Earnings Call: Q2 2021

Oct 14, 2021

Good afternoon, ladies and gentlemen. We're now summing up to 2. It was a really good let's go ahead and sum up the best things. We have 5 elements that really reflect the portrait of Q2. So we have a record breaking level of sales. Nearly half of our sales in the group has come from e commerce. We're back to double digit EBITDA margin. So we have a very successful rollout of Half Price in Poland and abroad, and we have strengthened the structure of the shareholder group as well as the management of Euobavia. And so they're going to be able to achieve a very high fast paced growth rate. So look at each one of these levels, each one of these tenants right now. So we have a record breaking top line. So Q2 was better than not just Q2 of 2020 because we've far outpaced it, but it's also better than Q2 2019. And so it was the best top line quarter in the history of the group. And so what has contributed to that result? We're pleased when we can show you these type of graphs, which reflect and show that each one of our segments, each one of our brands is making a positive contribution to the 43% increase in e commerce. So we have very strong e commerce, strong brands. And so our e commerce platform is not softening even though the retail segment has been quite strong. So we have Modivo is up nearly 95%. DZ, half price has also shown up with some €40,000,000 and then 1 quarter ago, we it was some here €1,000,000 So of course, the retail sector hasn't negatively affected e commerce. So e commerce has grown by another 4 percentage points to 43% year on year. And so now we're going to look at each of these segments separately. I'm start with CCC. So CCC has rebuilt its sales very quickly, and this has happened because within our strategy, we said the leitmotiv is that we are basically focused on our customers. So we're walking step by step with the customer. What does that actually mean in CCC? Well, we're step by step with the customer. What does that actually mean at CCC? Well, we have 3 major directions, 3 major avenues. First, we're building out our product offering. One example is the Badura brand, which was recently mentioned. It's now already on our shelves. It's in our e commerce and it's selling quite well. Along with Jean Rossi, it's expanding the price points upwards. So in terms of the premium price points, the next part is the new channel digital channel of sales. So we're entering new markets 6 new markets. So we're expanding our geographic presence, our footprint and we're also present in other marketplaces and with specific products. And the 3rd element are tools to enhance the customer experience. And these are just some of the examples like PayPal. So you pay now you buy it now, pay later and so pay afterwards. And so in our retail brick and mortar stores, we are the only we're one of the only people who've been able to do that across Europe. And another example is that we're even more strongly linked to our delivery express delivering. And so we have a very unique approach. In tens of cities, within 90 minutes, we're able to make those deliveries. And so we're going to expand this service to other markets outside of Poland. So what have we paid attention to And also in terms of our concentration on customer needs and looking at the youngest customer groups, we have finished up the back to school season, which was dedicated to our younger customers, which is a very important component of Q3. We're pleased with that in 2 dimensions in terms of our business, in terms of our branding. In terms of our business, we've been able to achieve very rapid growth in sales of some 36% year on year. That's the top line growth. And our gross margin on sales is even faster because it's grown its 59% year on year. And so we've been able to achieve what we want to do. We're fighting for margin. We decided that we wanted to enter AW without using rebates. That's something we did on discounts. We were focusing on the quality of our products, on our communication, and this is something that has paid off. The second aspect in terms of our branding, well, this is no less important. We've created a very good perspective for our customers in terms of how our customer can assess us using the NPS score, and the collections have been received, welcomed very formally. And so we can look at one of the campaigns we utilized in the back to school campaign. And this was done within the 360 degree marketing. And so this K Pop tour, which is utilizing a very well known popular pop group from Korea with influencers, very different types of activities, utilizing the roles of influencers. So this is a very successful campaign, so you can have an opportunity to see it right now with your very own eyes. So we've shown CCC to be an open brand, open to young people. And through these positive emotions that you've seen on the short clip, we've been able to build good relations with a very important client group. So for me, this is a very important event, and I'm happy with it because this is an investment, a long term investment in our long building long term relations with our youngest customer group, which will be an important group of customers for many, many years to come. So focusing on our customers, you can see throughout our brands, especially in our EO Bovier e Commerce branch. And so this is a brand that's been growing at a much faster clip than its competitors. It's not stopping. It continues to grow. We're continuing to grow that business, scale it up. It's got enormous potential. How have we been doing that? So we are developing channels of sales. So we have Slovenia that's opened up and so we