CR 14/2020 Adoption by the Management Board of LPP SA of the decision to renounce part of agreements on the lease of retail space in the territory of the Republic of Poland – declassification of delayed inside information

Adoption by the Management Board of LPP SA of the decision to renounce part of agreements on the lease of retail space in the territory of the Republic of Poland – declassification of delayed inside information


Current report no: 14/2020

Date: 30 April 2020

Time: 8:27

 

The Management Board of LPP SA with its registered office in Gdańsk (the Company) informs that, on 29 April 2020, in the best interest of the Company and all of its stakeholders, i.e. shareholders, employees and contracting parties, it made a decision on the renouncement of part of agreements on the use of retail space, concluded with owners of shopping centres located in the territory of the Republic of Poland and, as of the same date, the Company initiated the procedure of formal delivery of relevant statements to individual lessors. The Company will renounce agreements on the use of retail space constituting approx. 29.5% of the total number of square metres of retail space utilised by the LPP SA Group. In consideration of the existing circumstances caused by the COVID-19 pandemic, the agreements in question may not, on a permanent-basis, be performed on the terms and conditions applicable so far, which justifies the exercise by LPP of its rights.

At the same time, LPP expresses its willingness to hold talks with shopping centres on new agreements incorporating terms and conditions adequate to the new circumstances. The Management Board aims at adapting the conditions of sale using retail space in shopping centres to the unprecedented change in economic and social relations, caused by COVID-19 as well as trading bans and restrictions introduced by the government of the Republic of Poland. For obvious reasons, the annulment of the trading ban does not mitigate the risk of consumers’ long-term loss of interest in visiting and shopping in shopping centres, which will, on a long-term basis, adversely affect revenue levels in this sales channel after the ban is lifted. Due to the expected restrictions involving installation in chopping centres of thermal cameras with temperature monitoring and consumer segregation into different risk groups (red, yellow and green), COVID-19 risk warnings made using the megaphone system, the requirement to shop wearing masks and rubber gloves limiting free touching and trying of goods and limitation of customers’ number in a store and the shopping centre, treading reality will be totally different. From the legal perspective, the above justifies the renouncement of current agreements, necessitating a deep change of the business model of stores operating in shopping centres and shopping centres themselves and determination of new terms and conditions for prospective cooperation.

Simultaneously, the Company’s Management Board informs that, due to the extension in time of the procedure for drafting and delivering to owners of specific shopping centres of statements on the renouncement of lease agreements, the Company has made the decision to delay public disclosure of the above-mentioned information on the decision made by the Company’s Management Board. The Company clarifies that, in the opinion of the Company’s Management Board, immediate public disclosure of the above-mentioned inside information on the date of its occurrence would give rise to the risk involving the hindering by owners of shopping centres of effective delivery of statements on the renouncement of agreements, which would substantially obstruct the procedure in terms of effectiveness of such renouncement from the moment of delivery of a statement to that effect to an addressee. Disclosure of information on the decision of the Management Board, made in respect of renouncement of lease agreements, before delivery of relevant statements to that effect to owners of shopping centres would, therefore, adversely affect the effectiveness of statements made, which, in consequence, could violate legally justified interests of the Issuer and, consequently, the interests of its shareholders. Today’s public disclosure of the information on the decision of the Company’s Management Board is related to the fact that, on 30 April 2020, the prerequisites set for Article 17(4) MAR, justifying the possibility of delaying the public disclosure of inside information, ceased to exist. At the same time, the Issuer informs that information provided for in this report exhausts the content of the above-mentioned delayed inside information.

 

CR 14 2020 – Adoption by the Management Board of LPP SA of the decision to renounce part of agreements on the lease of r

 

CR 13/2020 Update on the effects of the COVID-19 coronavirus outbreak on the operations of LPP Group

Update on the effects of the COVID-19 coronavirus outbreak on the operations of LPP Group


Current report no: 13/2020

Date: 15 April 2020

Hour: 1.43 pm

 

In connection with CR 6/2020 published on 15 March 2020, providing information on the effects of the COVID-19 coronavirus on the operations of the LPP SA Group, the Management Board of LPP SA (the Issuer) updates the said information as at 15 April 2020.

The Issuer recognises the highest risk arising from the effects of COVID-19 for the sale of goods.

Following decisions made by governments of the countries in which the Group operates its traditional stores, in 21 countries out of 25, traditional stores of all LPP brands have been closed.

The implemented restrictions concerning the operation of commercial facilities will adversely affect the Group’s sales and financial results.

At the same time, in 30 countries, online stores operate with no trading restrictions, generating high sales increases.

Risk relating to the supply chain is recognised by the Issuer as low.

Plants in China, Cambodia and Myanmar pursue standard operations. Plants in Bangladesh and India remain closed, while in Turkey and Pakistan production has been limited.

Simultaneously, warehouses in Poland, Russia and Romania accept goods and make dispatches to online stores.

Currently, the Company has stocks of goods worth approx. PLN 2 bln, comprising solely clothes from 2020 Spring/Summer collections.

The Company’s Management Board has undertaken numerous actions to maintain its strong liquidity position:

– on the revenues part: actions aimed at the dynamic development of e-commerce;

– on the costs part: reduction of store and head office costs (benefitting from the assistance of the Polish government as part of the anti-crisis shield involving rent-free periods for the duration of store closure and governmental support for payroll costs);

– on the expenditures part: reduction of orders for Autumn/Winter 2020, reduction of capital expenditures for 2020/21 to PLN 500 mln (limited number of new stores to be opened in 2020/21, i.e. the Company plans to increase space by 10% y/y, postpone in time investments involving the construction of head offices and the distribution centre in Brześć) and recommend non-payment of a dividend.

As at 15 April 2020, the Issuer expects that the effects of the COVID-19 pandemic will substantially affect the Group’s future results and operations. However, due to uncertainty, dynamics and prevalence of factors beyond the Issuer’s control, as the date of this report, such impact still remains impossible to be estimated.

Any new circumstances substantially affecting financial results generated by the Issuer and its economic standing will be communicated without delay in separate current or periodical reports.

 

CR 13 2020 – Update on the effects of the COVID-19 coronavirus outbreak on the operations of LPP Group