New LPP warehouse near Moscow to triple the efficiency of e-commerce operations in Russia

LPP has launched a new warehouse dedicated to processing online orders in Russia — the next step towards strengthening the company’s multi-channel sales. Thanks to the new Fulfillment Center, with an area of 30 thousand m2, this Polish clothing manufacturer will be able to process up to 95 thousand orders per day, increasing the efficiency of servicing the Internet sales carried out in the country by a factor of three. Just a few weeks away from bringing the warehouse online, LPP decided to expand it further. The investment in Moscow’s “PNK Park Zhukovsky” is the company’s response to the potential of the Russian market.

In March of this year, LPP signed an agreement to lease new warehouse space in Moscow’s “PNK Park Zhukovsky” industrial park. This facility, as announced by this Polish clothing manufacturer, was to be online by the third quarter of 2021, but already by June of this year it was processing the first online orders of customers within the Russian market. “Due to the limitations caused by the pandemic, the entire process related to opening the facility involved many challenges and required us to take a completely new approach, engaging many people as well as implementing a largely remote contact formula, with remote monitoring of progress and training online, all of which was an added handicap. Thanks to the strenuous work by the teams, we have successfully completed the entire project and today we can boast the fastest launch of a Fulfillment Center in our history,” emphasizes Sebastian Sołtys, LPP Logistics Director.

The new 30k m2 Fullfilment Center replaces the existing, half the size facility to handle Internet sales for this market. “We have long observed strong interest in what we offer through our online stores among Russian customers. The pandemic period further solidified this trend. It is also necessary to remember that under current conditions the volume of sales depends on logistics, and the existing facility, operating in this area since 2017, restricted us due to insufficient space. The current investment primarily allows us to increase the potential of our stock and storage capacity. Thanks to this, we are not only able to expand the availability of what we offer and increase opportunities for the development of Internet commerce in Russia, but above all we will discover how absorbent this market is. Already within the first weeks following the launch of the new facility we were trading at a 75% higher rate than in the same period of the previous year,” explains Sebastian Sołtys.

Currently the new warehouse has space for up to 3 million items of clothing for the spring-summer season or more than 2 million for the autumn-winter collections. “In the two months since the start of work, we have already broken the historical record in terms of the quantities of goods accepted and shipped, compared to the previous orders served in Russia. Having more workstations allows us to receive up to 100 thousand pieces of clothing per day and process 95 thousand shipments to our customers per day. This represents a threefold increase in our online sales capabilities in the country. The rate of building the storage facilities was as much as 3 times faster than when launching our earlier Fulfillment Centers facilities,” explains Kamil Kawałek, LPP logistics network development manager.

After several weeks of operation, the legitimacy of the new facility was confirmed by a further 10 thousand m2 expansion. The expansion of the storage space allows the Gdańsk-based company to effectively implement its strategy of multichannel development in this region.

Increasing the performance of the Fulfillment Center in Russia is aided by a modern warehouse management system (WMS PSI), based on artificial intelligence algorithms, which helps to greatly streamline the entire order shipping process by shortening the completion path. Even the design of the facility, with its optimal layout of the shipping, acceptance, storage and consolidation zones also favorably affects the work efficiency. A great advantage is also the convenient location of the investment, only 19 km from the Moscow ring road, which greatly improves the handling of orders.

LPP has been developing its global supply and distribution network for several years, so that the entire storage space after the launch of the Fulfillment Center in Russia is now more than 270 thousand m2. Later this year, the company plans to add another 22 thousand m2 of storage space in Romania and complete the construction process of the Distribution Centre in Brest Kujawski, the operational readiness of which is planned for the first quarter of 2022. The total storage area of LPP will then be more than 370 thousand m2.

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LPP is a Polish family company, one of the most rapidly growing in the apparel industry in the Central and Eastern Europe region. For 30 years it has been successful in Poland and abroad, today selling stationery collections in 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv and Moscow. LPP manages 5 fashion brands: Reserved, Cropp, House, Mohito and Sinsay. At the end of 2020, the company had a network of over 1,800 sales salons totaling 1.4 million m2. The online range of brand collections is available in 30 markets. Based on the global supply network, the Polish clothing manufacturer distributes 259 million items of clothing per year to 3 continents. LPP also has an important role in creating jobs for nearly 22,000 people in the offices and sales structures in Poland, Europe, Asia and Africa. The company is listed on the Warsaw Stock Exchange under the WIG20 Index and belongs to the prestigious MSCI Poland Index.

