the top shopping streets in Milan or London.
We have to show ourselves the best we can to show that we can make nice shops. But the collections are important. So speaking about collections, the collections will be different. They are different, but entering Italy, we had a capsule collection, Ciao Milano. So these things we address to Milan and London. We do it for London, Milan. They are visual, so attract customers, but 80% of collections are similar collections. We want to keep our collections in the same price levels as we've had so far, and, of course, compete by the aesthetics and competitive prices. Sales in August was higher year-over-year. In September, is slightly lower than last year. So in general, from August to September, it's similar to last year year-over-year.
Does it mean with that, with growing floor space about 20%, we have negative LFLs? And what does it have to current statement that the... Your statement that the sales is growing by more than 10%? Well, of course, we had good August. Now, September is slightly worse, and it means negative like-for-likes. But autumn is always like that. We have good sales, either in September or in October. With this weather like that, we have poor sales in September, but I'm sure it will improve in October. So there will be, like, kind of natural shift of demand. The current trading that speaks about the growing sales offline, we will see what happens in October, and in November, and December.
We are optimistic that we will keep the positive increase of offline sales. I don't want to change these targets. We are well prepared in terms of the goods and collections and price thresholds for the colder months, and we want to wait for colder months. Maintaining year guidance implies gross margin in the second quarter, 53%-56%. You are more worried about improving the margin year over year in the third or in the fourth quarter? We are positive about improved margin. In the third quarter, it will be on a much higher level. I could, I think I can even say that it's about 55% level. Well, whether it will be 56%, perhaps not, because Sinsay has lower margins than 55%, so the other brands will have to make up for it.
Looking at what happened in August and September and the outlook for October, we are confident about high margins for the third quarter. In the fourth quarter, the margins will also be higher, but the question is always how much, how much inventory we will have at the end of the year. The sales, end of year, beginning of year, will affect the final margin results, but we are confident about growing margins in the third quarter, and we will see, and we're relatively optimistic about the margins for the fourth quarter. The dropping costs of the functioning of search in the second quarter is, you know, is it affected by adjusting the cost to the sales?
Of course, poorer sales that we reported in the second quarter affects how we manage the costs in the stores, so we adjusted the cost in many aspects to the activity of stores, to the lower sales in stores. Of course, we need to be flexible here, but on the other hand, looking on, ahead into the next months, with improving sales, the costs will also be slightly growing. What was the other part of the question? Could you repeat, please? Does the level of inventory reflects the cost? The level of inventory, 1,700 PLN per sq m is optimum. We can reduce it. Perhaps 1,600 will be optimal in the coming months, and looking that this indicator is slightly...
It doesn't show the, the real, the situation because we take all the inventory, including e-commerce, and divide it by square meters, but we think that this is the good level and close to the target. Please comment on the return periods, Reserved and Sinsay in Western market, and what's the difference to the openings in CEE? Looking at the business case of a single store in the Western markets, the biggest cost is always rental, and the cost will be low, as I said, which will be helpful. We believe that only in the second year of our activity, we will achieve profit. Of course, the first year is higher expenditures for the opening of the store, so only in the second year there is some profit, and in the third year, we should, the store should start earning money.
So return on the investment is 36 months, comparing to Central Eastern Europe, with the return on investment period is much shorter. The maximum return of investment into new stores in Poland or Romania is 24 months, so increase of sales is fast enough and the costs are low enough so that we generate profits. Actually, beginning in the second or third month after opening the store, and considering the expenditures, the return on investment is 12, 18, maximum 24 months later. So how far how do we divide the better price because of better foreign exchange rate to dollar and lower cost of some transport with customers, compared to your original expectations? Let me say it, put it like that. It depends on the brand.
In the brands that are more fashion-oriented, where the aesthetics, fashion, the latest trends are more important, like Reserved or Mohito, here, the margins will be higher because we buy cheaper and the customer accepts higher prices easier. But brands like Sinsay, value for money, the price is of the foremost importance. So here, even part of the margin that we can generate because of a lower exchange rate or cheaper purchases for dollars, we have to return it to the customer because the competition, the price competition is very fierce there, and increasing prices there will be very difficult. So we have 2 business models here, is value for money and better brands or more expensive brands. So I think it's 50/50. We will, we give away here, and we do not give away there, so that's the mix.
