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Good afternoon. I'd like to welcome you, ladies and gentlemen, very cordially. Before we begin, I'd like to check whether or not technically everything is working and the translation is working. I've received confirmation that it is. So I understand that we can go ahead and kick off. So I'd like to welcome you, ladies and gentlemen, to this conference.
So the sole purpose is to present the operating group -- operating results of the group for Q1 of this year. According to legal restrictions in terms of communicating information, having in mind the profile of today's conference, which is open to all interested parties, we are not able to discuss any other subjects, in particular, the subjects related to the resolutions adopted by the Shareholder Meeting of CCC on 17 April 2020. So you can see that we're working on the issue. So these additional restrictions and legal disclaimers are applicable to us.
So I think that we've seen each other quite recently, and you're tracking what's happening in the company. So it was a mere 3 weeks ago, we've had the most recent discussion about the preliminary results for Q1, and we talked about COVID. It's only 3 weeks, but we can say that, that time was worth its weight in gold. We haven't wasted that time, and I can say that we've been able to achieve fantastic things. I'll use that word, even though our main channel was closed. And I can tell you about how we've prepared to open stores, and I can tell you how well poised we are.
Before we go on, I'd like to thank all of the interested parties, involved parties, the representatives of the banks, the representatives of the investors, the bondholders, our business partners as well as our associates, employees at CCC. I'd like to thank you for your enormous commitment and work. I'm very pleased that we've been able to move forward at such a masterful pace in order to do all of this work. And this work was crucial for -- and let's go ahead and go on to the results of the group in Q1, and I'll have the pleasure of presenting that information to you and jointly with the Founder of CCC, Supervisory Board Chairman, Mr. Dariusz Milek, will be able to do that as well as in conjunction with some of the other Management Board members like Karol Póltorak, who will join us remotely, and one other gentleman.
I'd like to draw your attention to the fact that we have today's visualization. And so you can see that we have some statements of thankfulness, gratitude to our customers, and we're trying to basically show our appreciation for how in the most difficult history -- moment in history of the company and how they've been working. And so this is our way of expressing our gratitude to you.
And so now we'd like to present you with the results of Q1 and some of the key events, and we'll talk a little bit about the plans. And then both the Chairman as well as Management Board members, will be at your disposal and will happily respond to any questions that you may have, and we're counting on having an interesting discussion.
So before we go on to discuss the key events, so we'd like to give you a snapshot. But the biggest event of this quarter was the pandemic COVID-19, which had an impact on our communication with clients repositioning our channels of distribution. And we had emphasized the safe purchasing or shopping option by shopping online for our customers. So coronavirus is also the reason we're able to show you these statistics. We usually don't show them.
If we look at our brick-and-mortar shops, I can indicate that situation is a little bit better than a few weeks ago. We have 132 stores operating. So we're starting to open some stores, retail parks, and we'll be able to speak about that at greater length.
So the results are quite promising. Traffic is a little bit better than our expectations. And so conversion is higher, even if the overall traffic is down. And so we have more units of shoes per ticket. So like-for-like is roughly 20%, but it's lower year-on-year. So we don't want to prefigure anything based on the early days of being open. It's still too early, but we can say that the beginning of the launch looks pretty good, and it's certainly better than our expectations. We'll see what's going to happen in upcoming days of the year.
So we've seen some lines, so we see how much interest there is in our stores. So being able to find the closest the store in our e-commerce, in our application. So we've got 10x more click-throughs than on average. So clients are starting to share information with one another where stores are open.
Another reason for us to be proud is our e-commerce, which is moving full steam ahead. So in Q1, we've already given you this information, that it was up 43%. In April as of today, it's up by more than 63%. Of course, days vary, so it's much better in the recent days. So in some days, there's a difference of 80% to 100%, in some place as much as 200% in terms of the daily growth year-on-year. So e-commerce, I'll talk about this later.
When we talk about logistics, we think this is a channel that continues to grow despite the conditions. So if you look at the online sales, so this is something that's sprouting and blossoming. It's going to have more and more meaning. So we have to have another 21 client interaction points. So we have 6 applications. So we have also points of connection within Switzerland. We also have MODIVO. We've got 2 [ new ] markets in Ukraine, Pan-European. And so these channels of communication are growing.
eobuwie has grown very strongly, some 38% in April, all the way up until today. So if you make comparisons between our biggest competitor in Western Europe, that person -- or that entity indicated 11% growth. You can see how strong our e-commerce leg is.
So if I can come back to CCC itself for a moment, we don't have a comparable base year-on-year. But if we look at April sales to January sales, we can observe that depending on the date, our daily sales in Poland and we have new sales platforms in e-commerce. It's 6 to 9x larger than -- in April than it was in January. So if you look at our daily sales chart in CCC, we can see the growth that's exponential.