The construction of the LPP distribution centre in Brześć Kujawski is halfway through

Six months after the launch of the investment, the main hall of the future LPP distribution centre in Brześć Kujawski was topped out. According to the tradition of construction, this ceremony marks a symbolic culmination of the construction works of the facility. It is also an opportunity to thank the employees, partners and companies involved in the construction. Now, LPP and its construction partners face the finishing works phase.

The Polish clothing company’s investment in the Brześć Kujawski Economic Zone began in January this year. Six months after it began, the steel structure of the warehouse section has been fully completed along with the roofing and insulation. The installation of the façade panels, which has been taking place over the last few weeks, has made it possible to top it out and start work on the assembly of the racks. The completion of this important stage of the investment was celebrated with a symbolic topping out ceremony. The Mayor of Brześć Kujawski, Tomasz Chymkowski, accompanied the representatives of the investor and the general contractor – Bremer – extended official thanks to the employees and subcontractors involved in the construction works.

– We are closing another important stage of the investment process in Brześć Kujawski. This is a reason for optimism,given the process we have gone through since we began talks with the municipality authorities. During that time, we have had to cope with the restrictions brought about by the pandemic and the exceptionally demanding winter in terms of construction activities. Despite the rough start, the project is progressing according to schedule. This is undoubtedly a great merit and effect of hard work of companies and people involved in this investment. I would like to thank all our partners for that – says Sebastian Sołtys, Logistics Director, LPP.

As part of the works on the shell of the building, a concrete floor was laid in the main hall of the LPP distribution centre, along with electrical and sewage installations. Skylights were placed on the roof of the building, ensuring the inflow of sunlight into the facility. Basic fire safety systems were installed – sprinklers and smoke flaps. Work is also being carried out in the immediate vicinity of the building. A parking area for lorries has been created on the plot. The section for passenger vehicles is also being completed. Ultimately, up to 650 parking spaces will be arranged there.

– The completion of this stage of work, which is sealing the building shell, is always extremely crucial to us. Afterwards, we can continue work in the building to the full extent, thus becoming independent of weather conditions. On the LPP project in Brześć Kujawski it is all the more important to us, as it assures our Client, LPP, that they had chosen the right partner for the construction of this important facility, and that despite the short deadline for the works and the turbulence on the building materials market, which affects the whole industry, the project is carried out according to the schedule – says Piotr Brańka, Member of the Board of Bremer Sp. z o.o.

The next stage of the investment consists in closing the construction and carrying out finishing works in the office building, which are scheduled to commence in the first week of August. At the same time, on the roof of the warehouse hall, the installation of the support system for photovoltaic panels will be carried out. The installation will ultimately generate about 1.5 MW of power. Another important milestone in the investment schedule is equipping the building with technological facilities. The installation of high-stacking racks and automatic sorters, increasing the efficiency of the logistics facility, will take about five months. The construction of the LPP distribution centre in Brześć Kujawski is to be completed in the fourth quarter of this year.

– I would like to congratulate LPP on its investment activities and I am glad that the company and its partners are so determined to complete the works according to plan. Despite the difficult conditions accompanying the start of the works, thanks to the commitment of the employees of all subcontracting companies we can admire the effects of their hard work, and soon we will all celebrate the completion of the new facility in Brześć Kujawski Economic Zone. I also appreciate the openness of LPP which from the very beginning of its presence in our municipality has been actively participating in the life of our community, and regardless of the situation connected with the construction works, has been well tuned to the needs of the inhabitants – comments Tomasz Chymkowski, the Mayor of Brześć Kujawski.

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ABOUT Brześć Kujawski Distribution Centre

The construction of the Distribution Centre in the Brześć Economic Zone is the next step in the development of the LPP’s supply chain. The state-of-the-art facility will enable the diversification of logistics operations and will strengthen the currently available capacities of the supply and distribution network of the Gdańsk-based company. Its area will comprise 75 thousand m2. The centre will support the operation of LPP’s brick and mortar stores in 25 markets, with distribution of up to 8 million pieces of clothing and accessories per week. In the first phase of its operation, the facility will employ about 500 people. The launch of the Distribution Centre in Brześć Kujawski is planned for the first quarter of 2022.

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 collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. As at the end of 2020, the company had a chain of over 1800 stores with the total area of 1.4 million sq.m. The online offer of the brands collections is available on 30 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 259 million pieces of clothing to three continents. LPP plays another important role as it employs nearly 22 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.

The beginning of the year for LPP was marked by a rebound in stationary sales and a triple-digit growth in e-commerce

• The revenues of the Polish clothing producer in the first quarter of 2021 amounted to nearly PLN 2.4 bn, which means an increase by over 99% YoY.

