LPP’s financial results for Q3 2020/21 – a slow return to stability

• The Group’s revenue in Q3 of the 2020/21 financial year grew by almost 5% YoY to over PLN 2.4 bn. The drop in sales for 9 months of this year by 11.4% was lower than expected.

• The increase in online sales, in the period from August to October, offset the falls in traditional sales. Revenues from e-commerce in Q3 constituted 18% of the Group’s revenues. The PLN 2 bn proceeds from this channel planned for the end of the year has been maintained.

• The stabilisation of sales and the positive effects of efforts aimed at strengthening the omnichannel model led the company to unfreeze its investment plans and to return to the stock up for the next season at the 2019 level.

• The importance of exports in the revenues of the Polish clothing manufacturer is growing. In Q3, foreign sales of LPP already accounted for over 56% of the revenue.

The Q3 brought about an improvement in LPP’s financial results of LPP in comparison with the previous months. Thanks to the restoration of traditional trade and the actions taken by the company to support omnichannel sales, the Gdańsk-based company generated over PLN 2.4 bn in revenue, which means an increase of 5% YoY. At that time, the net profit was slightly higher than last year’s and amounted to almost PLN 247 m. The weaker results of traditional sales in Q3 of this year, compared to the comparable period last year, were offset by growth in the e-commerce channel.

The continued interest of customers in online shopping, despite the restoration of traditional trade, is reflected in the 86% YoY dynamics of online sales. In Q3, sales from this channel generated revenues of nearly PLN 446 m for LPP. Thus, online sales accounted for 18.2% of the Group’s revenue and 19.6% from Poland, which accounted for approximately 47% of the total revenue in this channel. Cumulatively, in the period from February to October, the company reached over PLN 5.7 bn of total sales, which is a decrease of 11.4% YoY.

– Given the continuing uncertainty and uneven recovery of traditional trade in different countries, we are satisfied with the stabilisation of the Q3 sales results. The 5% increase in revenue is a good signal and proof that we have found a way to deal with the new reality. The assumption adopted since the beginning of the pandemic that 2020 will be the year of survival and maintenance of the company’s stable situation has mobilised us to introduce changes and strengthen the omnichannel sales model, which is bearing fruit today – comments Przemysław Lutkiewicz, – Vice-President of the Management Board, LPP.

The stabilisation of the sales results of the Gdańsk-based company after nine months was also influenced by the triple-digit e-commerce dynamics of 110%. However, this would not have been possible without actions taken during the crisis and optimisation of many areas of the company’s operations, which allowed it to survive difficult months – We are still observing how the pandemic affects customer behaviour. There’s a persisting trend of larger drops in traffic in stationary stores in large cities, and smaller ones in smaller towns. With this in mind, we see the potential of the omnichannel model and the growing importance of e-commerce in it – says Przemysław Lutkiewicz. – The persistently high number of visits in online stores, as well as new and returning customers allows us to look at the previously set target of PLN 2 bn from e-commerce at the end of the year with real optimism – he adds.

Despite the continuing difficult situation in all markets, Q3 of 2020/2021 was another one for LPP with the foreign revenues exceeding the domestic ones. In the period from August to October, they accounted for just over 56% of total revenues. The 14% YoY increase in sales in Europe was influenced by the good results recorded in the Baltic States, the Balkans and Romania. In turn, the subsequent restoration of the operation of shopping centres in Russia, Ukraine and Kazakhstan and the re-entry into Belarus with the Group’s own chain of stores, resulted in a 6% YoY increase in the Group’s sales in this region.

For the 10th consecutive quarter, trade liabilities constituted a source of inventory financing. These are still at a lower level YoY despite the 33% drop in traditional sales in comparable stores between February and October. In the third quarter, their level was lower by 12% YoY and by 22% per m2. This is a result of a shift in deliveries of goods, reduced orders for the autumn/winter season and high sales results in online stores. An important role in effective stock management this year was also played by the Defrost project, which in the period of the first lockdown allowed for the release of goods from the stores for the purpose of the e-commerce channel.

– Thanks to the lessons learned in the first lockdown and preparations for the second wave of the epidemic, we survived this most unpredictable time. We expected the worst, but at the same time we have learnt a lot in the field of goods management, use of technology and optimisation of logistics. As a result, we’re planning to return to the pre-pandemic level. The key IT projects and the securing of the financial cushion have also allowed us to return to long-term plans and investments in development and logistics, which we hope will ensure security of our operations under various market scenarios – comments Przemysław Lutkiewicz. – It is equally important that, despite the survival-oriented months, we have not changed the commitments in the area of sustainable development of LPP and we intend to continue our plans in this regard – he adds.