What was very important in this quarter and it has seemed to be a very lengthy, protracted quarter. So 3 months ago, we announced our GO.22 strategy, which is a very important change with [ roadside ] about the changes we're making in our strategy execution in terms of having an online channel and being a leader in the market, based on technology, having multiple tangential points with customers, so customer interface points.
So there are certainly things that we had to roll out and deploy within the organization, and we're very pleased with that because the strategy is starting to permeate the organization. The organization is living by the strategy. So we believe that in 2021, we'll come back to the trajectory of pursuing these targets. 2020 is an important episode in terms of what's going to happen with our sales. But if our efforts are successful, we believe profoundly that this pandemic may allow us to go back to the strategic goals attainment in 2022, based on the information I'm going to provide to you.
So if we look at our fundamental plan to react to the pandemic, we had certain phases. We had 3 phases and we looked at 3 dimensions. Here, I depict that for you. So basically, we retooled the organization to be fully digital. Then we looked at the safety of our employees and the health of our employees as well as our clients. Then we started to prepare the organization for very difficult times.
And here on the next slide, you can see what we've been successful in achieving. We don't have enough time to discuss each one of these items listed here. So I would just point out a few of the key things, so employee safety, customer safety. So as you follow this, you can see how many things we've done here, the remote work in the organization. So from one day to the next, we changed our procedures. We've become much stronger in terms of the technology of e-commerce, in terms of marketing communication. We've opened up new markets.
If we look at salaries, we've utilized the 8 programs in order to reduce costs and at the same time, save jobs. So we maintained our supply chain, even though the payments were stopped for a moment, we were able to cultivate and maintain those relations with our suppliers in terms of AW20 collection in fall of this year.
So I'll talk about financial turmoil. So all of the things that we discussed had been performed, and so they're spelled out in greater detail later in the presentation. So I'll come back to that.
So if we look at some of the other key events, online sales was the major source of the group's revenue. So you can see how big the role of online sales has been -- so for the first time. So if you look at that orange spot, so moving from January to April, this has been exponential, and it's even growing. So we've got 6 countries, 6 markets, Poland plus 5 others, so we can say that a lot has been happening.
Even so, a lot of things have happened in the eobuwie segment. So on an ad hoc basis, we put our buyers, execute the strategy. We've been able to achieve a lot of things that we planned. So in Zielona Góra in March and April, we did quite a bit of work with the team. And so we'd like to thank you for your efforts here.
We have restrictive working regulations, in terms of reducing the number of people who are present in the warehouse. We've become very strongly involved in the stay-at-home concept and shopping safely. And we have good relations with our older clients. We've utilized this time to cooperate with Eva Longoria. This is quite important for us in terms of our communication. And so we're looking at the profitability and the growth of e-commerce.
We've looked at the automated machinery in the warehouse. We've done the first rollout of the MODIVO platform in Italy. A platform, we've used up until now, did not give us an opportunity to have a higher conversion, so the costs per customer were much higher. But at the same time, it also meant that it doesn't provide a lot of the major functions that are must-haves from the point of view of our customers. So we think this e-commerce platform has changed quite a bit in order to assuage customer needs.
We haven't forgotten about the other pillars of our GO.22 strategy that will lead towards profitability. Many investments have been pared down after COVID, but ones that fit will be done in the near future. And so the warehouse K2 is quite important. But this week, we can start to speak about fully launching that warehouse and moving the operations of eobuwie from Warehouse K1 to K2 to meet the needs of -- e-commerce needs of CCC. That means we can send out more. So from 50,000 to 150,000, we can increase our distribution or mailing out capacity. But we also have the opportunity to rescale the e-commerce in CCC, which could sell more than -- and so we had basically to eradicate that bottleneck we had. Even so, these results are quite spectacular from our point of view.
So we also have important things in terms of cost synergies, access to information, managing, overseeing finances and things that are done within the framework of the group, so the finance and accounting software modules. So we are streamlining our operations, and we're elated with how these processes are proceeding.
So one of the key elements of work done in recent weeks was work that we were doing with you as shareholders -- and as shareholders and -- as well as banks, in terms of stabilizing the financing of the company to make sure that we can go smoothly into the fall and winter collection. So we're tapping into this opportunity to ensure that this new model can be converted into our strong suit and through e-commerce and through better sales.
So according to our schedule, we've been able to do everything that we wanted to do here. We've reached an agreement, and we're finalizing the contract with banks to maintain our current financing into at least 30 April 2021. We've suspended the application of covenants which could be here during the COVID, but this is a global pandemic, so when covenants would no long longer apply until the bonds are paid down. And so we've talked with banks about guaranteed financing from BGK, which is the Polish National Economy Bank. And so we have some soft declarations about the cooperation with many [ banks ], and this is our objective. And so we want to take half steps, if necessary, consistently in order to be able to execute these goals. And we're fully concentrated and focused on achieving these ends. And we want to utilize all of the opportunities to finalize these financing means.