• Owing to the ongoing dynamics of online sales, LPP has yet again recorded a triple-digit growth in this channel amounting to over 157% YoY. According to the plan for this year, the company aims at generating PLN 2.8 bn revenues from online sale.

• It was yet another quarter in a row where revenues from abroad exceed the Polish ones. The share of exports in the portfolio of the Gdańsk-based company already amounts to over 61%.

• The company is keeping up this year’s investment plans – allocating PLN 1.2 bn to this end.

The first quarter of the shifted fiscal year, encompassing the period from 1 February until 30 April was marked by the maintained increases in revenues. In said period, the company generated nearly PLN 2.4 bn revenues, which entailed a 99% increase YoY. This result was strongly affected by the triple-digit growth in online sales and the gradual rebound in the stationary sales caused by differences in the timing of lockdowns in particular countries. Flexibility in action, operational support of the e-commerce channel, as well as active following and staying in tune with the customers’ expectations contributed to the company’s net profit amounting to PLN 21.5 mn.

– The first quarter certainly warrants our optimism. We can see that the decisions we had made last year bring about the desired effect month after month. Owing to the activities supporting our growth in the spirit of omnichannel, we are now able to react to the changes occurring in the industry in a more flexible manner. This, in turn, is evidenced by the doubling of revenues YoY – despite more stringent restrictions in the traditional trade as compared to the equivalent period last year. – comments Przemysław Lutkiewicz – Vice-President of the Management Board, LPP. – However, our approach to what lies ahead is still moderately optimistic, as the market is constantly seeking stability. Nevertheless, the rebound of sales in the stores and the maintained e-commerce growth dynamics serve to indicate that both our channels are doing very well. We believe that the target of a double-digit growth in revenues from online sales YoY – up to the level of PLN 2.8 bn – is a very realistic one now. – he adds.

The beginning of the year for the Polish clothing producer was marked by intensive e-commerce growth. The results from online sales in the first quarter already accounted for about 42% of the Group revenues and were higher YoY by over 157%, which translates into inflows at the level of PLN 988.3 mn. The attractiveness of online shopping is also strengthened by the maintained triple-digit dynamics of website visits for the brands and triple digit increase in the number of new and returning customers. In addition, for yet another quarter in a row, the Gdańsk-based company recorded a high number of visits via mobile devices. They accounted for as much as 84% of visits, which generated 68% of e-commerce purchases. With this group of clients in mind, the company launched the first mobile sales app for Reserved store in the Polish language version, which will be developed in the coming months in other languages and for other brands.

In the first quarter, Poland accounted for approximately 41% of online revenues. The highest YoY increases were seen in the CIS region and in the European market. – We are pleased that our online offer is getting stronger in individual markets. This is another quarter in a row where despite the difficult situation in all countries – foreign revenues already accounted for more than 61% of the Group’s revenues. In the past quarter, the CIS region recorded higher revenues than Europe, which may be due to a different approach to lockdowns and closures of stationary stores. On the other hand, in Europe itself we recorded revenue increases in all countries, especially in Romania, which is positively influenced by the development of our logistics network, but also in Slovakia, Latvia and Germany. Equally good news for us is the fact that our pan-European e-store recorded tenfold YoY sales increases. This testifies not only to the effectiveness of our strategy, but also to the fact that the offer of our brands is properly adapted to the taste of the international customer. – explains Przemysław Lutkiewicz.

Thanks to adapting the collection to the new market needs, reducing the volume of the autumn/winter collection and no need for sizeable sell-offs, thus entering the first quarter with a new offer at regular prices – the company generated an increase in margin by 7 p.p., i.e. to 55.5% YoY.

Among the investment targets, at the end of this year, the company maintains its plan to open stores in Northern Macedonia. Thus, the brand’s stationary offer will be available in 26 markets. This year, the company will continue to expand its floorspace with a focus on the CIS region and the development of smaller brands: Cropp, House and Sinsay. Given the growing popularity of the Polish company’s brands in Europe – it will also speed up growth in this region. – The effectiveness of our omnichannel strategy keeps us convinced of the need to implement our plans for the expansion of our stationary stores floorspace. We see further potential for growth in the value for money segment, which is why we are planning more and more openings in smaller towns. – concludes Przemysław Lutkiewicz. – In total, this year the company will allocate about PLN 950 mn for the expansion of the stationary stores network. Another PLN 150 mn will be invested in strengthening the logistics network and building a Distribution Centre in Brześć Kujawski, PLN 60 mn in the IT area and PLN 50 mn in further expansion of offices, including the Fashion Lab complex in Gdańsk. In total, the company’s investment outlays for 2021/22 will amount to PLN 1.2 bn.

