LPP’s financial situation after the first quarter of 2014 is very good – the company’s sales revenues grew as a result of increased retail space and sales in stores. Despite the difficult situation in the East, which had an impact on our current results, the company continues to grow as it diversifies into three new sales markets. We are planning to open our first stores in Western Europe and in Arabic countries this autumn. In the first quarter, LPP’s total revenues from sales were 26% higher compared to the same period last year, amounting to 945 million PLN. This is a consequence of increased retail space and a 7% growth in sales in stores. The percentage margin in the period in question rose by 1.1 percentage points to reach 56.9%. As previously announced, LPP has continued to dynamically develop its store chains, with the total store area growing last year by 153,000 square meters (i.e. by 34%), reaching 606,000 square meters at the end of March 2014. Additionally, LPP’s operating costs grew by 24% in the first quarter of this year, which corresponded to an 87% increase in earnings before income and taxes, giving the total of 48.4 million PLN (this is significantly less than the increase in sales). LPP’s Q1 2014 financial results were also affected by the situation in the Eastern market. Foreign exchange losses, resulting from lower values of the Russian rouble and the Ukrainian hryvna, amounted to 57.4 million PLN, impacted the net result, bringing about a loss of 14.3 million PLN. “In March and April we reviewed our retail chain development plans. This review included a more cautious approach to the Russian and Ukrainian markets. That said, we don’t think it will significantly impact our plans for retail chain development. We have assumed that the increase in retail space will be 25%, which is only 3% less than our original assumption. By the end of 2014, LPP should have 737,000 square meters of retail space and 1551 stores,” says Dariusz Pachla, Deputy President of LPP’s Management Board. “We are searching for new growth opportunities to reinforce our market position. That is why, irrespective of the situation in Russia and Ukraine, we are on the lookout for new markets that will enable us to grow. Already this autumn we have set out to begin operating in Germany, opening 3 new Reserved stores.” The company is also planning to open stores in Croatia (5 stores of each brand: Reserved, Mohito, House, Cropp and Sinsay). Moreover, towards the end of the year our first store outside of Europe will probably open in Qatar, under a Reserved franchise agreement with Azadea. LPP, a company listed on the Warsaw Stock Exchange since 2001, is one of the most dynamically developing clothing companies. It has been steadily growing its business in Poland and abroad for a number of years, and has enjoyed a remarkable success in the clothing industry. The company manages 5 well-known fashion brands, a chain of 1400 stores, employing almost 18,000 people in offices and sales structures in Poland, in other Central and Eastern European countries, and in Shanghai. LPP continues to make new investments and win new markets. In March 2014, the company entered the WIG20 Index, which generates a significant part of the trading turnover on WSE.
The total sales of LPP Capital Group, the owner of 5 popular clothing brands (RESERVED, Cropp, House, MOHITO and SiNSAY), grew in the first half-year of 2014. The company increased its retail space and its sales in LPP-brand stores both in Poland and in foreign markets. The Group is facing a new challenge as LPP’s clothing brands will debut in Germany, Croatia and the Middle East. “In the first months of this year, we focused mainly on preparing our debut in the German market, and kept a close eye on the Eastern market. Owing to the dynamic developments in Ukraine and Russia, we have reviewed our plans a little for this region. The increase in retail space there in 2014 will be 33% rather than 52% as we originally planned. The total increase in space for all countries will therefore be around 23% instead of the originally intended 28%. At the same time, we are finalising the first stage of LPP’s venture beyond Poland’s western border, with the first RESERVED stores in Germany opening this autumn. We are also taking our business outside Europe as soon our first store begins operating in Qatar. Another important event is the debut of our five brands in the Croatian market in the autumn,” says Dariusz Pachla, Deputy President of LPP’s Management Board. “We have been the leader in the Polish clothing industry for a number of years, and we are strengthening our position in the Central and Eastern Europe. As for the investments in Germany, the Balkans and the Middle East, they mark the beginning of our global ambitions.” In the first half of the year, LPP’s total revenues from sales were 22.3% higher compared to the same period of the previous year, amounting to 2,130,000 PLN. This is a consequence of increased retail space and higher sales in stores. The percentage