Press room

LPP S.A. Press room Beginning of year above expectations for LPP: double-digit sales growth and double-digit LFL level

Beginning of year above expectations for LPP: double-digit sales growth and double-digit LFL level

29.05.2019

• In Q1 2019, the Polish clothing producer exceeded PLN 1.8 bn in revenue, recording an increase by 15.7% y/y.

• Despite the high base of the previous year, the company increased its LFL sales by 11.4%.

• LPP maintains an upward trend in e-commerce, among others due to the extension of the offer to new countries.

• According to the plan, in 2019 the company wants to exceed PLN 1 billion in e-commerce sales.

In Q1 2019, LPP generated over PLN 1.8 bn in revenue and increased sales by 15.7%. A good beginning of the year of the Polish clothing manufacturer is due to the positive sales results in all five brands, as well as the effect of maintaining the growth of sales in e-commerce. In Q119, online sales increased by 47% y/y and already constituted 12.0% of revenues from Poland and 10.5% of the Group’s sales.

– We are pleased that all our brands recorded better sales results than in the previous year. The more so as the beginning of the year is usually the most difficult for the fashion industry. It is yet another quarter which shows that LPP is developing in the right direction. We have been consistently working on the quality of our collections and investing in the further development of the omnichannel. Multi-channel sales allow us to get to know our customers better and precisely identify trends, and our designers can use this knowledge to prepare collections that cater to the needs of our customers. We are particularly pleased with the next successful quarter of House and Reserved brands – comments Przemysław Lutkiewicz, Vice President of LPP.

In accordance with the adopted omnichannel strategy, the company focuses on the development of e-commerce and at the same time strengthens the potential of its own chain of brick and mortar stores. At the end of Q1 LPP operated 1724 stores, and the area of the chain increased by 8.4% y/y. In Q1 of this year, the company managed to reduce the costs of its own stores per square meter by 5 p.p. compared to the previous year. Despite significant investments in the development of e-commerce and rising logistics costs resulting from the development of this channel, LPP reduced total SG&A/m2 costs by 2 p.p. per year. The Polish clothing manufacturer continues the process of quality development of the chain of brick and mortar stores, focusing on increasing the size and modifying subsequent stores, which has an impact on cost optimization. The larger area of the store is also conducive to better display of goods.

– Despite the high base from the previous year, LFL sales grew much above our earlier expectations, by as much as 11.4%. This data show that revenues of LPP are growing not only due to the opening of new locations, but also due to the fact that existing stores are able to generate more and more revenue. We are pleased with the good sales dynamics on foreign markets, especially in Eastern and Southern Europe. We are a Polish company with global aspirations and it is abroad that we see an opportunity for further development. That is why we are not slowing down the pace and we are planning further openings – announced Przemysław Lutkiewicz.

At the end of Q1 of this year, LPP was conducting sales activities on 24 markets. At the turn of March and April, Bosnia and Herzegovina joined the chain of brick and mortar stores and the company launched stores of all five brands in that country. This year’s plans include a debut in Finland, the launch of an e-store in Ukraine and a pan-European e-store. A turning point in the development of multi-channel sales and global supply chain management will be the implementation of the RFID system. Currently, a team of several dozen trainers conducts trainings for employees of Reserved stores in Poland on the use of electronic tags. Here, the RFID implementation will be completed this year, and in the following years it will include the remaining brands.

Simultaneously, LPP invests in the development of an integrated logistics system, adjusted to the multichannel sales model. This year it wants to launch Fulfillment Center for e-commerce in Romania and in Q1 2020 in Slovakia. The company is also preparing to commence the construction of a distribution centre in Brześć Kujawski worth approximately PLN 500 million.

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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 collections already on 24 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 1,700 stores with the total area of over 1 million sq.m. and operates online stores in 12 European countries. On the basis of a global supply chain, the Polish clothing producer distributes over 200 million pieces of clothing to three continents. LPP plays another important role as it employs over 25 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.