Moreover, the Gdańsk-based company continues its development in the spirit of sustainability. The company joined the Canopy initiative in May to support the idea of sustainable use of forest resources both in terms of its packaging policy and the use of more environmentally friendly cellulose-based materials in its Eco Aware collections. It is a partnership that aims to better control the supply chain in this area. It is also part of the company’s plans to move away from single-use plastics and to find substitutes for them. The company has also taken action in terms of its new packaging policy by implementing a carton standardisation process. These are further steps bringing the Polish clothing manufacturer closer to achieving its strategic goal of reducing its carbon footprint by 15% from its Scope 1 and 2 operations by 2025.

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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 collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. As at the end of 2020, the company had a chain of over 1800 stores with the total area of 1.4 million sq.m. The online offer of the brands collections is available on 30 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 259 million pieces of clothing to three continents. LPP plays another important role as it employs nearly 22 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.

LPP’s 1Q21/22 videoconference, 24th June (Thursday), 12.00 CEST

Dear Sir or Madame,

LPP, the leading CEE fashion company, has the pleasure to invite you to participate in its videoconference, on Thursday, 24th June, 12.00 CEST.

The CFO, Mr Przemysław Lutkiewicz, will comment on the company’s 1Q21/22 numbers and developments.

Videoconference in English will be available under the following link:

https://platforma.livingmedia.pl/lpp/210422003/

During the on-line broadcast participants will have the possibility to ask questions using chat.

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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 collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of 1.4 million sq.m. The online offer of the brands collections is available on 30 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 259 million pieces of clothing to three continents. LPP plays another important role as it employs nearly 22 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.

The economic and environmental impacts of LPP’s new packaging management policy

LPP, a clothing company, is developing further improvements in its logistics network. As part of the Control Tower project – a platform for improving supply chain management – it has implemented a cardboard boxes standardisation process. The applied solution allows for optimisation of logistic processes at the stage of transport and warehouse space management. It also makes it possible for the company to significantly reduce the use of bulk packaging and its reuse in the process of distribution of goods to stationary stores, while bringing measurable benefits to the environment. In the last six months alone, the company has recycled almost 900 thousand cardboard boxes this way, thus saving 17 thousand trees from being cut down.

The cardboard boxes standardisation process carried out by LPP is but one constituent of the company’s larger logistics project called Control Tower. It encompasses several hundred suppliers and aims at more effective use of bulk packaging in which the ordered goods reach the LPP distribution centre.

– The whole standardization process has generated measurable economic and environmental benefits. Therefore, we have reduced the use of cardboard boxes, which after the implementation of the project can be re-used several times. We eliminated the transport of not fully packed boxes, which translated into optimisation of the loading area. This, especially in times of rising freight prices and limited availability of containers, has also exerted a positive impact on our economic calculation. Standardisation also entails more efficient use of space in road transport, which contributes to savings in terms of fuel consumption. But what is most pleasing is the positive impact on natural resources. Using bulk packaging several times allows real savings on raw materials for cardboard boxes production. Over the last six months, we have saved as many as 17 thousand trees this way – explains Sebastian Sołtys, Logistics Director, LPP.

The project, run on the basis of an innovative platform dedicated to supply chain management, has also allowed for more efficient use of warehouse space by as much as ten or so percent. Owing to advanced automation solutions of the distribution centre based on the volumetric measurement of the flow of goods, a comprehensive technical monitoring of the warehouse and its key storage area – the miniload – was introduced. That, in turn, rendered it possible to measure the scale of the outcomes of the entire venture accurately. One of the outcomes was the acceleration of the process of receiving deliveries at the gate, another – a better use of space, both in the warehouse and during goods transportation. It also brought real environmental effects to the company.

While making business decisions on logistics issues, the company is also pursuing its sustainability strategy. Thanks to the standardisation of packaging among suppliers, the company has extended the project of recovery and reuse of import boxes coming from the producer and delivered to the distribution centre in Pruszcz Gdański. They are no longer sent to waste paper, but gain a second life in distribution of goods to the chain of LPP brand stores.

– Over 40 percent of cardboard boxes from suppliers arriving at our warehouse may already be reused. This way, we are currently saving about 150 thousand cardboard boxes every month, which translates into saving 2,800 trees monthly. Over the last six months, namely since the introduction of monitoring of this action, we have recovered almost 900 thousand cardboard boxes and we haven’t said our last word here – notes Sebastian Sołtys.

LPP intends to develop the project of recovering cardboard boxes for reuse and to implement it also in the newly built distribution centre in Brześć Kujawski. There, the company aims to achieve a recovery rate of up to 75%.