have an omnichannel store in Czech, Prague. And so we have same day delivery. This is an important moment in time. And so we've seen very rapid sales growth in that store. We're also ramping up that potential by referencing customers through these tools and facilities where you have comfort, which only EOBUVI is able to provide. So our innovative service, which is called e Seismit, utilizing scanners, and we've developed that to include another 4 markets on top of Poland. And we're utilizing the scanning functionality to make sure that shoes fit people's feet, and this is done in international markets as well. And this is an important milestone in the growth of EO Bovium. And so you can't have happy customers, ramped up operations unless you have rapid deliveries, incredible deliveries and supply chain. This has to be done as the company grows quickly. You have to scale up logistics, and this is something that's happening in Euboea as well. And a lot of has happened in Q2. And so you can see those elements, which will define the positive future of Euboea, and they address the peaks that we have in front of us like Black Friday. And so Eobovia has gone through some pretty important structural changes. We have some ownership changes. So the new ownership structure has been solidified. So SoftBank has joined us. So the largest global technological fund, which is investing in companies and pearls like IABUVIA. And we've also changed the structure of the management team. Damian Zeblata has joined as a very experienced seasoned manager in e commerce, who's the CEO of that company and in the future shareholders. So we've this chapter has wrapped up. We're going to do the IPO in 2022, 2023. So it will be the next chapter. So the story about IABUVIA wouldn't be complete unless we were to talk about Modivo, which is a younger element of the IABUVIA group. So Modivo is a precursor of the apparel within the CCC group. And so this is something that's picking up in importance across the group and how important Modivo is. And this part of our operations is testified to by the revenue. Since we started in spring of 2019, we've got 30x growth. So in Q2 2020, we've doubled and so we have €100,000,000 in revenue in a quarter. And so it's got 12% share of the sales in Bouvier. So how has this been done? We've been building the value for the customers, expanding the footprint, conversion, the basket, value of customers over time and also having a loyalty club, the first one in Modivo. And this has been very successful. We've also developed the technology which improves conversion, which is raising the ARPU per transaction. And so you can see creative styles, very nice interactive solutions, which enable you to select the various elements of your clothing and then you can drop them into your basket and that improves the sales parameters. So apparel is not only the domain of Modiva, as you know, in December of 2020 And so, DC has also elected to go into clothing and expanding the category to include apparel. And so we have the 2 major axis of growth for DC. What are the aspects of this dynamic growth after less than a year? So they're very satisfactory. So in Q2, some nearly 20% of the sales have come from apparel. And you should remember that it's not even a year has passed. So it started less than a year ago. So how has this been done? We're utilizing the potential in the customer base. We're ramping up the awareness, brand awareness, and we are we've expanded the geographic presence to 6 markets. These markets are some 35% of the sales revenue. And so we're going to fire up another 3 markets. So we're going to have a total 9 countries that will where we'll be selling DSYS. So this fashion and the expansion of this applies not only to Diesys, but also to our youngest segment, our youngest brand, which is the off price, where we have the half price format, which has started less than half a year ago. And we can say that we're very pleased related with the outcome of this start. Why? This launch, because we've got dynamic growth. We have some 30 stores that have been opened. This is not easy to do in the current market conditions and with investments. And so we have some 50,000 square meters. So this is a big event, a flagship event. So we've done some restructuring of CCC stores. So we're decreasing the size. So we're on plan in the markets. We're present in Poland and Czech, Hungary, Austria. Pretty soon, we're going to be in Croatia as well. And so this geographic accessibility is happening within our biggest stores. So 2,500 square meters, 800 square meters, half half price. So we have sales revenue, which is much better. The revenue is much better than we had with CCC there. So we're very pleased with that. So the third cause of our satisfaction is that we've been able to scale up our offering. So through off price and achieving the satisfying customer expectations, so we have more double the number of SKUs. We have 5 times more brands available. So that means that we are very strongly developing our brand here and focusing on customer needs. Another key event that took place in Q2 and will continue in Q3 with respect to individual segments. And I'd like to ask Crispin, who is our CFO, and I'd like to ask him to tell us a little bit about the financial results delivered by these various segments. Thank you very much, Martin. So ladies and gentlemen, welcome. We'd like to go ahead and talk about the financial results of the group. And so I'll walk through the various segments, and I'll start with the CCC. So in Q2, we continued the revision of our points. So we closed 35 stores that weren't profitable with half of them where we reduced