margin in the period in question rose by 1.6 percentage points to reach 59.3%. Total retail space grew by 35% compared to June 2013, reaching 674,000 square meters, and the number of LPP-brand stores at the end of the first half-year of 2014 was 1488. As a result, LPP closed the first half-year of 2014 with a net profit of 154,192,000 PLN, a 10 percentage point increase compared to the profit achieved in the same period last year. Despite the improvement of the situation in the second half of the year, throughout the first half of the year LPP’s results were considerably influenced by foreign exchange losses of 27 million PLN. This concerned mainly the Russian rouble and the Ukrainian hryvna. Owing to the unstable economic situation in Russia and Ukraine, LPP has slightly scaled down its investment in the region. LPP’s operating costs increased by 25.9% compared to the first half-year of 2013, and earnings before income and taxes rose by 21.2% in comparison to last year’s EBIT, reaching 246,479,000 PLN. LPP, a company listed on the Warsaw Stock Exchange from 2001, is one of the most dynamically developing clothing companies. It has been steadily growing its business in Poland and abroad for a number of years, and has enjoyed remarkable success in the clothing industry. The company manages 5 well-known fashion brands, a chain of 1500 stores, employing nearly 18,000 people in the offices and sales structures in Poland as well as other Central and Eastern European countries, and Shanghai. LPP continues to make new investments and win new markets. In March 2014, the company entered the WIG20 Index, which generates a significant part of the trading turnover on WSE.
LPP intensifies its expansion in the West – RESERVED clothing now available in the largest European market. As previously announced, LPP is pursuing its expansion into the German market. The company has signed new contracts to open RESERVED flagship stores in further locations in Germany, including Berlin, where LPP’s first flagship store will be set up. LPP has an ambitious plan to open 30 new RESERVED stores in this market over the next three years. LPP’s expansion in the West is undoubtedly one of the key decisions made by the Management Board in recent years, aiming to boost the company’s growth and reinforce its position on the international arena. Under the newly signed contract, LPP’s new flagship store will open in a prestigious location – at Tauentzienstraße 18, a major shopping street in the western inner city of Berlin. As per the investment assumptions, in the last quarter of 2016 LPP will be selling its RESERVED products in an area covering 2000 square meters. And as far as other locations go, the RESERVED clothing store chain will lease a massive 2400 square meters of retail space in the Palace shopping mall on Planken Street in Mannheim, a city with over 300,000 inhabitants. “Germany is the largest clothing market in Europe and fourth largest in the world. It is very well established and promotes the presence of international brands,” says Piotr Dyka, Deputy President of LPP’s Management Board, who is responsible for the Reserved brand in Poland and abroad. “We are operating in a business where being on the lookout for new growth opportunities is key. We want to be present in the most prestigious fashion streets in Europe. Opening a clothing store in Berlin highlights our expansion strategy, whose objective is to open new stores in renowned locations in the largest German cities. By the end of the year, we will have opened 3 more RESERVED stores in this market.” The first RESERVED store in Germany opened this September in the Palais Vest shopping mall in Recklinghausen, with new openings coming up in Stuttgart and Bremen in November, and Hanover in December. Germany is the first step in our expansion in the West. Simultaneously, we are taking our business to regions that are entirely new for us. This autumn, shops of all LPP brands will open in Croatia, and at the beginning of 2015 our flagship brand, RESERVED, will welcome its first customers in our very first Middle East location in Qatar. LPP, a company listed on the Warsaw Stock Exchange from 2001, is one of the most dynamically developing clothing companies. In 2013 alone, the company sold over 70 million items of clothing, with the turnover reaching over 1 billion euro. It has been steadily growing its business in Poland and abroad for a number of years now, and has enjoyed remarkable success in the clothing industry. The company manages 5 well-known fashion brands, and plans to launch another in 2016. LPP runs a chain of 1500 stores, employing nearly 18,000 people in its offices and sales structures in Poland, other Central and Eastern European countries, and Shanghai. In March 2014, the company entered the WIG20 Index, which generates a significant part of the trading turnover on WSE. At the end of August, the company’s shares were included in the prestigious MSCI Poland Investable Market Index. The current market value of LPP is estimated at 4 billion euro.