Off-price ambition, operational reality

HalfPrice is set to become the largest chain within the Modivo Platform, although it currently reaches only 40 percent of its potential customer base. The remaining audience – including shoppers from Sinsay and Pepco – will be targeted by its twin concept, ShockPrice. Together, the two brands will account for the majority of roughly 300,000 square meters of new retail space.

Dariusz Miłek, founder of CCC (today operating as Modivo Platform), has on multiple occasions used earnings announcements at quarterly media and investor conferences to counteract shareholder sell-offs triggered by results. On May 20, however, the market reaction moved in the opposite direction.

Preliminary results for the first quarter of fiscal year 2026/2027 (February–April) were initially well received by shareholders, with the stock rising by several percent. During the conference call, however, sentiment reversed: gains turned into a several-percent decline, bringing the share price down to around PLN 80 (approx. EUR 19). That implies a market capitalization of over PLN 6 billion (approx. EUR 1.4 billion). A year earlier, Modivo shares traded above PLN 220 (approx. EUR 51). Management maintains that the company remains undervalued.

— We defend ourselves through work, as they say on construction sites. We keep working, and we believe valuation will follow. I am not withdrawing from the 2030 target [the incentive program assumes a share price above PLN 300 (approx. EUR 70) – ed.]. Nothing motivates me more than the bonus waiting for me — says Dariusz Miłek, CEO of Modivo Platform.

Results below ambition

Modivo’s revenue in the first quarter increased by 4 percent to more than PLN 2.4 billion (approx. EUR 0.56 billion). This was driven primarily by the HalfPrice chain (+35 percent to PLN 600 million, approx. EUR 140 million), as the CCC banner together with Modivo.com (the platform and eObuwie stores) posted a single-digit decline. Total retail space increased by 40 percent to 1.2 million square meters, supported by the opening of 234 new stores, bringing the total to 1,286.

Gross margin rose by 1.3 percentage points to 51.8 percent, the highest level in years. After adjusting for selected items (including negative currency effects), this translated into a 6 percent increase in adjusted EBITDA, reaching PLN 296 million (approx. EUR 69 million). However, operating profit contracted sharply – by 90 percent – to PLN 22 million (approx. EUR 5 million).

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— We had an appetite for more, and our ambitions remain higher. That said, given weather and geopolitical volatility at the start of the year, the adjusted EBITDA result is solid — says Łukasz Stelmach, vice president of Modivo Platform.

The company does not disclose a profit target for the current year, saying it aims to “extract maximum value.” This follows the need to revise expectations downward twice in the previous year.

Last year’s CAPEX (capital expenditures) amounted to PLN 800–850 million (approx. EUR 186–198 million), of which around PLN 150 million (approx. EUR 35 million) was allocated to a HalfPrice warehouse scheduled to launch in the coming months. This year’s spending on retail expansion is expected to be comparable – around PLN 700 million (approx. EUR 163 million) – depending on the availability of attractive locations on favorable terms. The group plans to expand retail space by roughly 300,000 square meters, primarily under the HalfPrice brand.

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Modivo performing better, Worldbox facing challenges

The Modivo.com banner (together with eObuwie) has recently been the main source of pressure, weighed down by excess inventory and unfavorable commercial agreements with suppliers. As a result, the group removed roughly 700 brands from the platform, retaining around 100 under the most attractive terms – including several dozen proprietary and licensed labels. The company now expects a gross margin of approximately 48 percent this year, compared with 38 percent in 2023.

— The 8 percent decline in Modivo.com sales was a conscious decision, driven among other factors by a reduction in performance marketing spending [“buying clicks” – ed.] by PLN 50 million. The ratio of such spending to revenue fell by 6 percentage points to 12 percent, which is a solid level for e-commerce. An adjusted EBITDA margin above 9 percent is also a good result. For us, however, this is just a stop on the way to 20 percent and beyond — says Łukasz Stelmach.

A new drag on the group’s results is Worldbox, developed over the past year on the foundation of the Kaes retail chain. Modivo took control of the company only in February this year and is now dealing with the consequences of stocking inventory that initially generated gross margins of just 4 percent. Proprietary licensed brands, which deliver the highest profitability, have been rolled out more extensively since mid-March. Gross margin has already risen close to 60 percent, with a target of 62 percent by 2027.

Dariusz Miłek had aimed for Worldbox to exceed PLN 1 billion (approx. EUR 232 million) in revenue by 2026, with an EBITDA margin of around 20 percent. Operational challenges have forced a shift in priorities. Instead of 150 new stores, the plan now is for 50, and for the time being exclusively in Poland (reaching 270 stores by year-end, including roughly 70 legacy Kaes locations).

— This year we will reach around PLN 600 million (approx. EUR 140 million), so the billion mark is not that far off. I continue to believe in this business model. We are already achieving a solid margin and strong conversion. What is still missing is traffic, but that will come once we replace the entire assortment with a new collection. Then we will accelerate store expansion. It is possible this is not a concept for large cities. The chain performs best in towns of 20,000 to 30,000 inhabitants — says Dariusz Miłek.

