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LPP S.A. Press room LPP doubles e-commerce sales in Q1 2018

LPP doubles e-commerce sales in Q1 2018

21.05.2018

• In Q1 2018, LPP increased revenues by 16% compared to Q1 2017 • Sales from e-commerce increased by 139% • Online sales already account for over 8% of the total value of LPP sales • The increase in LFL sales revenues was over 9% • In Q1, the sales area of the LPP group increased by almost 10%, year over year

LPP ends Q1 the year, which is traditionally the most difficult period for the entire fashion industry, with good sales results. This is due, among others, to the decisive and constant investments in the development of e-commerce and the expansion on new markets. They resulted in a doubling of revenues from this area – in comparison to Q1 2017, sales revenues increased by 139%. The total sales of LPP in Q1 2018 reached almost PLN 1.6 billion, which means an increase of 16% compared to the first three months of the previous year.

The LPP group managed to maintain profit margins at the same level as in the corresponding quarter of the previous year, despite the weather, so unfavorable for the spring purchases in February and March. Similarly to last year, the gross margin remained at 45%.

The development of online sales and subsequent levels of its share in the group’s revenues is very good news for us. This is a sign that our investments in the development of IT departments or logistics give specific, measurable effects. Specifically note the16% increase in revenues compared to the same period last year – this proves that customers are satisfied with our collections and are waiting for more interesting proposals for new seasons – comments Przemysław Lutkiewicz, vice president of the board and financial director of LPP.

Traditionally, the best sales results have been achieved by the flagship LPP brand – Reserved – over PLN 700 million in revenue. The youngest brand – Sinsay – achieved the highest increases, as much as 27% y/y. This is due to the consistent development of its sales network, also abroad. In addition, Russia has recently joined the group of countries with online sales. The Polish company has high expectations concerning this country.

The solid basis for our growth is also demonstrated by sales results based on a fixed number of stores (LFL), which increased by 9% in Q1 2018. This means that the recorded increase in revenues is the effect of not only new openings, but also the activity of previously operating salons – adds Przemysław Lutkiewicz.

LPP upholds its foreign expansion plans announced in 2017. In the second half of the year, LPP planned the opening of the first showrooms in: Slovenia, Kazakhstan (own stores) and Israel (franchise). In Frankfurt am Main, the financial capital of our western neighbor, the previously announced 20th flagship Reserved store in Germany, will also be launched in the second half of 2018.

On May 17, 2018, LPP also presented a consolidated report on non-financial activities “Let’s get to know each other better”. It summarizes the most important information in the field of sustainable business and social responsibility of the Gdańsk company, which, apart from the development of the Polish clothing industry, has been a significant area of LPP activity for years. A lot of space in the report has been devoted to the supply chain, starting from the design of the collection up to its sale in showrooms, as well as the culture of work and social activity of the company. LPP cares for the highest quality at every stage (design, sewing, distribution and sales). For this purpose, by the end of 2017, it has already allocated PLN 16 million, and this year it has planned funds in the amount of PLN 5 million.

In addition, in March, representatives of LPP took part in the Congress of Family Firms organized by the Institute of Family Business. They shared their experiences related to the problems of contemporary family businesses that run activities not only as small-scale enterprises, but are often LPP-size entities – operating on many markets simultaneously, giving thousands of jobs in the country and abroad, creating added value and exporting Polish know-how.

The company also announced that it will change the method of calculating the financial year. It will be in line with the sales season, because it will start in February and end in January of the following year. This change is aimed at better adjustment of the way the company’s balance sheets are conducted on a quarterly basis with the life cycle of the collection, so that the financial quarters reflect fashion seasons. Due to this change, 2019 will have 13 months, and the target financial year from 2020 will start on February 1.

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LPP SA, is one of the most dynamically developing clothing companies in the region of Central and Eastern Europe. For over 25 years, the company has been consistently operating in Poland and abroad, achieving successes in the demanding clothing market. LPP SA manages 5 fashion brands: Reserved, Cropp, House, Mohito and Sinsay. The company has a network of over 1,700 showrooms with a total area of over 1 million m2 and on-line stores of its brands in 11 European countries. LPP creates jobs for approx. 25,000 people in offices and sales structures in Poland, Europe, Asia and Africa. LPP SA is listed on the Warsaw Stock Exchange as part of the WIG20 index and belongs to the prestigious MSCI Poland index.