So if we looked at bonds this week, we'd like to thank you for the pace at which you've worked and for the cooperation that was based on the merits. So we've been able to do pretty much the same thing as what we've done with the banks. Of course, we've maintained the original date of maturity and the service of interests. So I'd like to thank you.
And so we also had the rights offering. We had 99% of the votes in favor. And so the main parameters of that rights offering have been published in a current report. So these 3 things taken together secure the finances of the company in full and enable us to think very clearly and calmly about fall and winter of this year and harnessing the strengths that we've built in recent period.
So what has the company done up until now? What sort of prospects does it have? So we're utilizing all of the forms of support or aid that are available. So we're utilizing them as quickly as possible, as steadfastly as possible. And we have very good cooperation with institutions and central agencies that are responsible for delivering and deploying that aid. And so this is done -- has been done very well. And so we hope this is going to be the case in subsequent programs.
If we look at the savings program within the CCC Group, we have a simple task, so we're utilizing an axe to cut costs. That's just what the Chairman said. So we're cutting costs to the bare minimum. We want to be a lean organization, which doesn't have a cost balance, so optimizing head count expenses, we're utilizing aid programs, but we're also aligning our head count in stores and administration. So we want to save roughly PLN 100 million by the end of the year. We'll come back to that later.
We're renegotiating rents. So we'll expand the knowledge, if you have a question on that. These processes are underway. And we have a positive approach to the outcomes. So we're closing selected sites, and we're renegotiating all the contracts, rental contracts. And so we have a lot of processes that have been in-sourced, so like IT. So we've been able to reduce our annual cost by nearly PLN 20 million. And so we have other programs that we're following.
So closing our sports sponsoring activities, which was contracted for 2020, '21. So on the right side, we want to say a few words about the possible restructuring provisions, which we'll consider once we have confirmation of the level of these costs. We're just signaling them here. We'd like to finalize our presence on the German market. So we want to wrap up the closing of CCC stores. So we have a number of [ 12 15 ] that we're working on there. So we're restructuring our presence on the Swiss market to cover the further losses until we shore up that market to make sure that it becomes a profitable market or at least is at 0. And we're closing stores in Austria, Switzerland, Poland, other CEE countries. We're ready to close stores, we're ready to set up some provisions and so we'll be prepared to cooperate or not with those parties.
And I've already mentioned that we're going to end our sports sponsoring contracted for 2020 and 2021. So the total cash estimated expenditures would be around PLN 150 million to PLN 160 million. And so we're thinking about having provisions of that level. What's very important here, all of these efforts, we had planned to do under our strategy. So we're just accelerating what we had in our strategy.
So in terms of the final outcomes, basically, we're going to strive to achieve the planned levels of profitability earlier than originally planned. So CapEx in 2018, 2019 was nearly PLN 1 billion. This was because of growing the amount of selling space we had, floor space we had. But this is also linked to investments in technology changes, so technology, e-commerce, improving our ability to mail out things. So we expect nearly PLN 400 million.
Then we had the omnichannel development, hybrid stores and product development. So these were some of the prevalent expenditures we had in 2018, 2019. So the budget for 2020, 2021, had a planned CapEx of roughly PLN 450 million, and so we're going to slash that to around PLN 250 million. So in terms of cash generation, we're at a totally different stage of monetizing these projects.
So we're opening stores we still believe in and where we have them at advanced levels, but we're looking at all of our investments to think about cutting those expenditures. So we're trying to draw benefit from what we've done in 2018 and 2019. So we want to be a light company in terms of costs. And so the cost savings we're making, we want to turn them into long-term cost savings. So costs with stores being closed are down by half of the regular running costs, so our costs will be clearly lower.
We anticipate, as you see, that the costs will be linked to our base scenario. But we would declare that even though stores were [ opened ] as a result of optimizing programs for rents, labor expenses, we anticipate there'll be major changes on our operating expenses.
As I've mentioned, basically the efforts we've made -- we've taken, are taking place faster and sooner than had originally been anticipated in our strategy plan. This is because of COVID-19. So we wanted to be ready to open things quickly. And pretty soon, we're going to open up new stores in Czech Republic, perhaps in Croatia, Hungary. So in the middle of May, we're going to have another wave of lucent restrictions and we're going to be very close to having our full operating capacity in place. So we're monitoring the situation in terms of occupational health in stores.
We think things are working perfectly. We see that when stores reopen, there's 10x the interest. We can see that based on the traffic in our stores. We anticipate and we're basing this on what we've heard in the media that in mid-May, shopping galleries will be able to open. So we'll be in a totally different situation then.
Having in mind the picture you see here, this was not a period in which we didn't have any communications with the customers. We've done a lot more in marketing. We have a new influx of fresh air. So we've been able to build this. And we believe that the nurturing of these bonds with customers we've been able to engage with during the pandemic will be continued. So we want to give the best quality product, and this is something that we're going to continue to offer. So our stores are ready organizationally health-wise for our customers. And these were tasks that we had to do and we've done them.
