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[Foreign Language] Welcome, ladies and gentlemen. It is now 12 noon. We'd like to welcome you. We're going to focus on the results of Q2 and the events that contributed to those results. We'll say a little bit more about our investments, because a little bit more has happened, and it would be good for you to have this recapitulated or summed up. And we'll start with the key events.
So we had a lot in this quarter. Not all of them would fit on this slide. So I'll talk about them a little later during the course of our presentation.
So we have a new flagship store in the Wars Sawa building. We have nearly 2,500 square meters there. So our -- it's our largest store. So it's a true flagship store, the most prestigious location, but prestige is not the most important thing. So from the very first day of trading, it's one of the top 3. So -- compared to [indiscernible] and Magnolia -- so we have 2 of the 3 floors rolled out. We're going to have a bit of a surprise for maybe some functions that we haven't done as a group up until now. But we'll talk about this at the end of this year.
So another important group of events, these are acquisitions. So the ones that were completed in Q2, like in Romania or taking over the Swiss company on Vögele Shoes. And we can also talk about taking over control over the Adler agency network at the end of the year. Over -- taking over the DeeZee web store. And we'll do more in the rest of the year there. Another 2 important events, we can brag a little bit about our optimization work, cost cutting, improving the graphic design in the stores as well as the reduction of operating expenses, that's already a significant size, but the effects will accumulate over time. And we're also optimizing our working capital. And so we've been able to stable our inventories in the brick-and-mortar network, so they're not growing. We're also pushing back the deadlines for payments and we're financing some of the suppliers. And so we've been able to optimize our working capital quite well.
If we look at the group CCC in figures, so we're present in 22 -- 32 countries. So we're online in 14 countries. We're offline in 18 countries. So we're -- total, we're in 22 countries. And so we're now in Switzerland as well as in Spain. And so one example here is Switzerland. And so we can see that we've got 56% growth in our e-commerce arm. And so we're moving strongly towards PLN 1 billion in sales there.
So if we look at the like-for-like sales, we'd like for them to be better. We'll talk about this greater at a little bit later in the presentation. So we've had a pretty big increase in the amount of space. We have 660,000 square meters through acquisitions, but also, there's quite a bit of organic growth. And so this has been running in conjunction with plan.
So the gross margin has grown by 2.2%, which is quite good. And then we have a decline in our store costs by 6%. And so basically, we've been financing our inventory with the trade payables, so that's upward of PLN 500 million.
And so if you look at the map now, as I've said, Spain is in green, Switzerland is in orange. Orange is our color -- our corporate color. Red is the color of Vögele. So now we're present in 22 countries. And we have 660,000 meters of square space. Hence, the growth is to a larger extent a result of adding 87,000 square meters of Vögele. But we also have a big amount of organic growth, as we've added new stores and launched our stores. And so we've had some closures or transformations in some of the stores. In some of the stores, we have deposit or storage areas, which reduces the amount of shopping space.
So if you look at it over the last 6 months -- in the upcoming 6 months, we'll close 7 of our German stores, which were generating the bulk of the losses. So we've converted nearly 7,000 meters of space -- square meters of space into storage areas that will be used for different things. And this would enable us to optimize our expenses in upcoming quarters.
So in Poland, we've got -- in Russia, we've got the biggest amount of organic growth. And this is something that pleases us, especially if we look at Russia and the other countries. So this is an area that's very profitable for us.
So the one thing that didn't grow as much as we wanted, this is the like-for-like sales growth. You can see that we have a slight negative figure of 1.4%. And if you look at the pace that we had in 2016 and in '17 was -- it's not hard -- or it's not easy to beat such a high base. And so we weren't entirely able to do that, especially since the weather, so the short period in which our Spring Collection was actually on the shelf. And so we didn't have an opportunity to beat the base this year from last year.
So -- and we have the distribution of sales days because of the Sunday trading ban. So if you look at the graph on the right side, you can see that there is a bigger impact from the Sunday trading ban than would come from a statistical distribution. So now we see that people are buying things much less frequently on Sundays. And so in the past, they spent time in shopping galleries or shopping centers on Sundays for pleasure. And so the decline is 80%. And so otherwise, it's 50%. So this is paradoxically something that's positive. So in subsequent years, we can say that this effect will very much limit Sundays. And so Sunday will in the future not have much meaning.
So if you look at this quarter, you can see as e-commerce sales continue to grow from 13% to 17% quarter-on-quarter, we're coming close to our target of 20%, so e-commerce sales as a percent of total sales. So PLN 83 million is the incremental growth.