this space. So we've marked that space to half price. We've opened several new stores, and we've increased the most forward looking stores in terms of their size. And so if you look if we look at traffic coming back after the lockdown and we see e commerce growing and growing, this means that the revenue has improved per square meter by some 37% year on year. And we've been able to achieve now 6 28 watts per square meter, which is 10% higher than what we saw in 2019. And what contributed to that revenue spike? We have a 31% increase where the Romanian market grew by some 80 some 1 percent and the Hungary market was 29% and 26% growth in Poland. This is where we saw the biggest growth. So we had Sprandy Brands. So this was some 75% January and so then Lasolsky was 19%. So we've been improving the gross margin, and this is a result of increasing first prices and effectively managing our discounting policy, the rate B policy. And so our own brands, Janney Ferry and Laselski, generate the gross means. We've been able to improve our margins by some 6 percentage points. And also transferring production to Asia has improved our margins. In Q2, we've optimized the costs of operation of our brick and mortar stores. So it's down by 2.4 percentage points as a result of renegotiating contracts, lease contracts. They represent a smaller percentage of revenue. And so we've effectively managed the other costs of maintaining stores, and so we've been able to reduce that by some 2.8 percentage points. If we look at the OpEx increase, this is a result of for salaries, this is because of the low base effect because we had some co financing or subsidies during the COVID period. And so we can see costs that are up in terms of marketing, selling expenses because as revenue grew and we saw higher costs of transportation, which is a result of higher sales in e commerce. So this is why that hasn't increased. So we had higher gross margin. We've been able to improve our profitability of the segment to 11.6%. So it's almost 8 percentage points higher year on year. Now let's take a look at the results of the EOBV Group. So EOBV including Modivo, we have a growth rate in our revenue in excess of 50%, and the foreign markets were the biggest drivers. So Western Europe was the fastest growing area. France, 167 percent growth. Germany, 88% and Greece with 78% growth. And so the margin that we were able to command there is 43.6%. This is the gross margin, and it's higher than the margin that we received that we commanded prior to the pandemic. And comparing to 2020, we can see that there are 2 contributing factors for the margin being lower. So we had very good purchasing conditions during the pandemic, and then we had more sales this year. This transferred or had an Ocon effect on the profitability of 10.3 to sales. And so the difference in profitability between Poland and the other regions is a result of the product mix and having higher margin products with a bigger stake. And then we also had FX differences and also the producers' prices on international markets. What do the results of Mediwa look like? In Q2, we saw that sales revenue was nearly twice as high with the margin more or less at the same level. And so the major growth contributors are foreign markets. And so Western Europe is the fastest growing area, So we have nearly 4 times growth. And so Greece, Italy and France are amongst those markets. And so as we improve the profitability, this is a result of the ramping up of the scale of business, the economies of scale. What about the overall EMEVIA Group? So we have top line up by some 50%, and so the operating profit is nearly 6% of sales revenue, which is in line with our expectations. As I've mentioned previously, this was a result of a lower margin, higher logistics costs, which were dictated by the higher prices of courier, passenger services, while at the same time, the average ticket bus can value was falling. And then we had very active marketing efforts to continue growing sales, especially in our new markets. Now we can talk about our new segment, which is half price. As Marcin mentioned previously, Q2 was a period of intensive growth in the half res. We opened up 19 stores in Poland. As of today, we have 30 stores on 4 markets outside of Poland. We have Austria, Czech Republic and Hungary. And we're continuing our expansion in the latter half of the year. And so the gross margin of 53.2% is above our assumptions. So it doesn't take into consideration certain discounts. And so we have a 6.6% result of profitability amongst functioning stores. What's happening with our people in Greater Poland? So if we look at DZ sales, so it's up by more than 80% in line with expectations, primarily as a result of entering new markets, Romania, Czech Republic, Slovakia, Hungary and also expanding the apparel. So the average gross margin is 56%, which is some 10 percentage points higher than the margin we saw in Poland. And this is because of differences in FX rates as well as lower discounts. So the profitability of this segment, which is quite high for e commerce, it's 9.3%. Nevertheless, it's lower than last year, primarily because of the investments we made in development as well as the marketing expenditures and performance as well as the costs of courier services that we've incurred on international markets. And so let's go ahead and sum up the result of the CCC Group. So in Q2, we had an EBITDA of 231,000,000 swaths. And so the operating result was improved as a result of the following factors. We had PLN2 1,000,000,000. We have a clear improvement in the margin by 2.2 percentage points, and this is a result of effectively managing