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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 collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of 1.4 million sq.m. The online offer of the brands collections is available on 30 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 259 million pieces of clothing to three continents. LPP plays another important role as it employs nearly 22 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.

Summary of LPP’s financial results for 2020/21

• Revenues of the Polish clothing manufacturer in the 2020/21 financial year amounted to PLN 7.8 billion and were lower YoY by almost 15%.

• This is the first year in LPP’s history in which sales abroad were higher than domestic ones in every quarter. In 2020/21, the value of exports accounted for over 56% of the Group’s total revenues.

• The Gdańsk-based company fulfilled the annual plan of PLN 2 billion proceeds from e-commerce, which means that in the past financial year revenues from this channel already accounted for over 28% of all total revenues.

• The lower than expected drop in revenues and the positive effects of activities strengthening the omnichannel sales model allowed the company to return to its investment plans.

The past surely unprecedented year was marked by the impact of the pandemic on the market and many challenges, especially in the clothing industry. However, thanks to a flexible approach in the face of the new reality, strengthened operations in the e-commerce channel, improvements in logistics and following customer expectations actively, LPP ended the 2020/21 financial year with a better result than originally expected. The company’s revenue for the last quarter amounted to over PLN 2 billion, while total revenues reached over PLN 7.8 billion, meaning a fall by 15% YoY. For the first time in its history, the Group recorded a net loss at the level of PLN 190 million.

– Last year gave us a solid survival lesson. Thanks to a financial cushion and the implementation of projects responding to the market situation, we managed to get through the toughest period in our history. In the first half of the year, not knowing what the next day would bring, we entered a crisis mode by introducing strict cost discipline in order to maintain the company’s liquidity. That time showed us that when faced with a new reality we have to be ready for different scenarios. Observing the sales results in May, June and July, we decided to unlock investment outlays in the subsequent months and implement projects that are key to the future of the company. In that regard, from the second half of the year on we focused on development in the area of logistics and e-commerce to cope with the dynamic growth in e-commerce – comments Przemysław Lutkiewicz, Vice-President of the Management Board, LPP.

The past year was a period of intensive growth in e-commerce for the Gdansk-based company. Online sales in the whole of 2020/21 accounted for as much as over 28% of the Group’s revenues. The highest proceeds from this channel amounting to almost PLN 780 million were recorded in the last quarter of the year, when online sales accounted for a record 37.2% of the Group’s revenues.

– Unfortunately, the 99% increase in e-commerce in the last quarter of the year did not offset the 23% drop in overall sales caused by temporary lockdowns in various regions – explains Przemysław Lutkiewicz.– However, we are observing sustained interest of customers in online shopping. This is visible in the double-digit dynamics of the number of visits to our brands’ websites and the triple-digit increases in the number of new and returning customers. In addition, the share of mobile devices in online shopping continues to grow. The period from November to January was yet another quarter in which more than 80% of visits were made with mobile devices, of which over 60% ended with a purchase. This is good news for us, because these statistics already correspond to global levels – adds the Vice-President of LPP.

Organisational changes supporting omnichannel sales and an inventory management policy adjusted to this model resulted in trade liabilities being the source of inventory financing for LPP for the second time in a row. The company pursued a rational inventory management policy throughout the year. This was the effect of quick adaptation of the offer to customers’ needs, limiting orders for the autumn-winter season and effective sale of collections. The Defrost project also played a significant role as it allowed for a gradual release of goods from the stores for the purpose of servicing online sales. Thus, despite market uncertainty, the company ended the year without excessive stocks.

At the end of 2020/21, the LPP offer was available on 38 markets. During that period, for the first time in the company’s history, foreign sales accounted for a greater share in each quarter, with their share in the revenue of the entire Group already amounting to over 56%.

– Last year, all our brands generated more revenue from abroad than in Poland. Also in the last quarter, for the first time Poland’s hare in the Group’s revenues fell below 40%. In the regions where we are developing our logistics network, we favourable sales results were recorded, an example of which is the Q4 revenue in Romania. Sustained interest in our offer was also visible in Serbia or Bosnia and Herzegovina. At that time, we also recorded a doubling of sales in the pan-European store says the Vice-President of the Management Board, LPP. – The important thing is that despite the decreasing share of Poland in the Group’s revenues, we observe a relation between our financial results and temporary lockdowns in Poland. In a situation where we experience periodic closures of brick and mortar stores abroad, but domestic stores remain open, we are able to make up for the foreign loss and fulfil our sales plans. However, when the situation is reversed and we have to close the stores here in Poland, it is much more difficult for us to achieve these goals. This proves that Poland is still the driving force behind our sales, and brick and mortar stores play an important role in the company’s revenues – he adds.