The company plans to allocate a total of PLN 760 m for this year’s investments. This will be primarily a selective development of the sales network, especially of younger brands in the eastern markets, where the company still sees development potential for traditional stores. The company also plans to continue investments in offices and IT projects. The last months of this year also saw the slow defrosting of projects supporting logistics. In this respect, the construction of a new Distribution Centre in Brześć Kujawski will be of crucial importance for the company. The new facility, planned to be launched inQ1 2022, will strengthen the existing operational capacities of the supply and distribution network of the Gdańsk-based company. The company is also returning to its plans to enter a new market and open stores of all brands in Northern Macedonia in 2021.

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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 plays another 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 launches the construction of a distribution centre in Brześć Kujawski

In January 2021, LPP will start the construction of a distribution centre in Brześć Kujawski municipality. The investment worth about PLN 200 million is one of the key projects of the Polish clothing manufacturer in terms of strengthening and developing logistics. Construction works will last until the end of next year, and the centre is planned to be launched in the first quarter of 2022. In the initial phase of the facility’s operation, the company expects to employ 500 people. Ultimately, 1000 jobs are planned to be created.

The construction of the distribution centre in Brześć Kujawski is yet another step in the development of LPP’s logistics network, supporting the company’s business expansion, both in the area of stationary trade and e-commerce. The new facility will enable diversification of the company’s logistic operations and take some load off the main Distribution Centre of LPP in Pruszcz Gdański. Thanks to the launch of the new facility, the Polish clothing manufacturer will double the existing operating capacity of its supply and distribution network.

The investment located in the Brześć Kujawski Free Economic Zone will be carried out in stages. The site is planned to be handed over to the general contractor by January 15th 2021 at the latest. Construction of the facility, installation of warehouse automation and stocking the centre will take about 12 months. The investor plans to launch the distribution centre in the first quarter of 2022.

– The construction of the new distribution centre is of strategic importance to us, therefore we are glad to announce the launch of this investment after it had been frozen. At the same time, as a responsible company, we attach great importance to the safety and comfort of the communities in which we operate. We are aware that the construction of the centre may cause certain inconvenience to the local residents, but together with the general contractor, we will make every effort to ensure that it is as little as possible – comments Sebastian Sołtys, Logistics Director, LPP. – With the support of the Brześć Kujawski municipality, we also want to stay in touch with the residents at all times. This is particularly important for us in the face of the pandemic, when open communication is of great importance for our common security – assures Sebastian Sołtys.

The organisation of traffic in the vicinity of the investment has been planned in such a way that the transport of construction machinery is carried out exclusively on national and provincial roads. Transport routes set in the vicinity of nearby houses and public institutions will be reduced to the minimum.

As part of the measures counteracting COVID-19, in addition to the standard safety procedures, additional protective measures will be implemented on the construction site, in accordance with the current guidelines of the sanitary services.

– In recent years, together with LPP, we have managed to implement many joint projects of social and educational nature. We are convinced that with the same commitment as the company has demonstrated in its efforts to support the municipality and its inhabitants, it will take care of the safe course of works. For our part, we declare our full support and we are glad that despite the difficult situation related to the COVID-19 pandemic, this investment will be carried out for the benefit of LPP and the entire community of our municipality – comments Tomasz Chymkowski, Mayor of Brześć Kujawski.

The area of the LPP distribution centre in Brześć Kujawski will comprise 75,000 m2, including 65,000 m2 of warehouse space and 10,000 m2 of office and technological space. In the building, apart from automatic systems, solutions will be applied to enhance energy efficiency and limit the impact of the facility’s operation on the local ecosystem. On the roof of the building, photovoltaic installations with a total capacity of 1.5 MW are planned. In the first phase of operation, the centre will employ about 500 people. Ultimately, up to 1000 jobs will be created. Recruitment will start in the third quarter of 2021.

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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 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 1700 stores with the total area of over 1 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 plays another 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 3Q20/21 videoconference, 21st December, 12.00 pm CET

Dear Sir or Madame,

LPP, the leading CEE fashion company, has the pleasure to invite you to participate in its videoconference, on Monday, 21st December, 12.00 pm CET.