first price as well as making changes to the discounting policy. So cost growth rate was much lower than the growth rate of revenue. And we also had restructuring in the Austrian and Switzerland Swiss markets. And so the reported results were lower than the ones we published in the preliminary results on the second of August by some €32,000,000 This was a result of a one off event. And so this was a settlement of the motivation program for the management team as well as the additional costs of and so as of 31 July 2021, the group had reduced its debt by some CHF283,000,000 to 928,000,000. So during the first half of the year, the group generated an EBITDA of 2 66,000,000. And so we've seen some changes in the net working capital. And so we after AW21, we had some investment expenditures of €120,000,000 That was our CapEx. And this was linked to the development of the half price network. And we had some investments in the OBOVIA Group, and we were also doing some refreshing of CCC stores. And these expenditures were offset by the sales of the business in Switzerland. And so if we look at the financial flows, so this was primarily linked to the sales of shares in Iluvivya as well to the 2 investors as well as payments for lease contracts, rental leases or rental agreements. So if you look at what's happening with inventory or stocks, we're building basically our stocks for AW21 as well as SS 2022. So we have Eubovje and half price moving up here. And so we can see that it's growing the inventory is growing at a slower pace than revenue. And so 90% of our stocks are linked to this year's collections, and so we're optimizing our working capital. As a result, we're increasing the turnover of our inventory. And so we have more frequent deliveries of product, and that means we're able to react more flexibly to needs. And so we have the right products in the right places at the right time. And so basically, we're going to be implementing an OMS system. And so we're in the process of implementing that at present. So as a result, we've been able to reduce the cash conversion cycle from 149 to 127 days. So I'd like to thank you for your attention. I'd like to go ahead and give the floor back now to Marcin. Thank you, Cristin. Thank you very much, Cristin. So let me recap. I usually talk about what's contributed to the results of the group and the customer satisfaction, which is the very high quality products. We're very pleased with our preparations for winter. As you can see, autumn is prevalent also in our shelves and the stores as well as a large amount of winter. And so we can see what our brands have put in place for this season of the year. So this is what Genie Wrestling. So universal classical approach, and this would emphasize the modern aspects of our brand. And so this is item number 4 in the ranking of brands in so it's got 5% of our sales. Then we have Badura, which is a new brand in our fashion portfolio. So we have a high price points here. And it's a well known lagged brand, but it's gone through a lifting. And so it's very popular amongst Internet sales customers. And this is something that very much pleases us than we have Lasowski, which is the top number one classical style for every occasion and very fashion oriented. And so it's close to nature. That's how we portray it. That's how we're building the identities. So that means we can build our ecological lines of products. And so we have now a capsule brand within the brand of Las Vegas. So we have recycled footwear. And so we have a session about this capsule. It's dedicated to this capsule. And this is a very interesting, a very nice, that's how I'd put it. And so we've collaborated together with the Academy of Fine Arts. And so this specific design that actually won is done by a student, Johan Levinczynska, who several months ago designed these recycled shoes. And in the near future, they're going to be on our shelves and they will be sold through e commerce. And it's a nice way to expand our portfolio of products where we're following corporate social responsibility and sustainability. Another brand that we want to talk about is Jenny Fairy. This is brand, fast fashion and the group's response to this group. So it's got 18% of our sales. And so we have got the newest fashions, the most fashionable colors and styles. And a lot has been said about Jenny Ferry as a result of the camping, which is the Jenny Ferry Rose Garden camping, which has generated spectacular reach. And that means we've got very good business results. We have 10,000,000 people who have been have seen it through the digital. And so that's more than we have in our target group, which has been defined for this brand. Our share of voice in television in September is about 50%, which is a record breaking level for a television campaign. And I'd like to go ahead and invite you to watch this clip, which is set in the 1970s, the stylism of the 70s. And right now, it's seemed to be something that's quite nice and quite attractive in pop culture in the California mountain region. And so it's something that's very nice to listen to and nice to look at. What is the business result of a good product and good communication of this brand, Janney Ferry, well, from the beginning of the year in the autumn and winter season, it's the top brand in our sales presence. And so this is our way of starting strongly in this season along with back to school. And I mentioned already that we're very pleased with that, but we want to talk about some of the challenges that are related to the autumn and winter collections. So there are discussions about some of the challenges linked to the supply chain where