The return of pocovid normalcy has hit clothing e-commerce

During the first months of 2022, the clothing and footwear trade shifted to traditional stores. This is evidenced by the latest results of the largest Polish companies operating chains with such facilities and the German Zalando, which for the first time in history recorded a decline in turnover.

The power of traditional shops

LPP and CCC, as well as Zalando, presented preliminary financial data for the first three months of the current financial year. For Warsaw-listed companies, this is the period up to the end of April 2022. VRG disclosed new earnings information in April. How have the companies invested by stock market investors fared?

Tomasz Sokołowski, an analyst at Santander BM, considers the LPP and CCC data to be strong, although he admits he expected better results from the CCC-owned Midovo Group.

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The CCC data is consistent with the predictions of DM BOŚ specialist Sylwia Jaśkiewicz. On the other hand, LPP surprised her positively. – LPP results are slightly better than my revenue level assumptions (by 7%) with significantly better offline sales and worse online sales. With selling and general management expenses similar to my forecast, operating income exceeded my expectations. I think the end of April could have been positively surprised, which is also a good prognosis for the coming months – comments Jaśkiewicz. – You can see that customers have returned to stores and the multi-channel sales model is working.

Investors, further encouraged by news from across the Atlantic, bought the shares of CCC, LPP, VRG and other companies in the sector during Thursday morning trading in May. However, during the day the gains slowed and there were declines.

In the period February-April of this year, the traditional chain of LPP stores and online stores of this group sold clothes, accessories and interior furniture for PLN 3.42 billion, i.e. by 45%. more than the previous year. Especially the first ones worked at full speed. The turnover of the Reserved, Sinsay and Mohito stores increased by 76% year-on-year, reaching PLN 2.4 billion.

At the same time, online commerce has hardly changed: 3% was spent on purchases in LPP e-shops. more than in the first quarter of 2021 – around PLN 1.02 billion. As a result, the share of e-commerce in the group’s turnover fell by 12 percentage points, to 30%.

At the same time – this was announced by Przemysław Lutkiewicz, vice-president of the LPP – the so-called first commercial margin of the group has decreased. It was 53.6%, that is, it was 1.9%. less than a year ago.


On the other hand, operating profit grew faster than turnover (by 136% to PLN 205 million) and the group’s profitability at this level improved significantly: from approx. just over 6%.

E-commerce is giving back ground

In turn, CCC Group revenue in the first financial quarter (ending April) was 32% higher than a year ago. and closed with the sum of PLN 1.89 billion. The group, which includes CCC, HalfPrice, eObuwie, the Modivo platform and numerous footwear and clothing brands, improved its results by limiting operating loss and EBITDA (according to the former investor-preferred IAS17 standard) .

The operating loss of the CCC Group in the first quarter of 2022/2023 is PLN 45 million (PLN 101 million a year ago). In turn, the EBITDA loss (IAS17), according to the calculations of Tomasz Sokołowski, is PLN 10 million. Sylwia Jaśkiewicz estimates that EBITDA (IAS17) could reach PLN 7 million.

CCC Group showed this result in accordance with IFRS16 and in this approach it is well above the line: 110 million PLN compared to 35 million PLN in the first quarter of 2021

Jaśkiewicz points out that these are the results before the one-time events, and in his opinion, there will be a lot of them due to possible write-offs of the value of assets in Russia.

As in LPP, also in CCC you can see a slowdown in e-commerce and dynamic increases in traditional stores. According to Sokołowski, this is an effect of postovid normalization.

The e-commerce group Modivo, which will go public, recorded a 19% increase in revenues (to 916 million PLN) and a decrease in profits. Operating profit decreased by 38% to PLN 41 million. EBITDA (according to IFRS16) by 27% up to PLN 59 million. Operating profitability and EBITDA margin decreased by 4.1 percentage points, to 4.5 and 6.4 percent, respectively. According to CCC’s management board, this is the effect of investment costs and the EBITDA margin is in line with plan.

The VRG group shows a drop in e-commerce revenues. For four months of this year, e-commerce earned him less than PLN 60 million, or 18%. less than a year earlier. VRG turnover of more than 80%. they are developing traditional stores this year (65% a year ago). Thanks to them, the group’s turnover after April is PLN 352.3 million, or almost 70%. More than a year ago.

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