The CFO, Mr Przemysław Lutkiewicz, will comment on the company’s 3Q20/21 numbers and developments.

Videoconference in English will be available under the following link:

https://platforma.livingmedia.pl/lpp/201214003/

During the on-line 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 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 1700 stores with the total area of over 1 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 plays another 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 distinguished with the Digital Excellence Awards

It is the second time already that he jury of the Digital Excellence Awards competition awarded digital achievements of the Polish clothing manufacturer. In this year’s edition, LPP was honoured with an award in the Digital Capabilities category for implementing RFID technology in its flagship brand – Reserved.

Digital Excellence Awards is a competition aiming to honour the leaders of the digital transformation and to honour those companies that have implemented a new business model, thus making their organisations more effective and innovative.

For the first time, the jury of the Digital Excellence Awards honoured us with an award in 2018 for an innovative proprietary Store Vision application, which was recognised for its high operational efficiency. We made a commitment then that we would not stop in our digital transformation activities and we kept our word. We are very pleased that in this year’s edition of the competition jury honoured our biggest digital project so far, i.e. the implementation of RFID – explains Jacek Kujawa, Vice-President of the Management Board, LPP.

The jury appreciated above all high digital competences of the Polish clothing manufacturer, embracing new technologies and very well defined objectives of the RFID project, and at the same time excellent implementation of the technology which has brought concrete value to the organisation.

The RFID project, i.e. an electronic tag operating on the basis of a radio frequency identification system, is a solution implemented in the stores of the Polish clothing manufacturer’s flagship brand, Reserved. It is based on original software fully created by the IT team of the Pomeranian company. The tag is used for remote product identification, which enables full and precise control over a single piece of clothing at every stage of product life, starting from the dispatch from the factory, through the distribution centre, to the delivery to the stores and the availability of products in the sales floor. The main objective of the project was to increase the operating efficiency of the stores and thus increase sales.

This is a unique project in which 140 people from various areas of LPP’s business, including 40 IT specialists, were involved at a crucial moment. We are the first clothing company in Poland and one of the few in the world to use RFID technology on such a large scale. And most importantly, the implementation of this solution was the fastest implementation to date worldwide, including the construction of an IT system from scratch – explains Jacek Kujawa.

During the RFID project, LPP changed, among other things, as much as 90% of the store processes, which eventually turned into concrete and measurable effects. This led to a tightening of the supply chain, enabling faster and more frequent stocktaking of goods in stores, thanks to which the company obtains accurate information about the inventory on an ongoing basis. The project has also contributed to the increase in the quality of the sales floor stocking, shortening the time of customer service at the checkout or optimising the acceptance of deliveries in the stores. The detailed knowledge of store stock levels obtained in this way made it possible to launch a new functionality, i.e. delivery of e-commerce orders directly from the stores located closest to the customer’s place of residence, rather than from central warehouses. Thanks to the implementation of the RFID system, the customers of the brands belonging to LPP gain a number of tangible conveniences related to their shopping experience.

The RFID project was so far the most extensive and the most complex technological project that we have implemented in LPP. We are all the more pleased that the jury of the Digital Excellence competition recognized the potential of this undertaking and appreciated our digital competences, considering us as digital innovators. I believe that the coming years will bring us many more opportunities to prove that we live up to such great mark, – comments Jacek Kujawa.

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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 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 1700 stores with the total area of over 1 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 plays another 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.

#CiaoKendall by Reserved as award-winning campaign in the KTR (Ad Creators’ Club) competition

During the online transmission from this year’s KTR gala, awards were given for the most creative and imaginative creative ideas in Poland. The Best of Jury 2020 awards were granted in 4 categories and #CiaoKendall Reserved was among the gold winners – it was distinguished in the Best of Craft category. The campaign received a gold award in the following subcategories: Production Excellence, Casting, Color Correction, and bronze in the Online Video category.

Watch the video:

In addition, Reserved was awarded in the Photography category: gold for Re.Design campaign photographed by Bartek Wieczorek, and silver for the project: Reserved feat. Hoffland, supporting the Hoffland exhibition at the Museum of the City of Gdynia and photographed by Zuza Krajewska, as well as bronze for the charming digital Twin Room session.