we mentioned about that when we talked about the problems with suppliers and deliveries. And so we want to tell you very succinctly and briefly that we're fully prepared to sell our autumn and winter collection 2021. We've prepared ourselves very well for this spring summer 2022 campaign. Why do we have so much certainty? We have three reasons for that. First, the products are available. So if we look at the AW collection, which we'll have on board until January, we have the full collection. Exactly 97% of the collection has been delivered to our warehouses, our central warehouse for e commerce or it's in the stores, on the shelves. The remaining 3% is on route. And at the same time, there's no risk that it won't be delivered on a timely basis. If we look at the spring and summer collection, 100 percent of it has been ordered as being produced on schedule. Some 50% of the demand we have for the sales in the SSS21 campaign has already been is already available in the form of stock. And so this is a very comfortable situation. Why the second reason why we're convinced that we're very well prepared for the upcoming period is that we have the flexibility in the delivery chain, the supply chain. Several things are important. We've implemented 3 important IT systems, which for the first time give us a view on where things are, where they're coming in from, where it's how where it is on the seas. So we've enhanced our skills. We've brought on some experts on supply chain management and deliveries. We've become more flexible in terms of the available suppliers. Our base of suppliers has more than doubled. And the last thing is that we've expanded also the partners we have for logistics purposes. We have twice as many as we had before. So 100% of the 1,000 containers that we need for the upcoming season have been secured. So we have a very comfortable situation as a result. So for one more than a year, we've known and been have been tracking these difficulties. So we started working on this much, much earlier in order to be able to prepare for this properly. And so a lot has been said. This is the 3rd block when we talk about cost inflation. Of course, that applies to all parties across the board, and we should have clarity on that, and it applies to us as well. But on top of suppliers and transport, we're mitigating more than mitigating that through our active price policy. As you've heard, in the back to school campaign, we've reduced rebates discounts. And so discounts in CCC were always high, but now we don't use those high discounts. We're pleased with the gross margin. We don't think it's going to be lower. In fact, we expected it's going to be a little bit higher. And this means that we can focus on our strengths, so having a unique format of half price, scaling it up, The e commerce where we're very strong, we want to be even stronger, and we want to utilize what used to be a painful element, and this is digitalization and technology. Today, we're a team that is very strong, and so every day is getting stronger with ultra great talents we're bringing in from the fashion industry. And so you've seen the results in Q2 in our results, but you're also going to be able to witness those things in subsequent quarters. And we're going to talk more about that when we speak about the presentation of our strategy, which we plan to do that in autumn. I think this will happen in November, about how and where and why we see the strategy fleshing out as it does. So in Q2, I want you to remember Q2 in the following. This is top a record breaking top line performance, a very strong e commerce even though our brick and mortar network is doing very well. We have a high level of EBITDA of 11%. We've been developing the half price network with some 50,000 square meters. And then EABOVIA has a new structure shareholder structuring, a new management team with dynamic growth. So I'd like to thank you very much for your attention and like to impose ask you to pose your questions now and we'd be more than happy to respond to your questions. So we're going to go ahead and start the Q and A session. So let's go ahead and look at the first question. The first two questions pertain to the supply chain management. You posed a large number of questions concerning the subject matter. So we basically compiled them to 2 questions, which I'll go ahead and read out, but I think they really reflect the questions that you've posed. The first question, the company has said next year's spring summer selections are on the production and logistics side. Are there any threats to SS-twenty one 'twenty two deliveries? I'll respond to that question even though I have the impression for sure that at least in part I responded to that question during the body of the presentation itself, but I think this topic is sufficiently important that it's worthwhile to reiterate this message. We feel very comfortable in terms of our preparations in terms of AW21 as well as SS22 collection. I've pointed out to you that when we talk about the autumn and winter collection, we can say we can sum it up as follows that we're totally prepared. We have the entire collection on board by in terms of the through the end of the sales period, through the end of January. If we look at the spring and summer collection, the process of preparation is something that we assess very well. We feel comfortable. We have some 47% of the products we need to sell during spring summer. Of course, we want to make sure that the rest of the product merchandise reaches us prior to the sales start, and we're quite calm about that. Why is there a distance in terms of what we're communicating as a company