Growing SG&A costs is below the original expectations or not? It's a good question. I think it's a little bit exceeded the original expectations. Changes of the costs were slightly higher, or we reduced costs stronger than we planned initially. But I think it's good to say that the company is flexible enough that it can react to the current economic situation, market situation on the third hand. Despite the difficult conditions, the company can generate profit. The current good, warm weather can reduce in higher price discounts, or it's too early to say? It's too early to say. Let's wait till the end of October. Can you divide income on the development of Sinsay and the... Could you repeat? Can you split impact of gross margin of Sinsay, between Sinsay and the market pressure?
If so, how does it look like? What's the development of... What's the impact of the development of Sinsay and the market pressure on our brands? It's very difficult to quantify it, like, off the top of my head. Let me rephrase the question. Today, we buy products cheaper for dollars. This way, we can generate better margin, but considering that Sinsay is the fast-developing brand and the Sinsay margin will not be higher than 52%, well, then, even if the brands will generate higher margin, even around 60%, the average, the weighted average will still be towards, as we said, between 53, 54, maybe 55% overall at the most. I spoke to a number of analysts about record margins, high record margins, 58-59% in 2013, 2013, 2014. They will not be like that.
We were speaking about the EBIT margin. Here, we will be working very strongly to keep the EBIT margin as high as possible, above, strongly above 10%. So the first margin is less important today because if we work well on costs, we can... Margin. Dropping costs for performance marketing was reflected on mostly in online sales in Germany. Do you expect higher costs on e-marketing outside Poland as you improve the results? Please specify the guidance of the monthly SG&A costs per square meter. You mentioned 300 square meters, is this for this year or for the next year? Let me start from the end of the 300 zlotys per square meter that you saw in the first half year. The guidance is about the, this year, the second half year of this year. I don't want to...
I don't want to talk about the cost next year, but I think I will share this information with you next quarter when we know more about that. Looking at the second half year, they also should be about PLN 300 per square meter. Coming back to the first part of the question, the drop in expenses on performance marketing, of course, the highest drops in the budget or reducing the budget by half resulted in us cutting the expenses in Western Europe, where the performance marketing was the most expensive. On the other hand, it also yielded poorer results, so we want to redirect the budget for the markets where we are present for a longer time, especially Central Europe, so that we have good return on investments there in buying the clicks.
... as well, improved profitability of e-commerce, but will we increase performance marketing costs? No, we want to reduce them by percentage means. We do not want to spend more than 9% of the value of the sales of e-commerce to performance marketing. Depending on the needs, it can be lower than that, but this is, like, the, the maximum, the, the cap that we are speaking about.
Another question. I know it's tricky to forecast the weather in Poland, but October, in October, we should have 9-10 degrees. Is it fall according to LPP, or what do we need more? Well, for us, in the morning, when we go to work and children go to school, it should be cold, and when we return from work and from school, it should be cold.
During the day, probably the degrees will be higher during the day, but if we have colder weather in the morning and in the afternoon, then it means we are going to have sales. Looking at dynamic changes in exchange rates, so dollar zloty exchange rates, what do you think it will look like? This is 4.15, but in Poland, we have 40% of the turnover, 60% outside, so the strengthening of dollar to zloty, or this is what we take into account as the exchange rate, will not translate directly into the margin because we sell a lot in Germany, the Czech Republic and Romania. So this mix on profits related to exchange rates will also affect our margin.
Our forecast or our outlook for the entire year assume a 15% increase in the next half the year. How realistic is it, and what are the factors speeding up the results year on year? Consumer data on CEE for the third quarter were rather poor. Yes, there are some elements affecting that. The base was rather low last year, so let's not talk about these 2 months. Let's look at the second half of the year. It's going to be colder in the morning, so this is going to help. The base from last year was lower. Another element, we are opening large stores in Western countries, so this is going to generate significant turnover. So the guidance that we publish is still possible. We don't want to refrain from that, so let's wait for the following months.
What were the likes in Poland in the first and second quarter? In the first quarter, this was one digit plus, and in the second, one digit minus. What was the increase in sales in Ukraine in the first six months and in the second quarter? It was the increase of 200%. On the twenty-fourth of February, we closed the stores, so the stores were closed for the first six months. These increases that you can see in the Ukrainian market result from the situation from the previous months. Commenting it further, we can see that we sell very well in offline and online, but we can see a very low competition these days. Can you say the difference between Sinsay and Reserved margins as for OpEx, related to square meter, so gross margin and sales per square meter?
I don't have such data, so I'm very sorry, but I cannot answer this question on top of my head. I'm going to check, but it seems that this was the last question. So thank you very much for all the questions, and I'm going to invite you for the next conference before Christmas. Thank you very much and-