So if you look at our financial results, we'll share with you a few numbers as a matter of tradition. So our revenue has fallen by 7%. Q1 results are now at our second banking importance. Basically, we wanted to survive and convert this into an opportunity to flourish. We've been able to do that very well. Like-for-like, has fallen by 32%. I'd like to emphasize here, if we look at Poland, we've got the greatest amount of visibility compared to our customers. So in January and February, our performance, we showed you that slide, in our GO.22 strategy, if we look at the market over the last 18 months, we had done worse than the market. But in January and February, we did much better than the market. And so this is something that's really worthwhile to emphasize because we can see for the things we've done in 2019 work and contribute to strategy execution. What's important here, the growth of e-commerce by 43%.
You can see on the subsequent slides, we've nearly been able to cover the gap we had in -- as a result of the shortage of stores, year in, year out. So the most important thing is that stores were closed, and so the ones that were open had fewer or half customers. So we've already reported the results. They've changed a little bit in terms of revenue.
So we have various channels of distribution. So our revenue is slightly higher than in the prelims. Our gross margin was a little higher, so our EBIT was a little higher. So this means that costs will probably trend pretty well in subsequent quarters. So we think that the situation here is quite good.
If we look at net profit. So the net profit was burdened by the result of an associate. And so the loss was higher than the purchase price, so the next [ price ] as a result. We can't go beyond what we paid for to get the season ready. So subsequent quarters, we have to have in mind that these results won't be added to the results of the group. So I wanted to explain that.
So if you look at changes in the net -- net changes in the selling space, we have 6,000 square meters less, so 5,000 square meters of new space, 11,000 of closed space. And so we're looking at store preferences. It's not the case that we're just opening stores, we're also closing.
If we look at like-for-like sales, so we had minus 32%. That's not something that pleases us. There's one thing that we have observed here in Poland. For the first time since 2013, we have several months in a row that our like-for-like is better than the competition. And from our point of view, this is something that's quite important.
If we look at e-commerce, much has been said. So outside of eobuwie, I can [inaudible] CCC DeeZee. We sold more than PLN 80 million in the first quarter. That's more than eobuwie sold in Q1.
And so if we look at how that bar is expanding, you can see that new e-commerce points of interface with customers are starting to sprout out here. And so this will give us additional opportunities in upcoming quarters. If we look at e-commerce stated as a percentage, well it's grown. So this is something that will be continued in subsequent quarters, we anticipate. So e-commerce has edged up by another couple of percentage points. So as a result of e-commerce sales, we've been able to offset the gap resulting from stores being closed. Perhaps this is because of the lack of a real winter. Even so, we're still negative at 7%. So this is a high penalty but not the highest.
So if we look at sales at eobuwie, it's better than our competition. It's the highest in Central and Eastern Europe as well as Southern Europe. So if you look at the profitability, eobuwie is a little bit lower in 2020 than in 2019. Based on April, we have the right to assume that this is pretty much one in a bunch result.
So you can see the margins, the gross margins were down by 2%. But if we look at the other selling costs, you can see we've spent some on marketing. Logistics were different. We have not been able to open up this new warehouse so we don't have the performance improvements. We had a bunch of new costs in terms of adjusting the platform to be operationally a function of -- capable of functioning to meet the needs of customers. So based on April that's coming to an end now, we can see that the situation is under control.
If we look at gross margin, eobuwie is a little bit lower. So it's down by 2%, and CCC is down by 1%. And so there's more competition here. And so the competition was using promotions that they hadn't used up until now. So the retail channel has a response. If you don't have -- if you don't make sales in the first price category, then that means that the income falls. So it doesn't look too bad. So this is something that can be made up for in normal conditions.
So if you look at cost growing, so space cost is up by -- retail is up by PLN 22 million, 10%. eobuwie, we're still trying to streamline costs here. So cost per square meter are following and will continue to follow.
If you look at e-commerce, it's higher, but more than half of our channels in e-commerce don't even have one full year behind them. So profitability parameters linked to sales growth and return on capital are things that will be held in mind.
If we look at the cost per square meter, you can see that there is improvement in each one of the lines. And I can put it this way, that this image will accompany us in subsequent quarters. So you can see that overall, operating expenses and specific ones are following. And there's a good opportunity for this to continue to follow in subsequent quarters.
If we look at the financial position, we still have a positive trend in terms of inventory, even though we had that period of freeze, if you will, in first quarter. So in some cases, we had stores open. And so it's better to have products to sell than not have it in this period. And so we had a little bit higher growth rate in the stocks or inventories, but this is linked also to the e-commerce. Even so, if you look at this image, this slide, you can see that we maintain a position that indicates that the company is operating efficiently.
If we look at the cash conversion cycle, we're still at a good level, so we're not far from going below 100 days. And the COVID or the pandemia is not assisting us here in the cash conversion department.