today and what you might be hearing in recent weeks and globally and locally in terms of supply change difficulties or troubles. Well, those challenges, we basically anticipated them at least 1 year ago, and they were the natural offshoot of the experiences. Well, some of the experiences for several years, I was also managing in the automotive sector, supply chain management. It's a very complicated supply chain, and we had even a small movement in Europe leads to difficulties in amongst the Asian suppliers. So in 2020, we saw the turmoil in place. And so the retailers, the customers were shorting their purchase orders, and that had a big impact in Asia. You have to understand the nature of the labor market in China in order to really fathom what's going on. This is not the first crisis that we've gone through, so the rebalancing usually takes up to 2 years in supply chain. And so this is something that we had anticipated and contemplated, and that's why we decided to prepare ourselves. We changed our sales calendar. We accelerated the deliveries by several weeks. Of course, we have higher inventory stocks than we might like to have, but we have full comfort in terms of having total access to products, and we don't have to worry about getting having access to this stock. So we've also prepared to this prepared for this on a systemic basis, a systemic approach. So we built IT tools. We strengthened the competencies on the HR side. We've expanded, doubled the supplier base. We've doubled our marine transport arm. And so up until the end of the collection for SS 2020, we have access to the containers. We've done our homework, and so our people and transports have been active for more than a year. So we're 100% comfortable in terms of our position. Please go ahead and remember about this subject. Well, this is something that you can basically dig into in our report in the non financial report, in our sustainable strategy. More than half of our suppliers are suppliers we've been working with for several years, in some cases, more than 10 years. And more than half of these suppliers are producing solely for us. They are locked in to us. And so basically, this is an extended supply chain, which goes back into China into Asia. And so there's no moral hazard here about who they're going to be producing for because we're basically we've been working together for better and for worse, and this has been the case for some 15 years. And having in mind our policy that we have towards the suppliers, we're generating additional benefits. We have security in terms of getting the product. We have the comfort of deliveries. And so we have full comfort production for the springsummer collection as transport has been contracted. And so for spring itself, we're well prepared to a large extent, especially since we have mid October now. And so I can assure you in the calm view, and I wanted to tell you why we have a difference between ourselves at CCC and other global and local players who have been speaking and communicating about the supply chain management tribulations recently. Do you anticipate your costs in the supply chain growing in terms of production and transportation? To what extent will they affect your own cost of sales? So I'll try to respond to that question. Ladies and gentlemen, we mentioned during our presentation, but I'll try to clarify this subject once again, the situation we're encountering right now in the marketplace where we have higher cost of transportation, this is because of freight costs. Well, freight costs have grown 10x compared to what we observed prior to the pandemic. This applies to the entire retail industry. And that means for our group that we have an increase in our cost of sales of some 8 percentage points. And so we have a loss of margin of some 2.2%. And so the increase in costs is something that we'd observed where we had a margin that was up by 2.2% year on year. So we have a method in which to deal with that. Above all, that's because we're effectively managing our discount policy, and our discounting policy has changed materially compared to last year. So we're selling more products at the first prices. And at the same time, we're following customer expectations. So we're enlarging the product offering through quality. And so we have higher price points there. And so have in mind brands like Gina Rasa and Bandura in particular. Thank you very much. The next question, how have you been managing to manage costs and control costs in EO, BUVIA, marketing costs? Is the next quarter going to be an increase in profitability for the company? So let me begin with the general. We're very pleased with the results generated by Eobuvi in Q2. And if you look at the competitors' results, you should share our satisfaction in relation. So we have some 9% profitability, so halfway within the target range that we guide you to in terms of trying to achieve an 8% to 10% EBITA return. So along with Medevia, we want to grow very dynamically. We're increasing the markets. We're enlarging categories, new solutions, and we're investing a lot in the logistics and marketing. And on top of that, the level of marketing costs in Euboea has the right to be a little bit higher than amongst players who are growing at the level that we see in Newuvium. In subsequent quarters, we intend to grow equally dynamically. So the proportions will remain more or less, but I think there's going to be a downward trend because we're investing in branding campaigns, we're improving conversion, we're improving our SEO performance, a lot's happening here. And so the costs of marketing against revenue long term should be lower in that