The KTR competition is an important event for the creative industry in Poland. This year, a record number of projects were submitted in four areas: Communication, Design, Craft and for the first time this year: Technology.

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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 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 1700 stores with the total area of over 1 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 plays another 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 awarded the Eagle of Innovation of Rzeczpospolita for implementing RFID in the flagship brand – Reserved

In this year’s edition of the ‘Eagle of Innovation’ competition for start-ups and innovative enterprises, organised by the editors of Rzeczpospolita daily, LPP received the main prize in the Enterprise category. The jury of the competition appreciated the Polish clothing company from Pomerania for the project of implementing RFID technology in the Reserved brand sales network.

The aim of the Eagles of Innovation competition, organised by the editors of Rzeczpospolita daily, is to promote companies that invest in innovations and thanks to them build their competitiveness not only on the Polish but also on the European and world market. Applications could be submitted in two competition categories – enterprise and startup. This year, the jury also awarded an additional special prize for work on an innovative solution to limit the effects of the COVID-19 pandemic. The Gdańsk-based company was awarded the main prize in the Enterprise category, for implementing RFID technology in the national sales network of its flagship brand – Reserved, based on proprietary software fully created by the company’s IT team.

– We believe that the Eagle of Innovation award, granted to LPP, is a proof that we are going in the right direction, reacting to current trends and constantly developing, introducing innovations to the market. It is also a sign of appreciation for the 140 people involved in the project and the effects that, thanks to their work, our company is now achieving – says Jacek Kujawa, Vice-President of the Management Board, LPP.

The project has contributed to the increase in the operating efficiency of Reserved stores and increased sales. LPP is the first clothing company in Poland and one of the few in the world to have been using this technology on such a large scale. The implementation of this solution was the fastest implementation to date worldwide, including the construction of an IT system from scratch.

Thanks to the implementation of RFID technology, the company from Gdańsk increased the effectiveness of store replenishment by 99% and gained full control over every product in the supply chain. Moreover, the time of registering goods at the checkout counter in the store was shortened by 70 percent and the availability of goods to the customer was improved by over 13 percent. The implementation had a positive impact both on the company’s operating processes and ergonomics of work in the stores, taking some burden off the teams in their daily duties related to e.g. stocking up.

– We are glad that the jury appreciated our actions. Such an award undoubtedly shows that the market recognises and appreciates us for our increasingly ambitious solutions. It is an excellent driver to take up further challenges, which encourages us to continue building an innovative fashion tech company – adds Jacek Kujawa.

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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 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 1700 stores with the total area of over 1 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 plays another 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 new reality as an innovation driver for LPP How a Polish clothing manufacturer changed its 3-year omnichannel plans in 3 weeks.

The new commercial reality marked the beginning of far-reaching changes for LPP, setting a new direction to the company’s business strategy for the post-pandemic times. The technological, logistic and sales transformation planned by the Polish clothing company for the next three years has materialised in three weeks. By way of a genuine and full integration of sales channels, LPP, as the first Polish company of this size, operating in the trade sector, has today become a truly omnichannel organisation.

During the lockdown period, like most companies in the industry, LPP faced the challenge of maintaining a stable financial situation of the company. Caution in cash management and cost discipline brought results. However, some companies did not survive the test of time, and the crisis caused by the suspension of traditional trade for a few weeks and restrictions introduced all over the world caused disappearance of many recognised brands from the market. The unprecedented situation has shown that even multi-generational traditions and an established position have not been decisive in maintaining liquidity – rather, the success was due to flexibility and the ability to adapt quickly to the new reality, based primarily on online sales. In LPP, the decisions allowing the company to be driven safely through the most difficult period and the bold decisions in the area of logistics based on proprietary technological solutions, as well as the financial cushion prepared for the crisis, which has been expected for two years now, gave the company the opportunity to adapt to the new reality.

– LPP was, is and will remain a family business, and the resulting organisational culture was, in my opinion, a key success factor during the lockdown period. Speed and agility in action, a short decision-making process, room for experimenting and looking beyond the perspective of the next quarter allowed us to make a change in our approach to our business quickly and efficiently. Today, it is the customers who decide where they want to spend their money, and we want to offer them the product they need and the level of service they expect, regardless of their preferred channel. By fully integrating and harmonising our sales channels and the structures working for them, we have adapted to the challenges of the new reality, which in LPP is called omnichannel – comments Marek Piechocki, CEO, LPP.