If we look at cash flow, this is affected by the limitations on trade and you can see that in the working capital. And so payables have grown. And this is -- so as -- so this is linked to COVID, but we anticipated this will be normalized.
If we look at net debt, we have a similar statement here. So net debt grew by PLN 250 million. So we have a big CapEx program. And the first quarter was very distinct. And so now we're going to be able to come back to achieving the goals that we had mentioned -- strategic goals we had mentioned. And so we don't anticipate very much capital expenditures now and after. Having secured working capital for the fall/winter period, we have a situation that's going to be improving by leaps and bounds. That's our opinion.
So to sum up, ladies and gentlemen, we believe that we're well poised and prepared to operate in the post-COVID world, where this virus will continue to be present, but we're going to be able to operate in open stores. We're getting rid of unnecessary costs, nonstrategic costs. This is something that's been discussed in our GO.22 strategy, not linked to our profitability and cash targets. So we have the 100% security for the SS20 collection. We've maintained good relations with our suppliers even though we had some problems with the stores being closed. And we really believe that our operational continuity will be maintained. We have a very good product that continues to be improved. So quality to value is a very important ratio, but price to quality is also very important. So CCC is in the first position.
We continue to improve that e-commerce segment, and so it has a pretty big role, as we move into omnichannel. We shouldn't forget about retail business, that's something that's also been tweaked. So e-commerce has become a segment that's nearly of the same size as the rest of the group. And so as we develop this e-commerce, this will make a positive contribution to sales and to profitability. And we've done some new -- five new [indiscernible] Slovakia, Austria, eobuwie. And we have deployed a new platform for Ukraine to sell our products. So we're going to have this mobile application that we'll be able to distribute across international markets. So in the upcoming months and quarters, we'll have three new foreign markets for CCC having this e-commerce platform from MODIVO. So we believe that we're going to be able to offer even more and get a much stronger position [ that this covers ]. And this gives us an opportunity to make positive contribution to the results of the company.
So if you look at the work done on altering this business model, where the customer is at the very center of this model, and this work's been going on for more than a year, we identify with our customers through our technology and other efforts and to offer products that customers really want. So we believe, as we can see even today, these products are incenting our customers. And so this is something that will continue to transpire in the fall and winter collection.
So we said that we're going to show you even more in the fall and winter. So you can see that even more is coming to the forefront. As I wrap up this portion of the presentation, I can say that COVID is something that we treat, even though it's an unfortunate event, and it's pushed us off our trajectory of strategy [ education ], but we now believe more than less that this situation can help us move forward. Hence, we're ready to execute that. So we've accelerated the work on changing on our business model. So we're thinking about this post-COVID world and to have a much more mature omnichannel policy with an even better product. So this should enable us to develop. We're not slowing down. We're reaching for more.
So I talked for 50 minutes now but I think you're going to have still a large number of questions and comments, and you might want to say something. As a matter of tradition, we have the Chairman with us, and he has a view of the macro context. So I think he might like to make a few comments at this time.
So I think you pretty much said everything. I might just add that I'm a witness of all of the things -- to all of the things that are happening in the company. And so working together with the Management Board, I'm also happy with everything that's happened over the last 5 weeks in the aftermath of this crisis. And I think we're in a much better position than we were, say, three or four weeks ago, thanks to the execution of the agreements with the bondholders, the banks and the rights offering probably next week. And so we're waiting for the stores to be opened, and I think we're well prepared.
This is something that Marcin has said. We have had good price-to-quality relationship. And so our brand recognition is something that we believe will bring customers through the doors and make sure that we have the accessibility and availability at the price you want.
So this has become the center of events. And so I would confirm about all these costs. So we're renegotiating rental costs in shopping galleries. We can't let a situation take place. It doesn't matter which country we're talking about. We're not in line. Basically, the cost that we incur have to be directly related to the revenue we can generate here. And so more and more operators of shopping centers have given us satisfactory conditions. And so I think in the next few days, we'll have the vast majority having already agreed to the new changes. But I would think that at most there'll be 25% of the developers have said that we should wait a bit and we'll get a better relationship, but nobody really knows what sort of conversion or how much sales traffic you're going to have or traffic. So we want to make sure that it's not going to count as some sort of countering point to our major objective.
So perhaps, are there any questions? So would the other Management Board members like to say anything at this time?
So I think we've got the first questions coming forward. So perhaps we should look at the questions. So I'm thinking that we could go on to the Q&A at this point. So we had to limit your ability to participate actively in our conference. Perhaps we'll go first to the questions, and then we'll add a commentary to that. A lot of things have happened in all of the areas we've discussed. So let's go -- let's move to the questions.
So the first question, what does the health and will of fighting look like amongst the management team and the Supervisory Chairman?