So the Polish segment and the Central and Eastern Europe segment has grown. And wholesale has fallen because we've moved the Romanian sales from wholesale sales into CEE category. So we consider both of our sales channels are growing in terms of our online and offline sales. So we've got 13% in our brick-and-mortar stores and we had a negative like-for-like. As I said, this is the second best historical quarter in our brick-and-mortar stores' results. So our sales are up and -- even though we had negative like-for-like. And then if you look at our online sales, there's no surprise here, we've sharply grown by 56%. So we think the next quarter will be another best quarter for us historically in e-shoes or e-commerce sales of shoes. And so you can see us growing in Poland.
It's growing -- so we can see the sales in Poland represent less than 50% of the group and we're very pleased by that. We can see that the sales in new markets are growing. So Greece, Spain, Italy -- especially Greece, Spain and Italy, we have a very positive trend and explosion of sales. In Sweden, we're going to have to think a little bit about how to bring about that explosion, but there's not the potential there that you have in Spain and Italy. So France will be added this year.
So we're -- this week, we sent out the first shoes to our e-commerce customers in France. And so we'll start next year in Switzerland.
So eobuwie shoes is something that's gaining traction. And we can say that our e-commerce firm hasn't said -- it's made its last statement, it's going to continue to grow.
If we look at our financial results here, we're going to show you, we don't have the incorporation of IFRS 16, especially financial statements. We have a backup to this presentation. You can find it in the appendix of the presentation. I don't want to take up much of your time. And to give you the opportunity to compare our performance, we'll do that, utilizing the old standard outside of the first slide.
So with sales, Q2 2018 to Q2 2017 grew by 18%. Gross sales margin is 29.9%. Gross margin is up by 1.6 percentage points, so 160 basis points. So EBITDA is up by nearly 33% from PLN 202 million to PLN 268 million. So our net profit has sharply increased by 61% from PLN 150 million to PLN 243 million. So the first thing I'd like to comment on, which is other operating income, so we have this line item here. With this as a result of revaluation of IFRS 3. So basically, this is confirmation that what we bought is more valuable than the price we actually paid for it. And the second line item is the cost of financial revenues. So it behaves a little bit differently compared to IFRS 16. So without IFRS 16, it'd be a positive impact on cost and financial income. We had basically the FX gains and losses because of the cash we have on hand as well as what we've contracted in terms of forward agreements. So for a long time, we're going to be benefiting from very inexpensive dollar. And then we have the negative impact of IFRS 16.
I wanted to show you how this operates. So this asset, which is denominated in euros, will affect us depending on what's going to happen with the euro exchange rate.
If we look at the results of individual segments, we're pleased with them. We're growing across the board in all the segments, except for wholesale. Wholesale is easy to explain. Basically, Romania is no longer part of the wholesale segment. So it's no longer possible to compare this segment on a year-on-year basis.
If we look at Germany and Austria, we have a decline. So we have a loss of PLN 10 million. Generally, we're not happy with our revenue, especially in Germany. We're relatively happy with margin expansion because we have expanded our margins there. And if we look at the cost, we continue to optimize costs there. We're closing a few stores. And at a certain point, we're going to have a positive impact delivered by the storage warehouses. So our costs and margins have more or less been in line with our wants, but revenue is off.
So e-commerce and the other countries where we have, Russia, where this continues to be a small portion of everything, but it's grown year-on-year by 100%, and that's not the end of what we should anticipate to see in the upcoming quarters.
If we look at gross margin, we're at a record level. We're at nearly 56%. So we're outside of the channel that we had talked about, 51% to 55%. So we're up by 1.6%, so to 55.8%. Even though our e-commerce arm is diluting, our margin, it grew by 0.8%, but it's a much smaller margin. But if you look at the offline network, we have a better dollar exchange rate less sales in our e-commerce arm. This is not a benefit we have in terms of the FX position. We have more capabilities to use our buying power. We also have a number of brands we're buying there. Because of our time constraints, I'm not going to talk about everything, but I can say that our e-commerce trading arm has an ability to continue growing in its margins over the upcoming months, quarters.
So if you look at the OpEx, you can see the growth. But if we look at the root causes, where the picture is a little bit different and it becomes a little more positive. We want you to look at the costs of inventories. We want to show these channels separately, if we want to analyze them separately, because if I look at Zalando and Deichmann, these are 2 totally different companies. So when you want to calculate e-commerce inventories per square meter and doing the same thing with the other segment is misguided.
So if we look at the total cost, that's not something that's entirely correct, because our e-commerce arm is growing at a very fast clip and it's nice to work on it. And we have marketing expenses. We're going to grow faster those expenses than sales growth. And we can see that also in this quarter, our costs have grown by some 80%. But if we look at the online -- or offline network, we can see that the costs didn't grow by much more than the increase in selling area. So this is quite typical of companies operating on this market.