What paid off during the shutdown of traditional stores and rapid growth in online sales, and what allows the company to look into the future with moderate optimism today, were investments in fashion tech.

For several years now, LPP has been consistently increasing its expenditure on the implementation and development of new technologies. Since 2016, the company has already spent over PLN 180 million on projects and IT solutions supporting key areas. In the three-year perspective, i.e. until 2023, the investments in this area are expected to amount to PLN 600 million.

Regardless of the plans adopted, an unprecedented situation – the triple-digit growth in e-commerce recorded in the first months of the pandemic, reaching five times last year’s results – forced the company to implement its proprietary projects faster than expected, allowing the company to bear such a sudden change in the balance of power between sales channels. This would not be possible, however, without the recent projects such as the implementation of RFID technology in Reserved brand, cloud solutions for online stores, optimisation of solutions related to online order picking, numerous modifications of the WMS system or a proprietary logistics platform integrating courier companies’ systems.

– Today, the IT team in LPP equals the size of the largest IT companies in the country. We have created our own solutions, which we know from the inside out and which have been tailored to meet our needs. Paradoxically, the pandemic gave LPP a powerful innovative impulse, speeding up work on projects, many of which we were able to complete in a few weeks, instead of three years, as previously planned. Without this, and above all without the enormous effort of our employees, there would have been no chance of efficient service of the dynamically growing scale of online orders, and thus of generating revenue from this channel at a level allowing us to compensate for zero revenue from stationary sales – comments Jacek Kujawa, Vice-President of the Management Board of LPP.

The starting point for the whole transformation was a change in approach and recognition that in the new reality only harmonised sales channels make sense and the decision to speed up projects that made the brick-and-mortar stores network and online stores an integrated channel with a single stock and a consistent approach to the product and the customer.

– Over the last months, LPP has been reborn in a way. From a company in which the various sales and customer communication channels have been intertwined, but not integrated, we have turned into a truly omnichannel organisation. This change has affected virtually every area of the company: product, sales, logistics, IT and above all the innovative approach of our teams. We look at sales holistically, without dividing it into traditional stores and e-commerce. The product is to be available to the customer here and now, regardless of where the sales takes place and through which tools – says Marek Piechocki.

The actual and full integration of sales in LPP is based on two basic areas. The first one was the organisational changes consisting in the combination of structures designed to support individual channels. The model introduced thanks to this, based on an integrated approach and cooperation, allowed for streamlining the flow of information, improving the management of knowledge about individual sales channels, and above all, developing a method of product presentation and customer communication consistent for all points of contact with the customer. What allowed for the full transformation were also activities in the area of logistics systems and IT systems supporting them.

– The decision to remodel the Distribution Centre in Pruszcz Gdański, previously adapted to the wholesale shipment of goods to the stores, into a warehouse for handling individual orders of e-commerce customers, marked the beginning of the transformation and our response to the enormous challenge posed by a dynamic and unprecedented increase in the number of e-commerce orders. The adaptation work, which lasted only three weeks and included the integration of two WMS platforms and the modification of goods allocation and order picking systems using artificial intelligence algorithms, allowed us to ship up to 100 thousand items of clothing a day. Thus, the efficiency of LPP logistics in this period increased by as much as 300% – comments Jacek Kujawa.

Along with the activities in the area of improving the distribution network, LPP started working on the implementation of the “Mustang” (Multichannel Stock Management) programme and its key element – the “Defrost” project –strategic for further transformation. Thanks to the introduced changes, the company is able to manage the entire stock in an integrated manner, which means that the goods are directed to where they are needed at a given moment from a location that ensures the fastest delivery to the recipient. The company’s assumption that nowadays distribution must be closer to the customer has also opened the way for testing the concept of so-called “hub stores”, which play an additional role of mini-centres in regions far from the main warehouses.

– The implementation of the Defrost project allowed us to free up goods in stores for the purposes of regular e-commerce sales and thus protect them from being shifted to sell-offs. Ultimately, we want the customer who orders a product online with the in-store collection option to know that the ordered goods are waiting for them there even before their shut down their computer. At the same time, Defrost ensures better tapping of the potential of stores for e-commerce orders implementation, reduction of the last mile logistic costs, or increasing traffic in stores – says Jacek Kujawa.

