The second quarter of this year at LPP marked by the development of the sales network in Europe, high profitability and the company’s consistent cost discipline.
- In 2Q2023/24, the Polish clothing producer’s revenues exceeded PLN 4.5 bn, 5.4% up YoY and double-digit incremental sales growth in 1H2023/24.
- The opening of 81 new stores in Poland and abroad brought the increase in the Group’s retail space in May-July by over 25% YoY and offline sales growth of over 10% YoY.
- Online sales in 2Q2023/24, despite a significant reduction in operational expenditure of online stores, exceeded PLN 1 bn, accounting for 26.1% of Polish revenues and 23.6% of Group revenues.
- Stable sales, combined with consistent cost discipline, ensured that the company’s net profit in the first half of this year was more than 90% higher YoY.
- The Polish clothing producer yet again generated higher revenues abroad, which accounted for 58% of Group turnover in 2Q2023/24.
- The omnichannel strategy and the continued development of the stationary network in the markets of Western, Southern and Central Europe remain a priority in the company’s plans. The implementation of business plans will be accompanied by continued cost discipline.
- In July this year, LPP, as the first Polish apparel company, got its decarbonisation targets scientifically verified and validated by the international Science Based Targets (SBTi) initiative, placing the company in a selective group of only 11 Polish companies with a positive SBTi assessment.
The second quarter of the 2023/24 financial year was marked by stable sales for LPP, and the continuation of the development of the stationary network remained a priority in the company’s operations. The net profit in the first half of this year, higher YoY by over 90%, is a result of the well-developed offline channel and new store roll-outs, but also of maintaining cost discipline in the Group. Effective use of omnichannel potential in nearly 40 markets allowed the company to close the second quarter with revenue of over PLN 4.5 bn and sales growth of 5.4% YoY, and to achieve double-digit revenue growth in the first half of the year.
– Considering the high volatility of economic conditions, the stable growth of revenues is a good signal and proof that we are able to flexibly adapt to the current needs of the market, including the recently observed return of customers to stationary shopping. As demonstrated by the results for the first half of this year and the 11% YoY increase in results, consistent implementation of our strategy based on a multi-channel sales model confirms that we have correctly set the direction of development, allowing us to effectively diversify risks and maintain profitability – comments Przemysław Lutkiewicz, vice-president of the management board, LPP.
The positive effect of balancing sales results of particular channels was visible in Mohito and Sinsay brands, which recorded high double-digit YoY growth dynamics. In LPP’s youngest brand, this is the outcome of both the economic situation, which favours the continued popularity of value-for-money products, and the development of Sinsay retail chain in smaller towns. On the other hand, Mohito maintained its good performance in e-commerce, reflecting the diversification of consumer needs. The higher-end brand recorded almost 13% YoY growth in total sales, and the online channel already accounted for almost 30% of its revenue.
Between May and July this year, e-commerce revenues exceeded PLN 1 bn and online sales accounted for over 23% of Group revenues. Despite a decrease in the dynamics of this channel by almost 12% YoY, it remains a strong basis for LPP’s omnichannel, supported by mobile applications. Through them, the company is strengthening the sales potential of brands in selected foreign markets and, in parallel, is pursuing the process of international roll-outs of the apps. In 2Q2023/24, it expanded their user pool for Sinsay to include the Bulgarian market, while continuing to work on the launch of an app for Mohito. The increase in the Group’s online sales recorded in the second quarter is also a good prognosis for the second half of the year compared to the previous accounting period, despite the continued reduction in operational expenditure of online stores.
The Polish company’s priority in the second quarter of this year remained to tap into its potential in Western Europe, as well as Central and Southern Europe. These activities resulted in an increase in sales on foreign markets by 7% YoY and a share of 58% in the Group’s revenue. In line with the adopted strategy, from May to July the company opened a total of 81 new stores, increasing the retail floorspace by over 25% YoY, and the offer of the brands was already available in over 2,000 stores. Abroad, the Group increased its retail floorspace by as much as 34% YoY, developing its sales network in Serbia, as well as in Romania, the Czech Republic, and Ukraine, where the particularly high customer interest in the collections of brands from the LPP portfolio translated into the highest revenue in these regions.
– Consistent development in the markets of Central and South-Western Europe is a key element of the current LPP strategy. We are implementing the plan of foreign expansion according to schedule, and the opening of 81 new stores in the second quarter of this year proves that we are maintaining our year-round plan for retail floorspace growth. We are not giving up on investments, while keeping costs under control and profitability at a high level. The good results of the first weeks of the third quarter of this year confirm the effectiveness of our actions – adds Przemysław Lutkiewicz, vice-president of the management board, LPP.
An important step in the implementation of LPP’s expansion plans on European markets was the opening of a Reserved store in London in August this year in the Westfield Stratford City shopping centre and a second store on the prestigious Oxford Street. LPP is also currently preparing to open another location in the UK capital, in Brent Cross shopping centre. LPP has also decided to further expand its presence in Italy – following the successful debut of its youngest brand, Sinsay, in December 2022, in September this year Reserved opened its first store on Milan’s most important shopping street, Corso Vittorio Emanuele II, and there are already plans for further openings of Reserved stores, as well as the debut of Mohito on the Italian market.
In the coming months, LPP intends to continue its plans to strengthen its position abroad and increase the number of locations in specific markets such as Finland, but also Greece, Romania, Bulgaria, and Serbia. The launch of a new Distribution Centre in Romania, scheduled for the fourth quarter of this year, will significantly support the company’s growth in the region.
In parallel, the company is also continuing its sustainability plans with a focus on circular economy activities and CO2 reduction. In July this year, LPP became the first Polish clothing company to have its decarbonisation targets positively assessed by the international Science Based Targets (SBTi) initiative. This places LPP in a selevtive group of only nineteen Polish companies that have joined the initiative and eleven that have had their GHG reduction plans scientifically verified, gaining their official approval.
LPP is a Polish family business and one of the fastest growing clothing companies in the region of Central and Eastern Europe. For 30 years, it has been successfully operating in Poland and abroad, offering its collections in such prestigious capitals as London, Helsinki or Tel Aviv. LPP manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay, whose offer is available today in stationary and online stores in nearly 40 markets worldwide. The company has a chain of over 2000 stores with the total area of 1.7 million m2 and distributes clothing and accessories to 3 continents every year. LPP also plays an important role as it employs nearly 30 thousand people in its offices and sales structures in Poland, Europe, Asia, and Africa. The company is listed on the Warsaw Stock Exchange in the WIG20 index and belongs to the prestigious MSCI Poland index.