LPP maintained its liquidity, that is why investments in the last quarter were higher and amounted to almost PLN 300 million. At that time, the planned construction of the Distribution Centre in Brześć Kujawski was commenced and the development of the retail network continued with a floorspace increase by almost 17% y/y last year. The first stage of development of the Fashion Lab complex was also finalised, doubling the office space in Gdańsk. The company also decided to expand its e-commerce warehouse space in Russia and Romania. – Despite ending last year with a net loss of PLN 190 million, we believe that we are prepared for the still uncertain market situation. We forecast that 2021/22 will bring us further growth in online sales. We are hoping to exceed PLN 2.8 billion in revenue in this channel. In addition, we expect that after the end of the pandemic the market will see the so-called deferred demand phenomenon. This is clearly visible each time lockdowns are lifted, when customers are eager to return to brick and mortar stores. We therefore assume an optimistic market scenario of a return to normality, although understood in a different way than before – says Przemysław Lutkiewicz. – In the new retail reality, efficient logistics processes and digitalisation are of key importance, which is why, as part of strengthening omnichannel sales, we will develop retail space and invest in these areas. We will invariably focus on adapting our offer to the current needs of the customers. The budget allocated for development activities in 2021/22 is PLN 1.1 billion – he adds.

In 2021, as part of the planned development of the sales network, LPP will enter a new market, namely North Macedonia, with the offer of all five brands. Selective growth of retail space in Eastern markets is also planned. Given the growing potential for growth in the affordable fashion segment and the fact that the stationary network is an important part of the omnichannel strategy – the company will continue to develop the offline offer of younger brands in smaller towns. Continued construction of the Distribution Centre in Brześć Kujawski and implementation of the second phase of RFID technology implementation in younger brands are also planned. Bearing in mind the growing trend of shopping via mobile devices, an Internet application for the flagship Reserved brand will be launched in the near future. Additionally, a further extension of the Fashion Lab office complex in Gdansk is planned for 2021.

Despite a year focused on survival, LPP invariably continued its plans for sustainable development. Implementing the For People For Our Planet strategy for 2020-2025, the company reduced plastic consumption by another 300 tonnes, and the share of the Eco Aware collection in the entire offer has already increased to 18.6%. As part of its responsible manufacturing efforts, the company started consultations with factories in Southeast Asia to meet the set Eco Aware Production standards. The company also joined the international ZDHC initiative for chemical safety in production and the Polish Plastics Pact. Moreover, an inseparable element of LPP’s activities in the past year were charity projects, for which the company together with the LPP Foundation donated over PLN 9 million. – We are proud that despite the prevailing uncertainty we were experiencing, we were able to consistently fulfil our commitments in terms of responsible and sustainable fashion and we had the energy and enthusiasm to help others in the fight against the pandemic – says the Vice-President of the Management Board, LPP. – Caring for the environment is inherent in our DNA, so regardless of the challenges – we will develop in a sustainable way. This fact has been, is and will be an integral part of our business – he adds.

More information on the activities undertaken by LPP may be found in the Company’s integrated report for 2020/21 financial year, available at https://www.lppsa.com/zrownowazony-rozwoj/raport-roczny.

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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 collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of 1.4 million sq.m. The online offer of the brands collections is available on 30 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 259 million pieces of clothing to three continents. LPP plays another important role as it employs nearly 22 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.

LPP speeds up RFID implementation in more brands

Due to the rapidly growing role of multi-channel sales, LPP is accelerating the implementation of RFID technology in subsequent brands. The introduction of the electronic tag to Mohito, Cropp and House brands will be carried out over 5 times faster than in the flagship Reserved brand. The plans also include the use of soft tags, which will allow achieving 100% visibility of the entire offer. This is yet another stage of the Polish clothing manufacturer’s development within the framework of the omnichannel strategy.

The new retail reality caused by the Covid-19 pandemic was an impulse for LPP to significantly speed up the implementation of projects supporting multi-channel sales. What paid off during the period of closure of traditional shops and rapid growth in online sales were investments in the area of fashion-tech and the implementation of RFID system, i.e. the electronic tags technology. That solution indeed supported the effectiveness of sales of the Reserved flagship brand at the moment of crisis. Taking into consideration the key importance of this technology in the process of integrating sales channels, the company from Gdańsk decided to implement electronic tags to Mohito, Cropp and House faster than previously planned.