The experience of the first wave of the pandemic confirms that in the current, still uncertain market conditions, the key to survival of the business is readiness for various scenarios. The actions recently taken by LPP and the implemented organisational, logistic and technological changes are an important safeguard in case of further restrictions in traditional trade, but they are also the company’s response to the new “normality” in the clothing industry.

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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 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 1700 stores with the total area of over 1 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 plays another 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 has introduced the second generation chatbot by K2Bots.AI in customer service

Customers of LPP brands, such as Reserved, Cropp, House, Mohito, and Sinsay, can already benefit from AI conversational assistance. The tool implemented in cooperation with K2Bots.AI allows to solve 200 most popular problems reported to the Contact Centre by customers of online stores. The second generation chatbot solves 70% of all issues correctly, and thanks to the ability to answer open questions, it has significantly improved the service of the recently growing number of customers in the e-commerce channel of the Polish clothing manufacturer.

LPP, in cooperation with K2Bots.AI, has made it possible for its customers in Poland to use the latest generation of chatbot, which already handles almost one third of all cases reported to the Customer Service Centre. Thanks to the automation of handling the most frequently asked questions, at a time of rapid growth of online sales, the second generation chatbot has significantly increased the effectiveness of the Contact Centre of the Gdańsk-based company.

The second generation chatbot by K2Bots.AI solves already 200 most popular problems reported to the Customer Service Centre by customers of online stores of brands belonging to LPP. It can talk about 30 different delivery statuses, helps with courier returns or order problems, solving already as much as 70% of such issues by itself. It can include a consultant from the Customer Service Centre for the most difficult conversations or when the nature of the request so requires. The effectiveness of proper problem solving is evaluated in a reliable manner – by a person who analyses the course of selected conversations with customers and on this basis introduces further improvements and provides the bot with additional training.

The conversational AI by K2Bots.AI usesnatural language to respond to the problems reported by customers, and thanks to the possibility of handling open questions, a conversation with it resembles a natural exchange with a Customer Service Centre employee.

– The implementation of the second-generation chatbot is a key step in adapting LPP’s customer service tools to the surge in online sales continuously recorded since April. This innovative solution, with the possibility of transferring difficult conversations to people is the most effective and at the same time the most easily accessible channel of contact for customers. The next step would be for the chatbot to also support customer service of LPP in foreign markets – comments Dawid Telepski, e-commerce operations manager, LPP.

The chatbot in LPP has been implemented by K2Bots.AI team along with the Genesys PureCloud contact centre solution which supports calls switched over by the chatbot to a human employee and calls from LPP brands’ profiles on Facebook. Genesys PureCloud enables effective scaling of system usage and integration of all customer service channels. Chatbot uses the Google Dialogflow natural processing engine, complemented by proprietary K2Bots.AI technology.

– The solution introduced in LPP is another second generation chatbot launched by K2Bots.AI for the retail leader after the IKEA launch. With both implementations, we want to set a benchmark for natural language understanding and effectiveness that is currently achievable. The conversational AI in LPP-branded stores answers open questions in a way that is as human-like as possible and is not based on choice forms commonly used by firstgeneration chatbots – says Łukasz Lewandowski, K2Bots.AI CEO.

Presentation of the LPP chatbot https://youtu.be/mfcd8ws2LME

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About LPP

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 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 1700 stores with the total area of over 1 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 plays another 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.

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LPP confirms the start of construction of a distribution centre in Brześć Kujawski

LPP goes back to the plans concerning the construction of a distribution centrein Brześć Kujawski. The decision to postpone the project announced in June this year was caused by the pandemic, which forced the Polish clothing manufacturer to significantly revise its investment plans. After the analysis of the current situation of the company, by the decision of the Management Board of the Gdańsk company, the strategic investment in Brześć Kujawski is to start in the first quarter of 2021.

The crisis caused by the COVID-19 epidemic had a significant impact on the financial standing of LPP. The loss of a significant part of revenues due to restrictions on the operation of retail outlets forced the company to introduce strict cost discipline in each area of activity and changes in investment plans, including the revision of the project to build a distribution centre in Brześć Kujawski.

– Without a doubt, it was one of the most difficult periods in the history of LPP. We are all the more pleased that today, after many months of struggle to survive and maintain the company’s financial liquidity, we can have an optimistic outlook on the future.. The decisions we made during this time and the implementation of projects strengthening e-commerce sales and optimisation of areas supporting the company’s operations during the crisis have made it possible to maintain continuity of business processes. Owing to these actions, despite the still uncertain market conditions, the company’s situation today is stable and allows us to continue our commitments in Brześć Kujawski – comments Jacek Kujawa, Vice-President of LPP.

