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LPP S.A. Press room LPP exceeded 2 bl revenue in Q3 2018

LPP exceeded 2 bl revenue in Q3 2018

20.11.2018

• Since the third quarter of this year, the retail space of LPP’s brick-and-mortar stores abroad has already accounted for more than half of the company’s total retail space

• In the third quarter, the Company recorded over PLN 2 bl in revenue – 12.8% more than in the previous year. In the first nine months of this year, LPP generated PLN 5.7 bl, which means an increase by 16.3% y/y.

• The Company achieved a positive LFL and a three-digit increase in e-commerce sales y/y.

• In the last three months, the Company made its debut on three foreign markets. In the third quarter it launched sales in Israel and Slovenia, and in October opened a store in Kazakhstan.

LPP ends another quarter of this year with a result of over PLN 2 bl in revenue. As a result, total sales of the group for the first nine months of this year exceeded PLN 5.7 bl. This is primarily the effect of an increase in LFL, an increase in the retail space of the brick-and-mortar chain, and a high dynamics of online sales.

– The results achieved in the third quarter prove that our strategy is correct. Every month, from August to October, we debuted on one new foreign market. We recorded a significant increase in gross margin, despite the sales offers in this period. Customers’ attention was attracted by very good AW collections, in particular by Reserved and Sinsay. We are also satisfied with the House collection, which closed the third quarter with a double-digit increase in sales – comments Przemysław Lutkiewicz, LPP’s Vice President of the Management Board for Finance.

The gross margin of LPP in the third quarter of 2018 reached 51% and is 2 p.p. higher than a year ago. Compared to the previous year, the Company also reduced the costs of its own stores per square metre. This is a result of the introduction of new, larger store formats and the renegotiation of existing agreements with shopping centres. In the first nine months of 2018, the Company generated a net profit of PLN 193 m, recording an increase by 36.5% y/y.

– The development entails the need for investment, therefore in order to maintain the current dynamics we have been allocating further funds for the development of our stores, logistics and e-commerce – comments Przemysław Lutkiewicz. In the third quarter of 2018, LPP’s capital expenditure totalled PLN 210 m, of which nearly 60% was earmarked for stores. The remaining funds were invested, among others, in expansion of the distribution centre in Pruszcz Gdański, construction of the centre in Brześć Kujawski and expansion of the Company’s head office.

Sales results in the third quarter of this year confirm that Poland remains the most important market for the group. In line with the LPP strategy, the Company is simultaneously developing its sales network outside the country and increasing revenues from operations on foreign markets. Already now, the share of LPP retail space abroad accounts for more than half of the group’s total retail space. In addition to the dynamic growth in Europe, LPP has also increased sales in the Middle East – the debut of Reserved in Israel contributed to the strengthening of its image in this region. The Company also intends to continue its development in Southern Europe.

– Following the September debut, Slovenia is already the fifth country in Southern Europe where LPP brands’ stores are present. We are satisfied with the results so far in this region. To begin with, we opened a Reserved store in Slovenia, and we are planning to open more stores of our brands. The scale of LPP’s operations in this region already requires the support of a distribution centre – hence our decision to lease a warehouse in Romania – comments Vice-President Lutkiewicz. The new distribution centre in Romania will ultimately support online sales of LPP in South-Eastern Europe.

Online sales in the third quarter of this year accounted for 8.3% of revenues from Poland and 7.4% of the group’s sales. At the same time, the Company maintains its declaration to increase the share of e-commerce to 20% of total sales by 2021. LPP wants to achieve this, among other things, by expanding its offer to new countries – by the end of the first half of next year it intends to make its offer available via the internet in every EU Member State. In 2019, the brick-and-mortar network of the Polish company will be expanded by another country in the Balkans – Bosnia and Herzegovina and Finland in Northern Europe. Following its debuts in the last three months, LPP is already present in 23 countries.

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LPP SA is one of the fastest growing clothing companies in the region of Central and Eastern Europe. For over 25 years, the Company has consistently carried out its operations in Poland and abroad, being successful on the demanding clothing market. 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 11 European countries. LPP employs over 25 thousand people in its offices and sales structures in Poland, Europe, Asia, and Africa. LPP SA is listed on the Warsaw Stock Exchange in the WIG20 index and belongs to the prestigious MSCI Poland index.

Contact for the media:

Monika Wszeborowska
PR Manager
Phone number: +48 519 010 990
E-mail: monika.wszeborowska@lppsa.com

Sławomir Ronkowski
Director of Communications and Sustainable
Phone number: +48 571 448 369
E-mail: slawomir.ronkowski@lppsa.com

www.lppsa.com