It's perfect, a little bit like being in the trenches. But we made the adjustment swiftly, and we've done quite a bit. I think we're working more. We're available all the time at all times of the day and night. So I think it's quite a thing. So we're healthy. We're optimistic. So let them open our stores.
So perhaps you've seen that there's a bit of fatigue, weeks of working day and night. And so we're going to have an opportunity to have maybe a little bit of a weekend, and then we're going to come back very actively to work. So our health and our willingness to fight is at the top level.
And we have another question. Could I ask you for a split of your restructuring expenditures into Germany and Switzerland? Does this mean that you want to leave the German market entirely in the HR Group? What sort of costs are you talking about with Switzerland? What's going to happen with Switzerland? And what does that depend upon?
Perhaps I'll try to respond to that question. Can I try? So the question is about Germany and Switzerland. Half of the amount is extracting ourselves from Germany. 1/3 is moving out of Switzerland. This means that we would close all of the stores that we still have in Germany that are operating under the CCC brand. So that means that CCC would no longer be a brand in Germany. We would be a super passive shareholder in HRG, so no intention to augment our role there. So the main shareholder in HRG, so we're going to go in a certain direction with this [ master ] in HRG, but no more additional exposures.
If we look at Switzerland, when will a decision be made? And what will it depend upon? We're utilizing this market momentum we have to close stores and to revise conditions such that we'll have less, but a little bit more profitable.
Operation, we'll see who could be interested in this company. So somebody new could join us. We have founders. And so decisions will be made about potential investors coming forward at the end of the year, we think will be more interested in a restructured entity as opposed to what the case is today. So the final decisions will be made at the end of the year. That doesn't change the fact that we're closing everything that's not very profitable. On Switzerland we're going to cut things in half, more or less. Next question?
Next question. It's about the operating margin and e-commerce. It's fallen or deteriorated. Should the situation improve into the next quarter?
I mentioned -- I responded to this question during the presentation. So we had a price war, we didn't have an opportunity to improve the margins. We've been able to buy products quite favorably, so we think there's room here for the gross margin.
If we look at logistics, we talked about the mix in various markets. So we think we're going to have a faster growth base, Central and Eastern Europe. And so things will normalize here. Costs of logistics as of May, we think they'll be normalized as a result of the new K2 warehouse. So we think that we're going to be able -- so starting in April, we believe that the situation is normalizing quite strongly.
So we've done certain things in March in terms of having those disinfection points. So it's going to be something we're observing, but we think that the work has been done to improve that.
Next question, could you present a breakdown of the cash spend on restructuring? We're talking about the PLN 150 million, PLN 160 million. Could you say a few words about the breakdown of that?
I think Karol Póltorak has responded to the extent that we can really talk about this. So I don't know if you want to say anything more, Karol, in terms of provisioning levels, which I see three or four different questions. Could you read out the question once again, Wojciech?
This is a question from Lukasz Wachelko. It was posed in English.
The bulk of that is the cost of closing Switzerland and Germany. From Germany, that's roughly half of that amount. 1/3 is Switzerland, and this is the true loss of this market. And so as of 2021, we assume that this is going to be an asset that won't generate a loss [ on our own cash ].
So in Germany, once again, we're extracting ourselves from that market entirely under the amount that we've provisioned here. So after 2020, we won't have any presence whatsoever, hence, the provision we've put in place here. So this is not something that will burden us anymore.
So everything depends on how the market's going to develop in Germany being a 30% shareholder in HRG. And so all players have some challenges. It depends on the aid programs in Germany compared to Poland. But as I said, we're going to want to sell. We don't want to increase our stake in any way, shape or form.
What's quite important, there are no contractual arrangements that we agreed upon with our partners, so there are no calls or anything like that.
So the next question. Will the shopping galleries, utilizing the bank guarantees? If so, what amounts are we talking about? Maybe to the Chairman?
So the guarantees are for 3 months' rental guarantees. So they're not going to use them. We don't have a situation in which those banking guarantees are utilized by any of the shopping centers. The situation, of course, is terse or tense. So it's obvious that most of the shopping centers didn't receive anything in March. And so we hope that they're going to -- these talks that are being quite intensive, that they'll end. So we're tenants like others. There's certain instruments on our side and so we're counting on a partnership arrangement that would protect this business in this year and subsequent years.
So it's not the case that Karol hopes. Karol knows. So it's not possible for somebody to get full rent if our revenue's fallen by half. I'll say even more. If somebody comes and tries to utilize a banking guarantee, they'll never see us again. So it's not every shopping center. We're one of the first ones to say that we're not going to pay rent during this period. So if you have an empty shopping space, that's the end of a shopping gallery. So these talks went very well. So we can't really disclose the contents of these discussions because we have market competitors. And there's a market, generally speaking, and so on and so forth, but -- so as we go on -- we have a similar question. So what caused the year-on-year online segments result to fall?