If we look at then the OpEx costs or SG&A, and you can see that the picture is quite different. Half of the increase is organic. So we have -- we have additional selling area, and that means we have employees there, we have additional leased areas. So it's a total of PLN 70 million. So we've added PLN 24 million because of acquisitions. And so you can see that which companies and understanding from when we can sublet it to each company, and you can see what the impact will be in this quarter and subsequent quarters. We've also added an incentive program, so we have marketing and other costs. So we can treat that slightly as investments in 2017. From Q4, we have something like PLN 10 million allocated here, but we're doing some several hundred programs, which should drive the volume -- value of the company. And so we need to engage the management -- line management. We're doing that through some of these incentive programs, which got started in Q4 2017.
We have new markets, so Greece, Sweden, Spain, Switzerland. We have new channels for e-commerce sales. So some of the e-commerce is being done also in CCC.
We're selling also under reserve & collect. This is developing quite nicely. We're going to be more and more present in social media, Instagram, and you can see the growing presence of CCC. And so you can say that our methodability and accessibility in social media is also gaining traction. And so we have some LED content, digital content. We have new groups of customers, young children, kids, adolescents. So different groups of products. So there's a lot of new things that -- which we need to position correctly and we have to invest in that through that marketing.
We also have other costs. So we have these storage warehouses or depository warehouses. Right now, we have to pay the rents for them. And then we have the IT department, CRM and e-commerce. So we're spending more in salaries there. And this should give us improved profitability and higher revenues.
So we've been able to reduce the costs of operating our stores, but also head office costs, as we centralize certain procurement processes. So this quarter, we saved PLN 22 million. So in subsequent quarters, this line item will grow.
So we've just started to draw the benefits from it. It's best to see if you look at the OpEx of our stores. So we're down to minus 6% year-on-year from PLN 210 million to PLN 198 million. Even though there's inflation in costs of wages moving up, we can see that the costs of staff and the lease costs are changing. So then we also see the lack of the sales bonus. And depending on the market, we've been able to reduce the staff numbers by 10% to 15% per a certain square meter. So generally speaking, we have additional effects of renegotiating lease contracts. So CCC's value as a tenant is changing in shopping centers. So we don't see any reason why these costs couldn't continue to follow in upcoming quarters.
If we look at our cash flow and the balance sheet, we have some growth -- a lot of the growth is because of e-commerce arm growing. So as at 30 June, our inventory is not something that's linked to what we sold in Q2, but what we intend to sell in Q3. So it's quite easy to understand why we have more inventory because of e-commerce growing so strongly.
And so then we have the Karl Vögele as well as the inventory there. And if you compare it to the offline stores, even though we have major growth in the square meters of selling space, we have a slight decline in inventory elsewhere.
So if you look at the fact that we're starting to get a lot more accessories, also sporting shoes, which are more expensive, so we would also declare this theme that we're working on these inventories. And at the end, basically we'll see the impact a little bit later, Q1, Q2, I think. And so we're also working on extending the payment deadline, so we want to improve our operating capital. So we've been able to reduce our debt by PLN 350 million. So our net debt-to-EBITDA is around 1x. That's our -- close to our long-term cap is basically 1x. We want to have stable long-term finance in the company. And we assume that we'll continue to improve that, even though we're going to have a big investment program.
So if we look at our cash flow, we have major improvement quite visible. So you can see our year-on-year and quarter-on-quarter, the delta between our payables and inventories is something that we're starting to close that gap. And that wasn't so obvious to us a year ago, but things are happening here. And as a result, the company is starting to have a different cash flow in its balance sheet.
And if you look at the impact, you can see that our operating cash flow is PLN 484 million of cash flow -- operating cash flow. And so this was never the strong -- strength of the company, and this shows that we can have a good margin, a good profitability, but at the same time, improve some of our other parameters.
So just a couple words about our investments because you posed some questions about this and we were avoiding those questions how much could be spent. But what we're reporting to you now is that we are far along the track in terms of our investments. We're at the midpoint of 2018. We're more or less halfway through the 3-year program of intensive transformation of the group in becoming an international channel leader. And you can see that in our CapEx. We're taking over companies. Some of them are to basically bring order to the group. So what's happening in Romania or Adler. And then we're adding like Karl Vögele. We're giving them a product, e-commerce, the logistics chain. Those are things that we're strong in. Karl Vögele has basically 100% brand recognition on the Swiss market. And so we want to enter the market in Switzerland totally differently from how we did it in Germany. So our total spend will be around PLN 270 million on M&A. Then Adler will be financed a little bit later.