share of costs. If we look at the peer group, so we have some of them where their growth rate is half of what we see in UBIO, and then we can say that the profitability starts to look similar to ours, but the growth rate is half of ours. And then we have other companies with growth rate that's similar to us, but their EBITDA is minus 1%, minus 2%, minus 3%. And so having all of that in mind, we're within our targets. We're pleased, we're related with the results we're fighting for the market with high levels of profitability, and this is something that really distinguishes us from our customer our competition at Eubovia. So please tell us what is the net debt of the group today after settling for the transaction on the shares of Eobuvia? So ladies and gentlemen, one moment ago, we discussed in detail our net debt at the end of Q2, which is S928 million. And if we look at the debt we're going to have at the end of Q3, you'll learn about that in 2.5 weeks along with our preliminary results, which we'll publish on the 24 sorry, on the second November. What is the share of the operating results or the EBITDA does Leather Footwear have? So if we look at the omnichannel approach, we can talk about 33% in the margin by PLN, and that's for the most recent 12 months. And so the next question has been posed on the English language change. I'll go ahead and read it in the original language. Can you give us some color on the improvement of margins? Does this refer to online and traditional retail? Yes, we've mentioned this mechanism how we're going to improve our margins. So on one hand, we're counting, reckoning with hiring costs of our logistics costs. Of course, we'll have negotiations with suppliers about the new seasons. But on the other hand, if we look at the demand side, we monitor the market on an ongoing basis. And if we look at the implementation of products with higher margins, this is one of the things we're doing, and then lower discounting. And so we feel quite calm, and we believe that we're going to be able to control this margin. So we do see room headroom for us to continue growing that. So thank you very much. What type of growth in CapEx for space do you anticipate? So I think we can respond to this question to elements. First, the main part of our expansion in space is we're rolling out the half price concept. And basically, we have a large number of new stores for half price to make sure that they would have a decent share of our sales. That's what we'd like to say today. In November, we'll publish our strategy. I assume it's going to be strategy. Certainly, as I said, it will be in autumn, and then we'll have the opportunity to talk about what we see in upcoming years, what awaits us. The next question in English, can you give us an update on the current liquidity position? So sure. We've completed the refinancing process in the first half of the year. In September, we signed a contract with PFR, the Polish Development Fund, and so we gaze into the future with a sense of calm. In terms of the long term debt, this is 2,000,000,000 swaths. The financing and the refinancing agreement that we signed with banks give us a horizon of 4 to 5 years. So the next question pertains to Q3. How is this quarter looking in terms of sales in the brick and mortar network and online? As I mentioned, with respect to this quarter, in terms of back to the school and the Rose Garden campaign, we're quite pleased entirely as well as with respect to the individual components of that quarter, what's the most important thing for us. And we would like for you to take this away from this conference as a takeaway. We have a very good launch into the autumn. Back to school wasn't so good in recent years, but this year has been very good. That execution has been very good. And so basically, this chain is working very well. And so if Modivo continues to work, so it's very important. So we're very pleased. And the next element that we would like for you to draw attention to, and this is resounding in what we said, we've changed our policy promo policy, and that means we have much lower discounts. At the same time, we're very pleased with the sales results. So 2, 2.5 weeks, we'll produce, publish prelim results, so for Q3. In terms of business results and presence, And so we continue to uphold what we say that we have 3 strong engines, smart drivers. So we've got basically brick and mortar, e commerce and half price. So there's a high level of comfort and satisfaction with what's happening here. Would Dariusz Miuk like to sell his shares? If so, what percentage of his shares? If not, why has he put forward a motion to convert his shares from registered shares into bearer shares. So I don't know of any such intention. You'd have to ask Dado Schmueck that question. But in terms of the conversion, well, please have in mind, this is a procedural aspect that comes from the rights issuing that we had in April of 2020 in order to give the opportunity in that first pool to now to allow fund investors to have access. Basically, the Daraus Muek and Ultra had a year for those shares to be proved for been it for trading. That's more or less it. That's there's no other topic there. So the plans in terms of the pace of growth in Eubovje for revenue and its profitability and the IPO, just as I mentioned, we're very pleased with the concept, which we call Eubovje in conjunction with Modiva. We're happy with the growth rates, with the profitability along with the new CEO, Damian Zapata. We can say that we're going to throw it into our higher gear. We're very pleased with the observations we've seen in terms of what we can actually strengthen EO BOUVIGN