The construction of the new distribution centre remains one of the key undertakings for further development of LPP, and its location in the Brześć Kujawski municipality is of strategic importance for the company in operational terms. The project, which will be carried out in stages, will be adapted to the current direction of the company’s development and its current and future logistics needs. The modern and partially automated facility with an area of 65,000 m2 will provide jobs for about 500 people already in the first phase of its operation. Ultimately, as the intensity of warehouse operations increases, the company plans to create up to 1000 jobs. The construction is planned to start in the first quarter of 2021 and the distribution centre will be launched at the turn of 2021/2022.

LPP also remains an active participant in the social life of the municipality. So far, activities undertaken in cooperation with the Municipal Office will focus primarily on support in the area of education of the youngest residents. This year, the sets of gifts funded by LPP as part of the “School starter kit” campaign will once again be given to pupils starting their education in primary schools in the municipality. With first-graders as well as senior pupils in mind, LPP also confirms the continuation of the “English with LPP” educational programme initiated in 2019 in cooperation with a language school in Włocławek and the municipality authorities.

– I am very pleased with the decisions taken by LPP to start the construction of the distribution centre in the municipality of Brześć Kujawski. Taking into account the economic situation caused by the COVID-19 epidemic, we had been waiting patiently for the decisions of the Management Board with full understanding. I would also like to thank on behalf of the residents for the continuation of the social activities financed by LPP, related to the school starter kit and English lessons. I wish the Management Board and the whole community of LPP successful implementation of the intended project in accordance with the adopted schedule and I declare the Brześć local government’s help and involvement in the implementation of this project – comments Tomasz Chymkowski, Mayor of Brześć Kujawski.

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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 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 1700 stores with the total area of over 1 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 plays another 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 decision of major shareholders of LPP to swap shares is another step on the way to strengthening the family business for generations

The two largest shareholders of LPP, the Semper Simul Foundation and the Sky Foundation, have decided, according to today’s public announcement, to swap their ordinary shares into preferred shares between these entities. In the opinion of the company’s Management Board, this opens yet another stage towards securing the succession of the Polish clothing manufacturer. The actions taken are a guarantee of permanent and stable management of the company and another step on the way to LPP’s growth as a Polish family business for generations.

The decision announced in 2018 by the president and founder of LPP, Marek Piechocki, to concentrate private assets, including the company’s shares, in a family foundation gave rise to the implementation of activities planned for the next few years to ensure the continuity of business operating for nearly 30 years. The decision to swap ordinary shares into preferred shares between the company’s main shareholders is, in the opinion of the Management Board of LPP, in the company’s best interest. It is a confirmation that its stability, in such difficult times for the whole industry, is of paramount importance to its founders.

Under the conditional contract concluded between the shareholders ,the Semper Simul Foundation will dispose of a package of ordinary shares in favour of the Sky Foundation and will purchase a package of registered preference shares from it, thus becoming the majority shareholder of LPP. The intention of the decisions taken by the shareholders is the long-term development of the company and securing its Polish capital.

– The family business character of LPP is a guarantee of predictability and stability of the company’s operations in the long term perspective. Today, in such uncertain and difficult times for us all, it is a value that cannot be overestimated. I am convinced that both our employees, as well as partners and contractors have received today another proof that LPP was, is and will always remain a Polish family business – comments Marek Piechocki, President of the Management Board of LPP, and adds: – Personally, as I have always been responsible for the day-to-day operations of the company, I perceive the decision of the two biggest shareholders of LPP to leave the reins in the hands of one of the founders as an expression of trust and confirmation of the durability of this decision.

In the opinion of the Management Board, the action of the leading shareholders of LPP is not related to the current operations of the company. However, it is a confirmation of durability and stability of the long-term business goals adopted by the company and strengthening of conditions for its development in the years to come. Leaving the responsibility for management and strategic decisions in the hands of one of its two founders is also a guarantee that LPP will remain a Polish company building its capital based on values that have remained unchanged for years, which is reflected in the position of the company on the economic map of Poland.

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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 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 1700 stores with the total area of over 1 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 plays another 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.