So this is gross margin. One-off costs. So the spring came earlier this year. We had the season. Now we have growth 100% and beyond, all these shopping centers were closed. People were panicking. We have a much bigger ticket for MODIVO now, for example. So we have more shoes being sold in terms of quantities. So if it's not going to be in the least expensive channel, then it will be in the medium channel or the most expensive channel. So we're going to sell, of course, in this e-commerce channel.
We have to remember that our ability to ship out product is going to triple this year based on our growth in e-commerce. So we're very pleased with that growth. So we've had growth in excess of 200%. So basically, we had to reconnect to new systems or connect -- hook up to new systems. We switched systems. So things are much better now. And so several times bigger. And so we're mastering that situation, and we're in control of it.
We have several questions. Let me add that e-commerce is a little bit of a response to what's happening in general retail. So we have more marketing. So basically, all customers or competitors are trying to sell through e-commerce. And so, sometimes, the margins can't be as big, but it's a matter of the size of your operations. So marketing efforts will lead to higher sales. And if we look at our stores, it's not such a big business in terms of having inexpensive shoes or inexpensive products.
So the rental costs have to be aligned to the stores. We have to remember that 70% of the returns are in our stores. But elsewhere, we have 40% repurchase or additional purchases. So this is something that we want to utilize, tap into in the future, in terms of these type of sales channels like e-commerce.
Next question. There are a few questions about traffic as stores are opened up again. So the traffic is higher than we had anticipated, but it's down by 50%. Conversion is higher. So the like-for-like is at 25%. So things can change. They can move up. Not everybody knows that the stores are open. So we can see that people are happily coming in and doing some shopping.
Next question. In terms of renewing sales in stores, are you planning any rents in your retail parks right now?
We're trying not to pay, even though the [ law ] doesn't anticipate that. I can't imagine a store that we're going to pay for that. I can't imagine a store where we're going to pay rental for this downtime. We're starting new sales, a new life on better conditions for the next six months to a year. And so, basically, the level of sales revenue has to be linked to the level of rents we're paying.
You're talking about labor. So cuts of employee benefits, what sort of level?
You can assume a number in the teens. We're not talking about layoffs or dismissals. We're mostly talking about not extending contracts. So fewer operations, fewer shipments, fewer handling -- less handling.
So basically, if we have things down by 20%, 25%, then we have to have fewer staff members. We're doing everything we can to retain our long-term staff to the greatest extent that's possible. So the best people will be retained. So we have some of the rotation amongst the new employees. So we have natural selection as well. So this is not a prestigious function to be a sales clerk. So we have a -- it's a natural area for, not absenteeism, but for turnover to take place.
So as we go on, what are the group's plans for your presence in Austria?
Austria has a profitability problem. So the rental costs are being renegotiated, and we're talking about them. Certain things are being terminated. And so we're talking about the new terms and conditions.
So we've done several things in terms of the communication, the product rotation. So we're trying to launch e-commerce. So we have a positive point of view on the possible outcomes. Every state or country has slightly different regulations. So in Austria, you have a slightly different approach towards force majeure in finding a solution that's suitable to what's happened in terms of what's selling in the stores or what you can do.
Next question. Do you see higher logistics costs since everything is being delivered by couriers and messengers? What is your opinion about the future?
We haven't seen that. In CCC's e-commerce or eobuwie's e-commerce, we haven't seen any changes. We'll see what happens in the future. So things are basically being fleshed out anew.
So there's a group of suppliers that's going to have a more difficult time to negotiate in terms once again for the new times.
Have you been able to renegotiate the rents in Germany, so you won't have to pay rents?
So this is about our partner, HRG. It's much more difficult to handle those -- run those type of talks in Germany than in Central Eastern Europe. So Adidas and Deichmann said that they weren't going to pay, but then they had to retract from that statement after a couple of days. So those talks aren't going to be very easy, but the German market is adapting quite quickly. But it's not going to be our problem, or it's not our problem anymore. And so we can just sort of look at what's going to happen there, follow up what's happening there from our side of the border.
So we're closing another group of stores. So we're going to have a very small percentage of those type of stores. And we're moving down towards 0. So as we continue, so the gradually opening stores, we see that shoes and apparel aren't coming back as quickly in those markets as, for example, small household appliances.
We believe that demand is going to come back. We've shown you some of our assumptions. We believe that at the end of May all the way through the end of the year, stores will be gradually retracing their steps. We know it's going to be better. We don't really know what's happening with small household appliances. But based on what we see, and what the Supervisory Board Chairman has said, we have very good shoes that have been upgraded in terms of the quality. So we've got the best price-to-quality relationship. So perhaps this remark is correct, but we haven't observed it. That's a problem of the overall branch or the industry as opposed to a specific player. So there are financing and other issues to be considered.
Okay. Thank you. Next question?
What was the utilization of your factoring limits at the end of Q1?