So then we have organic expansion. It's going on target. So we think that we'll spend around PLN 150 million. If you look at logistics and the expansion in Polkowice and then adding a new distribution center in Zielona GĂłra, which would cater to the needs of our e-commerce arm, I think it was PLN 100 million. Then we have some 75 IT, CRM projects, which we're doing, and this would be roughly PLN 30 million. This should improve our profitability and should make it easier for us to improve our working capital. And so the total value is PLN 550 million.
At the same time, we have a very safe net debt to EBITDA. And so the key investment, which took place in this quarter, which we reported to, there you have the data about that. Here, perhaps this is not the largest acquisition. It's only CHF 10 million, but it's the second largest player on the Swiss market. It has a lot of e-commerce potential. So this company is nearly 100 years old, 100% brand recognition and CHF 172 million in terms of its net sales. And so even though we plan for these synergies to be achieved in 2019, we can say that already in August, we've been able to sell some of our products through their network.
And so using their e-commerce footing, we want to utilize the Vögele stores, and we want to utilize our very good new concept of stores. But at the same time, we want to utilize our skills as well as their skills and having a different product on the DACH, so the German-speaking countries. So our goal is to improve profitability of Vögele in 2019. And of course, we'll report to you in what direction we're going.
And so this is the short recap. Because of the large number of events, we couldn't have said less than we've said. So there's a lot of positive things that have happened in Q2. It's an ambitious program. And I think we're going to able to share with you in upcoming quarters more information, I hope positive information. So in terms of our summary and Q&A, as a matter of tradition, I'm going to give the floor to our CEO, in order to sum up the quarter and also he will field any questions you may have.
So after a pretty bad quarter, the company is back on the right track, and that's my opinion, and everything is going more or less according to our expectations. We can say that we have poor like-for-like sales results in H1, but this is because of major growth in previous years. We were growing at 12% more or less in previous years. So if we're down a couple of percentage points, we're comparing ourselves to a period in which previously we had sales lower by 24% for -- over the last 2 years. So it's difficult to always blame the weather. We can say that this spring was delayed by 45 days. Spring came at the end of March as opposed to in the middle of February. So we were late with some sales. And so many companies had to sell their product with a large amount of sales discounts, some of them Internet stores, were selling 70% discounts.
So we're happy with the margin, but we're counting on a much higher margin. We have to follow those discount trends. But if you compare us to the retail industry, we're looking not only at Polish retailers, but European retailers that you could say that we look quite good compared to the others in the market. So it's a tough situation in the shoe market. Well, shoes react to weather differently than apparel.
We're closer to a tire industry, where you change your tires in the spring or in the winter. So depending on the weather, you have people standing in line to buy your shoes or not. We're quite susceptible to weather. But I wouldn't say that everything that's happening in the company is linked to the weather. And there's a lot happening here in the company. Listen to what Marcin says, this all confirms that the company is doing these things, and we're quite elated with the progress we've been able to achieve. Many companies have not been able to do what we've been able to do with such a high degree of efficacy.
So we can say that the acquisitions, basically these are opportunities, business opportunities. So DeeZee or the Vögele company, that's how I see that and that's how I feel. I wouldn't want to say that we're buying companies that lose money, because if those companies were earning money, then we would have to pay too much for them. But buying a company that's been around for 100 years with revenues of CHF 600 million I looked at -- I was in Switzerland for a couple of times. I understand that business, and I can say that this business will start operating well in the near future. I'm not sure what you can compare CHF 10 million to, but it's more or less the cost of maintaining some sort of ship or maybe some sort of airport division. Maybe not my airport division. Well, CHF 10 million cost -- CHF 10 million is not a big cost. We bought an asset that doesn't have any debt, and we have a store network that's all across Switzerland.
Switzerland is sort of like a persuasion. So you've got -- there's 100 stores. Well, these stores couldn't earn much money, because some of them were on the second floor, not on the ground floor. But we're buying the competences to buy or to sell brands, other brands. Of course, we have those skills, thanks to our e-commerce arm, but we're not a channel of distribution for reputable brands. Vögele is -- 40% of their sales are other brands. That's how we have to treat Switzerland because CHF 100 is not a big cost for a Swissman. We wouldn't be able to maintain the -- our stores there if we're going to sell inexpensive shoes because base is expensive, employees are expensive. So give us a little bit of time before you start making suggestions and giving your opinions. We were talking 2.5 years ago about buying e-commerce, eobuwie, and we paid too much for it at that time. But I knew that this is worth even more, and it would be worth even more, and I can promise you. So if you look at DeeZee company, which has PLN 35 million in sales or we do that much in a weekend, I'm aware of it, but we bought totally different skills. So access to a young customer who we don't have, we're talking about people who are 18 to 25, we want to have access to social media. That's the #1 player there.