Expert's perspective

A difficult road ahead for Modivo

The Modivo Group has come a long way. A long and arduous one: from a fragmented business spread across several entities to a far more structured, integrated organization. Dariusz Miłek has repeatedly demonstrated his ability to generate profits. The question, therefore, has never been “if,” but “when” the company would return to sustainable profitability.

A strong licensing segment, the distribution of these products on platforms such as Allegro and Zalando, and consistent efforts to increase the share of premium assortment sold in a marketplace model – all of this is now beginning to have a tangible impact on results.

Investors still remember CCC’s golden years, as reflected in the ambitious valuation that not long ago reached around PLN 120 per share (approx. EUR 28), compared with roughly PLN 80 (approx. EUR 19) today. At the same time, they are now looking at the company with far greater caution. Their trust premium has clearly diminished, while Modivo’s debt remains high, exceeding PLN 2 billion (approx. EUR 465 million).

At the current cost structure and debt level, any deterioration in demand – whether driven by weaker consumption or intensifying promotional pressure – could simultaneously erode margins and limit the company’s ability to continue steadily reducing its debt burden. For now, however, Modivo still looks promising not only to investors, but also to partners selling on its platform.

Urszula Wiszowata-Pilic

Co-founder, B2B Hub

“I want to be the king of off-price”

At present, the group’s three main banners – CCC, Modivo.com, and HalfPrice – each account for roughly one-third of total revenues. By 2027, however, the lead is expected to be taken by HalfPrice, a chain launched five years ago. Already in its second year of operation, it became the regional leader in the off-price segment (branded goods sold at heavily discounted prices), helped by the limited activity of its only real competitor, the U.S.-based TK Maxx.

— In the U.S., this segment accounts for as much as 18 percent of sales, while in Poland it is just 1–2 percent. We started during the pandemic, when there was a large volume of surplus goods on the market. Now we increasingly produce goods ourselves under license – something no one else in this model is doing. As a result, we achieve a gross margin exceeding 50 percent, which is unprecedented in off-price retail. No European company has succeeded in this segment so far, although many have tried. I want to be the king of off-price — says Dariusz Miłek.

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In the coming years, the group plans to open around 100 such stores annually, each with a sales area of 2,000–3,000 square meters. Roughly one in five will operate under a new twin brand, ShockPrice. The group has already quietly opened 10 such stores, but a smaller 600-square-meter format proved unsuccessful. It is now seeking locations ranging from 1,200 to even 2,500 square meters. The first opening is scheduled for August in Wałbrzych.

— HalfPrice is a story about fashion and major brands such as Guess, Karl Lagerfeld, Tommy Hilfiger, and others. We reach only 40 percent of potential customers with it, of which 10 percent comes from the luxury zones we are introducing. For the remaining 60 percent – located in retail parks in smaller towns – price is what matters. That is why ShockPrice is a story about the best price. This second banner will have a gross margin of 40 percent instead of 50 percent, but twice the inventory turnover, so it will effectively generate the same profit — explains Dariusz Miłek.

The new chain will be built on the full infrastructure of HalfPrice. It will feature a significantly higher share of lower-priced brands (including licensed ones) in order to compete on price with players such as Sinsay (LPP), Pepco, Action, and Primark.

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Key Takeaways

1. Not as planned. In the first quarter of fiscal year 2026/2027 (February–April), Modivo Platform reported revenues 4 percent higher year on year, at more than PLN 2.4 billion (approx. EUR 0.56 billion). Adjusted EBITDA increased by 6 percent to PLN 296 million (approx. EUR 69 million), but operating profit contracted by 90 percent to PLN 22 million (approx. EUR 5 million). These results fall short of management’s ambitions, and this year the company has opted not to publish any financial target – last year it revised its guidance twice. It plans investments of around PLN 700 million (approx. EUR 163 million), primarily aimed at expanding retail space by roughly 300,000 square meters.
2. Two problems to solve. The group’s weaker-than-expected performance is mainly driven by two issues. The first is persistently insufficient profitability in the Modivo.com banner (together with eObuwie): an adjusted EBITDA margin of just over 9 percent instead of at least 20 percent. Improvement has been supported by reducing the number of brands from around 800 to just 100, as well as cutting performance marketing spending by one-third, or PLN 50 million (approx. EUR 12 million). The second, and currently more pressing, challenge is Worldbox, built on the acquired Kaes retail chain. The process of replacing inventory with new collections – based on licensed brands – has taken longer than initially expected, weighing on profitability. As a result, the group will open 50 stores this year instead of 150 and is, for now, limiting expansion to Poland.
3. A new brand linked to HalfPrice. The group’s growth engine remains HalfPrice, which accounts for most of the new retail space and is expected to overtake CCC in turnover by 2027. The company plans to open around 100 stores annually in this format, some of them under a new concept called ShockPrice. According to Dariusz Miłek, HalfPrice reaches around 40 percent of potential customers – those focused on premium brands. ShockPrice, by contrast, is designed as an alternative to Pepco, Sinsay, or Action for the remaining customer base, which prioritizes the lowest price.