I'm not able to quote that information just from the top of my head. I can talk to you about how we actually report that data. If I remember quickly, we mentioned in the current report, we had a certain percentage that are closed and everything are open, ongoing expenses. And then we have an agreement. So this topic is very well structured, you could say, because we've been able to adjust the age structure there.
What's happening with your rents in Russia? Can you access any government aid?
At the end of the presentation, you have information about the aid programs in the various countries. In Russia, perhaps, this is my best knowledge because things can change quickly. They're at a very preliminary stage, and it's not very big. So our goal there -- so it depends on the economics of the store. And we want to make sure that the rents are aligned to that. And Russia is going to be two to three weeks behind. So everything is just being worked out there now. Three weeks ago, they said there is no providence, and now negotiations are underway. So hoping for a positive outcome.
On the last few questions, if you could give a comment on the loan for PLN 66 million in Q1, what was -- who was it given to and according to what rules?
This is the fulfillment of our closure of operations in Germany. So we had the negative sales value that we had to settle. We had to cover the losses there and contribution to the closure of stores in Germany. We started to close more stores recently, so that's why we had to allocate that loan for that purpose. So it's part of our exit strategy from the German market. And that's something we announced, I think, 5th of January last year. So we're wrapping things up there.
So we don't anticipate that we're going to have any more capital expenditure contribution to that. We want to assess the probability of additional costs, and then we'll have to put a provision for that, and then we're exiting that market. So quarter-on-quarter.
And I think we have the last question.
Are you able to assess the noncash restructuring cost on top of the PLN 150 million, PLN 160 million?
Up until now, we've not focused on that. In recent 5 weeks, we wanted to shore up the financial standing, the situation of the company. And so we were looking at the cash needs we will have the next 24 months. And this is what we discussed with banks. And as the management, this is what we focused on. And that's why you see the provision that we've shown you, on one hand, to make sure that there are no surprises, and to make sure that everything is fully disclosed, so you can know what our best knowledge is in terms of the cash needs and what stands behind these amounts.
And this is the most important thing, in terms of our sales as a company in this business. But accounting write-offs, there'll be calculations for sure in Q2. And we'll have to make decisions about what amount they are. And we want have a normalized set of accounts that's not dirtied or soiled by historical events. So this is a good time to clean up certain things. So we want to be as transparent as possible, and we want to rebuild our profitability as quickly as possible.
So 2020 is a very distinct year. So it's not a year that anybody is going to be pleased with, but it's a good year to act as a catalyzer to launch us into faster operations. So if you looked at Switzerland, Austria, the other countries, we're reducing expenditures. So this is a reserve that we have in our results. There's no burdens on them. And so we want to release ourselves from that. And so then we want to continue developing that, both in terms of marketing and other things. So we have to bring the story to an end. Perhaps we would spend a year, 1.5 years on it otherwise, but now we're going to do it all in a single quarter.
One more question from the English language set. Could you give a few words of commentary about the potential impact about your write-offs for inventory in Q1?
Here, it's here too -- it's hard, too difficult because the spring/summer season is still underway. So the inventories have been refreshing quite strongly recently. So I don't anticipate that a write-off on a quarterly basis would be higher than normal. So we've got product that's quite fresh, fresher than in previous years, even for '20, '21. So I would think that this is going to be a small amount, and we're going to be more conservative.
You should know that our inventory policy is defined by a seasonal approach. We're thinking about how we can use our products in specific seasons. So fall/winter versus spring/summer. So we have the summer in front of us. So we are taking a very prudential or cautious approach, and so we're going to be able to be more rigorous than in previous years. So spring can be sold also in the fall, if you look at the collection it says '20, that can be an addition. So we don't see any major reason to write down more.
So we also have products on a better relationship between euro and dollars. So China was stopped. Now it's back in operation again. So it might be the case that the party that has the product is going to win. So you can imagine that we go into the fall season, and somebody doesn't have any product, that's one of the things that could happen otherwise. So we're trying to make sure that we're in Bangladesh retooling production and to make sure that everything is done more or less correctly.
So we're talking about the fall collection here. So the advances we've made [ or that will be made ] is for the fall collection. And so we've pushed it into the summer collection. But innovations are built with the suppliers in such a way that some of these costs -- upfront payments are smaller. Well, they have the same issues we have. We're all in the same boat. And so we're all waiting for the successful conclusion of this coronavirus problem to make sure that we can go back to our normal trading activities. If that's not going to be possible, then this issue rights offering and the loan from BGK, having that on board, we're going to be able to survive easily.
And then we'll have in our warehouses spring, fall, winter, summer. So we think that this first scenario that we have the products, and we're going to be successful in the market by selling that. That's what we're thinking about.
So I think we've responded to the other questions indirectly. So we'd like to thank you very much for your participation in today's session. So I hope that we've been able to give you quite a bit of interesting information. We're at your disposal and IR is at your disposal as well. And so we wish you good health, and we'll see you next time.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]