I don't know the data. So according to the reports and activity on Instagram, this is the #1 player in Poland and #3 in Facebook. So if we look at the amount of traffic generated there, so there's a lot of marketing potential there. Please remember that we're interested in moving up from PLN 30 million to PLN 60 million, but we're talking about the skills we want to onboard those skills into CCC. And so perhaps there could be even more. Because the brand DeeZee will also be sold in CCC stores. So we're selling Jennyfer shoes. So if some of those shoes would be in the DeeZee brand, then this would be a certain type of success. So we can relatively quickly double or triple the sales results of DeeZee. But we're not talking about just getting sales volumes, but we're attracting customer groups we've not had onboard up until now.
Let me also mention that we're looking for solutions to refreshen our stores, give new brands. We're going to add some sporting shoes -- a well-known sporting shoes in the spring of next year, and that will be more or less it at this point in time. But we're not just sitting on our laurels. We're going to have a few surprises for you in the near future. We're not a company that -- we're building a big shoe group, and that's our major objective. And the objective -- my objective and the management team is to build a big shoe company here in this part of Europe that would be profitable and efficiently and effectively managed. We're building size, but we're not forgetting about our profitability and working capital.
Well, with profitability things vary. I would wait patiently for about 2 years and then we can see that everything will be much better prepared. And so we have some IT projects and other big projects that should improve our operations. But I would say the results of the work we're doing now will come in the next couple of quarters. It's the same thing if we look at these deposit warehouses or storage warehouses. It's difficult to explain the entire process. So you have to start paying the cost of the warehouses first and then you start getting the benefits of not having to repack shoes and not having to distribute them. We're talking about this, but the goals we're going to achieve are or will be visible -- the benefits will be visible some 1 to 2 quarters down the road.
So thank you very much. So now we'd encourage you to pose any questions. Let me remind you, on the 18th and 19th of September, we have Investor Days in 2 sites and our 2 courses in Polkowice and in Zielona GĂłra [indiscernible] Wood. We're going to have the Institutional Investor Conference on the 18th. On the 19th, it's with the individual or retailer investors. And we'd like to invite you, ladies and gentlemen, to take advantage of this invitation and to see on site what CCC looks like, what e-commerce arm eobuwie looks like. And so sometimes people are surprised where we are, it's worthwhile to see it, to touch it and to get a better understanding of it.
So now we'd go ahead and invite you to pose any questions. We've got quite a bit of time to field any questions you may have. So please go ahead.
I have a question about your target, your M&A targets. It says PLN 270 million that you're going to spend this year. What's your idea for the remaining PLN 100 million you have?
PLN 270 million is what we're spending on the 4 companies. So the rest is money not spent on the 4 acquisitions. So not everything has gone through our cash flow yet. No more questions?
I wanted to ask you about the acquisition in Switzerland. How do you see the biggest challenge in the upcoming quarter? Where do you have the most opportunity to improve your profitability? And my second question, if you look at your contracts with third-party suppliers, will your acquisitions generate some risks that somebody might change the terms and conditions of your contracts of supply?
So the Swiss market are 2 or 3 consistent -- consists of 2 or 3 sales networks. Deichmann and Vögele, Swiss Vögele at present has more than 10% of the Swiss market. In Dosenbach, they don't sell brand shoes. It's more a brand like CCC. So Vögele is the biggest player and then Ochsner Shoes. So I don't think with e-commerce, eobuwie growing so strongly, I don't think anybody is going to want to stop selling to us. We're soon going to be the largest buyer of these sort of brand name shoes across Europe because Deichmann doesn't sell brand shoes -- branded shoes through its distribution channels. Then the other question was about profitability. So I keep saying, if you look at the number of products to the sales, sell-through results are more or less the same. So we can say, generally speaking, that after the first week, our shoes have found their place, but in margin, we have a margin that's 13% higher. So buying Vögele is not adding our shoes, but also utilizing the purchasing experience of brands that we deal with in our e-commerce arm. So we're going to buy at more profitable prices. And so in a few examples, the discounts that they had in Switzerland are smaller than we have in eobuwie. That's partially because you can sell shoes more expensively. VAT is only 8%, but we're going to operate as a group, and we want to get the best possible purchasing conditions. I wouldn't overestimate the value of these other brands. CCC has certain things in a narrow scope that we want to increase the sales per square meter every year. So additional products, adding sports shoes and some of the other things that we're planning to do, this should give us that impact that we're going to be able to achieve higher sales per square meter. Of course, during the crisis, we've learned a lot, because we've learned how to reduce our costs. So we're reducing staff expenses in our stores. So that gives us savings of PLN 50 million per year. But we have a higher margin. We've got these deposit warehouses and things. We've been able to offset the losses coming from like-for-like, but we want to catch up on the like-for-like sales. You have to remember that we had a bad October last year. So if we start the winter season quite well, then we're going to be able to fill in that gap or we'll be close to filling in that gap. Okay. Further questions?