Thanks to the electronic tag, the Gdańsk company is able to track the availability of goods in real time, which allows it to better control the flow of goods between warehouses and stores and, in effect, respond to customer needs more quickly and accurately. – The first wave of the pandemic showed us that we have to be ready for various scenarios. Last March, with almost all brick and mortar stores closed down overnight, we had to adapt quickly to the new situation. Thanks to the use of RFID technology in Reserved, our brick and mortar stores started to serve as mini-warehouses handling online orders. As a result, we were able to process orders placed by the online store faster – explains Alexander Yashin, RFID expert, LPP. – The success we achieved thanks to the integral approach to sales in our flagship brand was the key factor which made us more and more convinced to go in that direction with other brands. We knew we had no time to lose and needed to speed up the works on RFID implementation in more brands – he adds.

The first implementation of RFID in Reserved brand proved to be the fastest implementation of this technology worldwide. Thanks to the lessons learned from that experience, the company will implement it the second time even faster. – In Reserved, we introduced RFID in 270 stores within 12 months. Now, we are planning to implement it in 867 stores of other brands in 12 countries in just 7 months. It means that we will roll out the solution over 5 times faster than in Reserved – adds Agata Mielewczyk, IT Project Manager, LPP.

The RFID technology will be used in a total of over 1200 LPP stores. Thus, in 2021 over 200 million pieces of goods, being an offer of four brands of the Polish company, will bear electronic tags. An important element of the ongoing project is also a novelty, which are the RFID soft tags. Owing to this solution, products such as jewellery, perfume and other accessories will also be covered by the technology. – The implementation of soft tags will allow us to increase the availability of our offer for online orders of Reserved, as well as Cropp, Mohito, and House brands. The implementation of the system and the additional introduction of soft tags will ensure 100 percent visibility of stock levels in real time. Such elements as accuracy and efficiency of this solution are essential to us in the development of our omnichannel strategy. – says Alexander Yashin.

– We made the decision to extend the technology finally to Cropp, House and Mohito in October 2020, and started training buyers and suppliers already in November. We are currently preparing the stores, i.e. painting the walls with screening paint, equipping them with detachers and RFID readers. Moreover, we are implementing changes in the warehouse management system, store applications or in the software of RFID coding tunnels in our Distribution Centre. The full rollout of the technology in the stores will begin in September this year, and in parallel training of store staff will be carried out until March 2022 – says Agata Mielewczyk.

The transformation that the company has undergone and the decision to accelerate many technological projects is a response to the new reality of the clothing industry. The potential of RFID technology fully fits with the needs of the dynamic development of LPP’s multi-channel sales model.

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LPP is a Polish family business and one of the fastest growing clothing companies in the region of Central and Eastern Europe. For over 25 years it has been successfully operating in Poland and abroad, offering its collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of over 1.3 million sq.m. The online offer of the brands collections is available on 30 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 265 million pieces of clothing to three continents. LPP also plays an important role as it employs over 24 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.

LPP’s 4Q20/21 videoconference, 29th April, 12.00 pm CEST

Dear Sir or Madame,

LPP, the leading CEE fashion company, has the pleasure to invite you to participate in its videoconference, on Thursday, 29th April, 12.00 pm CEST.

The CFO, Mr Przemysław Lutkiewicz, will comment on the company’s 4Q20/21 numbers and developments.

Videoconference in English will be available under the following link:

https://platforma.livingmedia.pl/lpp/210422003/

During the online broadcast participants will have the possibility to ask questions using chat.

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LPP SA is a Polish family business and one of the fastest growing clothing companies in the region of Central and Eastern Europe. For over 25 years it has been successfully operating in Poland and abroad, offering its collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of over 1.3 million sq.m. The online offer of the brands collections is available on 29 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 265 million pieces of clothing to three continents. LPP also plays an important role as it employs over 24 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.

LPP doubles its warehouse space in Romania

Due to the growing importance of the Romanian market in e-commerce sales, LPP has proceeded to expand its Fulfilment Centre warehouse near Bucharest. Completion of the works and commissioning of the new facility is scheduled for the third quarter of this year. The doubling of the area of the already operating warehouse will allow the Polish clothing manufacturer to handle online orders from customers in both Romania and neighbouring countries, including Bulgaria, where the company plans to launch online sales later this year.

LPP has decided to expand its Fulfilment Centre, launched in 2019 near Bucharest. The warehouse, which handles online orders of LPP brands, will gain an additional 21,000 m2 upon completion of construction works in the third quarter of this year. This means that the Gdańsk-based company will double its warehouse space available in Romania. The decision to expand the existing facility was driven by the growing role of the local market in the group’s e-commerce sales.

– The works on the expansion of our warehouse in Romania, which have been in progress for over a month, are well advanced. The installation of the concrete pillars, which has just been completed, allows us to start the next stage of construction, namely the preparation of the steel structure of the roof. These works will take several more months. After their completion, we will have twice as much warehouse space in one of the fastest growing markets in terms of online sales growth for our brands – comments Sylwester Dmytriwski, Logistics Regional Network Director, LPP.