and provide a new chapter. You'll be able to learn more at the time of the new strategy, which we plan to publish in the near future. So I'd ask you for a little bit of patience. The timing of the IPO, I mentioned about that previously, is in place. So we're talking about 20 222023. The priority, of course, is to build and scale up Eobovio while retaining an exceptional level of profitability. Having in mind that growth rate and the results, what percentage of the merchandise in the group of CCC is currently produced in China? And how might this change in terms of the production structure in the future having in mind to your plans? So I can give you a reflection of today because this is something that changes. We have flexibility in our supply chain. This is something we've been working on for the last 2 years, especially over the last 12 months. What we report in our reports what we disclosed in our reports, basically, onethree is in China, onethree is in Poland, and onethree is in India and Bangladesh. We don't produce in Vietnam, which had some additional perturbations. We have some 60 suppliers in China. What I want to draw your attention to in this structure, this production mix in terms of that loyalty of our suppliers and the stability of our suppliers, this is something that's very critical. More than half has been working with us for several years, more than a dozen or so years and are working for only us, only for us. And so that's very important to have in mind in terms of the supplier base. In your opinion, during this trade fiscal year, will you have a higher revenue gross margin results than you had in 2019? So we're online, on track with our have barring any extraordinary events at the end of the year, I would say, yes. Our revenue and the percentage of e commerce, profitability, gross margin, these are those elements which we're driving to meet our ambitions that we outlined at the beginning of the year. So the next question coming in from the English language chat, what kind of areas will be covered in the strategy published in November? We anticipate let me start once again. This is not just a simple publication of a new strategy. Our task that we assigned to ourselves over the last half of the year, that's how we captured in the company. We wanted to look under every stone. We wanted to turn over every stone and become more effective. We sound tens upon tens, close to 100 ways of streamlining the business in e commerce operationally in terms of our processes. And in terms of what we defined, we're very pleased with what we've defined. We've scaled up our level of ambition and attuned it to market opportunities. So in geography, it's an evolution, not a revolution. We want to take advantage of all of the post COVID opportunities, which have popped up, and we've utilized them to some extent over the last 6 months. We've described them, the megatrends. We've described them very well, and we've made very good decisions under the previous strategy, which was GO 2022. As you've seen behind me, the group is changing. It's becoming more of a conglomerate of businesses where each one of them has a slightly different identity, a different P and L. Each one of them means something a little different. And so within this strategy, we want to show you more of that. And what's the most important thing to us for a longer period of time, and basically, the customer has to be at the very center of our intention. We want to develop and nourish those relations with the customer. We want to get ahead of the customer expectations. We want to be fully attuned to those customer needs and expectations. This is something that's really repositioned us and given us a lot of comfort. There's going to be a lot of technology and there's going to be a large number of themes in terms of these brands that you can see here, Motivo, Half Price, DC, how in fact they're going to be coming onto a 4x bigger market in apparel than just shoes and footwear themselves. And so give us an opportunity to discuss that in November. So thank you very much. Next question. What's going to happen in terms of the final accounting for the transaction in Q3 of the shares in Ebervielle? Will the company report a profit on that transaction in its P and L? In Q2, we had the transaction with Cipolla Vipulsat that was booked. In Q3, we'll book the transaction with higher investments. And so the results will be invisible in the standalone financial statements, but it won't affect, of course, the consolidated financial statements. Okay, thank you very much. So it seems that we've fielded all of the questions that you post during the Q and A session. So let me remind you that we, as the IR team, are at your behest, and we are counting on your questions coming in after the conference as well. So I'll give the floor to the CEO to wrap up. So I'd like to thank you very much for your attention, for your presence during today's conference, earnings conference. And I hope and I'm expressing this on behalf of Crispin as well. I hope that we've expressed some interesting information and we've responded to your questions. We see that a large number of your questions, I think more of the questions, if I've understood Wojtek correctly, is focusing on the supply chain. I want to mention once again that we're very well prepared. We've got comfort in terms of quality, in terms of quantity. We've got great merchandise. That's the big message for the second half of the year. And so we have the strategy to be announced in the near future. We'll report the prelims for Q3, so stick with us. Thank you very much for your attention. Thank you very much. Okay, thank you very much.