In Western Europe, do you have other companies that are similar to Vögele?
There is a lot of companies similar to Vögele. So after this acquisition of Vögele, we had a large number of visits paid by other companies similar to Vögele across Europe. There is a crisis in the market. The industry is trying to consolidate. So consolidation is taking place in the shoe industry as well. And perhaps this is even sort of a race for the better companies amongst the peers. It seems there's quite a bit. But I would say not so many companies like Vögele are out there and saying they want to be sold for CHF 10 million. I think it was an opportunity and it was...
So this was a bargain purchase? Or was this -- there's some assets of PLN 57 million, PLN 600 million in sales, CHF 10 million. So was it a good -- was it a bargain purchase?
Yes, it was a bargain purchase. Well, if this idea works out for us, if it turns out that we're going to be able to turn this company around, this is going to be a direction we can follow. We've got a lot of skills, skills in production, product skills. Let me put it differently. In Western countries, the business model was different there. They had own brands created by suppliers, but they were buying them from agents, intermediaries, brokers. They weren't buying stores or shoes directly in their own factories. So we can say we have a factory that works for us exclusively. Thus -- we don't have to be the owner of the factory. We can treat a factory as a factory that works only for us because we have 100% of these sales. Everything that is built and done is done for us at low expenses. Everything is calculated, and we know how much we're going to pay for every shoe -- pair of shoes. So I mean, this is a totally different model, and there's a large number of companies like this. And so we have market leaders across various countries. Let me say -- tell you one more interesting thing. We have average sales around EUR 20. So the average sales number is EUR 23 because they have also -- whereas Vögele has EUR 33. So if we want to sell a similar number of shoes with a higher margin at the same expenses, then you could build quite a nice profitable company. And this is something that we're vying for in order to sell additional products in order to increase the average price per pair of shoes. So we don't -- we want not only to increase the very average ticket value but increase the average price of pair of shoes. So the costs of a warehouse sending shoes and we're accepting complaints -- the people don't want to buy cheap shoes. The thing is to buy more expensive shoes, to have better products in the stores, and this is a direction that the company is moving in. Are there any other follow-up questions?
I have a question about Germany. Do you have costs of closing stores?
Of course, you have cost of closing stores, but we hide them on the ongoing basis. So it's all incorporated in our P&L.
What's going to be the value of these costs in the full year?
We're talking about only a few stores that we're being able to close. We're starting with the worst stores to close down, of course. I thought Germany was going to give us better sales results per square meter. We did a lot of optimization with the brands and with the staff. We don't take the shoes back to the warehouse anymore. We've cut staffing. But after March, we continue to have problems with sales per square meter. We've increased margins. We would be at home if we would able to get that target achieved. We're more stable then.
What's the percentage of e-commerce?
You're talking about our brand?
I'm talking about eobuwie's, its own brand.
I've got a large number of new ideas, and they have some nice licenses, contracts. So I think we're going to be able to sell 1/4 of all the shoes within the next 2, 3 years. I'll tell you 1/4, maybe 1/3 of our products we would sell through that e-commerce arm in order to drive up our margins.
What's CapEx on logistics? What do you think you'll spend next year?
Since we've got strong competencies in logistics, we're going to invest in DeeZee. We're going to invest in our website, you see. So we're using leased warehouse facilities. We're thinking about building our own facility. We've bought a plot of land. It's going to be done in phases, but we're going to have the ability to deliver services, render services to other companies because I think we've got the best e-commerce arm in Poland, full robotics. We wouldn't grow much further without strong logistics, because the numbers of orders are rising sharply. In August, we've got even better results than we did in H1. So we're talking about having a result in excess of PLN 1 billion, maybe adding another PLN 0.5 billion. Things are going to grow faster. So it's a race who can give better service, who can deliver shoes more quickly. So we're much faster than the competition here.
So you haven't defined the CapEx?