The Fulfilment Centre, located near Bucharest, now enables the efficient handling of orders for customers from this country, including offering facilities such as next business day delivery. The expanded warehouse, with a total area of 42,000 m2, will eventually serve not only online orders from Romania, but also from neighbouring countries. The new facility will also carry out cross-dock operations to supply the LPP brick and mortar stores network in Romania and Bulgaria, which currently comprises a total of over 100 stores in both countries.

– Southeast Europe remains an important region for us, also in terms of online sales. One of the fastest growing e-commerce markets in this part of the continent is Romania, which has become the second country after Poland with the largest share of our group’s online revenues. We hope that the revival in this channel, particularly visible in Romania, will continue and doubling the current warehouse space will further strengthen this trend – adds Sylwester Dmytriwski.

The expansion of the warehouse in Romania is, in addition to the e-commerce warehouse currently under construction in Russia and the distribution centre in Brześć Kujawski, another investment aimed at strengthening and developing LPP’s logistics. Upon completion of all three facilities, the group’s total warehouse space will increase by 50%, i.e. from the current 253,000 m2 to 378,000 m2.

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LPP is a Polish family business and one of the fastest growing clothing companies in the region of Central and Eastern Europe. For over 25 years it has been successfully operating in Poland and abroad, offering its collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of over 1.3 million sq.m. The online offer of the brands collections is available on 29 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 265 million pieces of clothing to three continents. LPP also plays an important role as it employs over 24 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.

The construction of the LPP distribution centre in Brześć Kujawski gains momentum

Construction works on the site of LPP’s investment in Brześć Kujawski, which began in January this year, are gaining momentum. Almost eight weeks after the announcement of the general contractor selection, the company from Gdańsk has already completed part of the earth-, reinforced concrete works and external installations. In the second week of March, the company also started assembling concrete pillars which will allow the next stage of the works – preparation of the steel structure of the roof – to begin at the end of the month.

One of the key investments of a Polish clothing manufacturer has entered the next stage of implementation. After the initial preparation of the location, fencing of the site and activation of access control and technical facilities, the company started the main part of the construction works. Therefore, after almost two months from the start of activities on the site of the future distribution centre, 70 per cent of the ground has been levelled and reinforced for the purpose of flooring works. The company is also in the process of performing external installations and reinforced concrete works. In the first week of March, the erection of structural columns began. According to the approved schedule, up to 20 of those will be erected daily, and the entire assembly will be completed before Easter.

– The investment process in Brześć Kujawski is going according to plan. Despite the temporary unfavourable weather conditions, which caused freezing of the ground in February and held us back for over three weeks, we resumed work in the first days of March. Parallel to the earthworks, we are currently installing concrete pillars, of which 123 out of the planned 400 have already been installed. Once this stage is completed, weather permitting, we will have an important moment of closing the facility with walls and a roof – comments Łukasz Piwoński, Administrative and Technical Director, LPP.

The assembly of the roof structure and the installation of the walls of the warehouse part of the new LPP distribution centre should already start at the turn of March and April. The milestone in the schedule will be the flooring, the most important element for the future technological facilities, scheduled for the end of May.

– Despite the still changeable weather, our entire investment team is currently focused on keeping up with the current schedule. I am convinced that thanks to the involvement of the general contractor, architects and investor supervision, the announced completion date in the fourth quarter of this year will be maintained – adds Łukasz Piwoński.

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ABOUT Brześć Kujawski Distribution Centre

The construction of the Distribution Centre in the Brześć Economic Zone is the next step in the development of the LPP’s supply chain. The state-of-the-art facility will enable the diversification of logistics operations and will strengthen the currently available capacities of the supply and distribution network of the Gdańsk-based company. Its area will comprise 75 thousand m2. The centre will support the operation of LPP’s brick and mortar stores in 25 markets, with distribution of up to 8 million pieces of clothing and accessories per week. In the first phase of its operation, the facility will employ about 500 people. The launch of the Distribution Centre in Brześć Kujawski is planned for the first quarter of 2022.

LPP SA is a Polish family business and one of the fastest growing clothing companies in the region of Central and Eastern Europe. For over 25 years it has been successfully operating in Poland and abroad, offering its collection in traditional stores already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1800 stores with the total area of over 1.3 million sq.m. The online offer of the brands collections is available on 29 markets. On the basis of a global supply chain, the Polish clothing producer distributes over 265 million pieces of clothing to three continents. LPP also plays an important role as it employs over 24 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.