It's going to be more or less the same in terms of logistics. It's being done in phases, but we're thinking about whether or not we should do more in automation, which processes are required and which ones do we have to do manually. Headcount is rising in [indiscernible]and in Zielona GĂłra. So there's a lot of warehouse companies being built there. We might have to pay too much for the place. We have to take all of that into consideration. So we're doing the budgeting. So a little bit later, we'll be able to say more if we're going to spend a lot or just an average amount, or not very much. So if you look at e-commerce, when I talk about the -- if we use robotics, the payback period is 3 plus -- is 3 years. So it's a pretty good investment. So machines pay themselves within 3 years. So margins fell -- so because we're purchasing. Let me put it this way. We're not interested in profit in our e-commerce arm. We're generating some profits. That's what [ Zolanda ] was saying, but we are profitable. The more you go into sporting shoes -- I don't know if you knew this or not, there was -- in spring, nobody was selling shoes in March. So everybody was down 30%. So it's very difficult to talk about H1 results. Anyway, it's very good that we've been able to deliver strong results in H1. But all of the good things are in front of us. We push through prices better than all of the competitors. So our full year results and this marketing, which is giving us good payback. So is it more important to gain market share or to show the financial result that's more or less e-commerce? But you're trying to grow fast. You want to get a good position, and that costs money if you want to get a good position in the market.
If I can pose one more question. This is the final question. I'd like to ask the CEO about Germany and Austria. After closing these stores, which you want to close, what's going to happen after that? What's your strategy? What would -- what should we anticipate over the next 2 years, let's say, from the DACH countries?
Well, we have some ideas. I don't want to talk about them yet today. In terms of Austria, I don't see any problem, because Austria doesn't even earn any money. But replacing the stores with Vögele stores. So Vögele had 190 stores that they closed as a result of the losses and the restructuring they went through. There is a strong network called Charles Vögele in terms of their apparel, but it's got a better brand recognition there than we do. But we're talking about the costs of employment in Austria and the lease costs. We need to have different categories of shoes, branded shoes, because it turns out that people come into the store and say, I don't know CCC, and they don't know any of our shoes. Even though we've got a good product at a good quality, the price, people know Gabor, Tamaris, they know some other brands. Perhaps the idea would be we might rebrand our stores from CCC to Vögele. And that way, we could increase our sales by 30%, our stores, our house of brands. But these brands are known in Central Europe, Lasocki. They say Lasocki. But that brand isn't known in Austria. So in Austria, we'll help ourselves or we'll achieve profitability on our own. We have some other ideas in what we should do in Germany, but I don't want to talk about that too loudly. In fact, I'm not even allowed to speak about that yet. So I think this is a type of [indiscernible] because it has negative impact on our financial results. And basically, the management team wants to clean that up. And within the next year to 2 years, we're going to clean that up. If we either turn left or really turn right, but it's going to stop hitting our financial results. Like in the American business, what you didn't do well, you have to bury it underground and forget about it. But we're happy with Ukrainian markets, Russian markets. We see a lot of potential there, and we're growing quite well. We have a lot of potential. And so the company has very strong prospects. We have a large number of franchise operations we could open up. But organizationally, we have to become even more excellent. We have to finish up the new projects that we're running. And then it will be much easier for us, we'll be much stronger than to start doing franchise. If you want to do a franchise, operationally, you have to share profits. You have to have something to share so to make sure that the franchise operator and ourselves, that both parties would be happy. Please believe me, I'm keen to tidy things up in those countries where we're not making money. This is not an idea or something that we've buried deep underground and have forgotten about. We're going to turn things. Are there any other questions you'd like to pose at this time? If not, we have 3 first questions from the Internet.
Why didn't you buy shares along with the other management programs? Are you waiting for a better price?
Of course. Well, to be serious, I have 11 million shares, 35% of the votes. I don't want to be treated as somebody, a speculator in his own shares, and I don't want to move the share price through my actions. It's a matter of reputation for me. I was encouraged that, that won't change my status or my portfolio, that I'll have another 0.5 million shares. I didn't want to convince people to buy shares just by me buying a few shares. I didn't like that idea. I could have done -- I had the funds on the company, costs more or less the same amount as before purchasing eobuwie. We've grown by 100% as CCC. And we've added eobuwie, which is growing very strongly. So this valuation is not something that's satisfactory to us, certainly not for me. That's why we're working for people to believe in the company again and for things to be well -- go well. Next question?
Why do you need WorldTour? Does this give you any business advance -- business benefits?
Of course, it does. Well, I come from a biking environment, because I like it, and it's my passion. So I know and I think that it's possible to do a business project through cycling. I didn't pay as much as it was said in newspaper. I took it over free of charge. I think it wasn't a business opportunity, because the owner and the founder unfortunately fell -- I mean, he died. And so it either -- would disappear. So we bought a second company. I bought it privately for free. But now it has to be sponsored in some way. We're not going to spend more than 40% of the budget. We've got some contracts signed with good partners that will co-finance the group with [indiscernible] and we also have the Giant agreement. So this is the leader in sales. So in the Giant factories, everybody is building their bicycles, manufacturing their bicycles. We've signed a 3-year contract with them in terms of the products they're giving us and the money that they are giving to the company. And so it's a totally different world so -- where everybody -- it's amazing. It costs PLN 2 million to put your name on somebody's butt and PLN 3 million if you want to put it underarm. So I'm not going to say who my new business partner is going to be, but perhaps we'll have a big business project as well. It will be marketing and imaging -- so an image project. We want to be in the Champions League. We're a global company. In the future, we're going to have a large number of franchise stores. And it would be good for the name to be well known what we've known up until now. We've been driving around the chimney. So you either have to kill the project or you have to enter the project more strongly. I don't know if you know, there's a problem with the WorldTour license. You have to have cyclists and a budget. But then it might turn out that you didn't get the license because some sort of French [ queue ] got it. It's little bit like entering the Champions League. So you have eliminations. And there's some -- while there are no eliminations in cycling, you either get a license or you don't get a license. So there's no guarantee. So this company has a license for several years in the WorldTour. So we have the right to participate in all the world's largest events. So there are 40 events across the year. That's 240 racing days because Tour de France due to have 63 days. So I would just mention this is some 240 racing days. So Tour de France is 22,000 hours in TV. That's a totally different world. We were spending half of the budget, and there is no impact whatsoever because only VĂ©lo Club TV was broadcasting that. But as now, you enter that and watch it we're going to be -- it starts on the 4th of January, and the cycling season ends in October. So we start with Australia. So we're suffering a little bit, because -- maybe because of what happened with the footballers. So sometimes field and -- track and field people are giving us some medals, but -- so and it doesn't say Telefonika. But across the world, people are saying CCC. I'm not -- it's going to be something on top of CCC. It's a big project. But if we bring it all together, then this would be a large business project. We're going to have a partner where we're going to be able to sell products in our stores. We're going to have recognition. It's a new company. And perhaps this will give us some sales success as well. And I believe that this is possible. In terms of our expenditures, I can tell you we'll double our expenditures, our spend on sport. But we're talking about change from a local team to a global team. So we've done a lot of savings in other forms of sport. So basically, this will generate some good benefit. And we're a company that is dynamic, is looking to achieve success. And so this is a matter of our motivation for all of our staff members in order to -- makes a big impression to be part of the Tour de France. There are so many people walking around and watching the Tour de France. It can't be compared with Tour de Pologne. What's happening in France is incredible. Of course, cycling is the most popular in France and Spain and Italy where we don't have stores, but that doesn't mean that we're not going to have stores there. Okay. Thank you very much. Any more Internet questions?
The cash flow is impressive in this quarter. Can we expect even greater improvement in this next half year?
I'll allow myself to respond to this question. We will work on this for sure. We haven't tried -- we've tried not to give any specific figures up until now, and we want to continue avoiding that. The 3 parameters that I've mentioned, which can contribute to that improvement. We want to stabilize our inventory in order to make sure that we have the right level of inventory while increasing the sports shoes, which are more expensive. So quarter-on-quarter, we've reduced inventory to square meters. We'll continue doing that. We want to change the deadlines for our payables so those payables will grow. And if we look at operating results, the best is yet to come. As the CEO said, we have a magical month called October, which will basically change everything. Even if it were to be just like it was last year, it would be better, but we think it's going to be even better than that. So like I will say, but how much better it can, we'll be able to tell you about that at the next conference. Let me add that I'm happy with the current situation. This might sound ridiculous. We're strengthening our position. We're bolstering our position. Companies have problems. Other companies have problems. And I think acquisitions wouldn't be taking place had those companies developed and grown more properly. So the climate is conducive. And we talk about the group that I'm trying to create and what I want to do. This situation is to my liking. We're earning money, and we're earning quite a bit of money. So this is probably going to be the best year. That's what we think. And many companies are having big problems, and there's a big mountain we're trying to overcome. Well, it's 20% incline, and so the speed is falling. And you can see who's got the strength to keep on going. That's the case in this industry. We're prepared to move strongly up a steep mountain hill, and I'm not able to explain that otherwise, but this was not a good year for the shoe industry in Poland, across Europe. So companies had a lot of inventory. Factories in Asia also had problems. I can tell you for hours about the number of factories that don't have things to do because they don't have orders for the next season, so spring, because they've got too -- in stocks.
So ladies and gentlemen. Thank you very much for questions. And I hope that the responses we gave you were satisfactory to you. If you have additional questions, please contact our IR department. You've got our contact details in the presentation, or you're going to be able to catch us at any of the conferences where we're present and meetings. So on the 9th of November, when we publish our Q3 results, we'll able to see you then. So thank you for your attention, and we have some refreshments for you outside -- out of the room. So thank you very much. Bye-bye.