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LPP S.A. Press room LPP exceeded PLN 2 bln of revenue in Q2 2018

LPP exceeded PLN 2 bln of revenue in Q2 2018

04.09.2018

• In Q2 2018, the sales of LPP reached over PLN 2 bln while in H1 LPP generated revenue of PLN 3.6 bln. This translates into an increase of, respectively, over 20% and 18% y/y.

• In Q2, the company reports positive LFL figures and doubles e-commerce sales y/y.

• Starting from Q3, the retail space in traditional stores abroad will be larger than retail space in Poland.

LPP ends the second quarter of 2018 with revenue totalling over PLN 2 bln. Therefore, the group’s total sales in the period of the first six months of 2018 exceeded PLN 3.6 bln owing to a two-digit LFL sales growth and the increased share of online sales, recorded in yet another quarter.

– The first half of 2018 was definitely profitable for our brands. We are pleased with positive acceptance of the Reserved collection and with the growing appreciation for Sinsay. Dynamic sales growths in our youngest brand in the second quarter prove that our hopes for Sinsay are fully justified. Successful collections of our brands and a new replenishment policy enabling increased supply flexibility translate into a significant increase in our gross margin – comments Przemysław Lutkiewicz, Vice-President and CFO of LPP.

In Q2 2018, the gross margin reached almost 60%, being 3 pp. higher than a year ago. Compared to the same period in 2016, LPP recorded a margin increase of 10 pp. The company was able to maintain the costs of own stores per square meter at the same level as year ago. Moreover, an increase in SG&A/m2 reached 9% per year, which resulted from further e-commerce development. All these factors made it possible to achieve the net profit of PLN 101.4 mln for H1 2018.

– Our total costs dynamics attained a level substantially lower that the sales growth and, consequently, in the first half of the year, we practically doubled our profit compared to the first half of 2017. We have sufficient funds for new investments. In the second quarter of 2018, we have invested a total of PLN 138 million, of which 60% for investments in brand stores. The remaining funds are designated for investing in the expansion of the head office and support for logistics and e-commerce – adds Przemysław Lutkiewicz. As confirmed by the company, one of the key investment projects will be the construction of a new distribution centre in Brześć Kujawski, of a value reaching almost PLN 400 mln.

As regards online sales, the company further declares to be increasing the share of e-commerce to 20% of total sales by 2021. LPP wants to attain that goal by, among others, expanding its offer to new countries – in 2019, the company plans to be present on 35 e-commerce markets. By the end of the first half of the next year, LPP intends to make its offer available online in each EU member-state.

The company has also deep interest in traditional sales – apart from the newly opened Reserved store in Tel Aviv, Israel, there will soon be launched new stores in Slovenia and Kazakhstan and the earlier announced 20th Reserved store in Germany, in Frankfurt-am-Main. In 2019, the network of traditional stores will be joined by Finland as well Bosnia and Herzegovina.

– The share of retail space abroad in the second half of 2018 will exceed over a half of the current million square meters. For us in LPP, this is a historic moment – we will have more retail space abroad than in Poland – concluded Przemysław Lutkiewicz.

The second quarter of 2018, with positive LFL figures in Poland, has proven also that LPP is doing well considering the trading ban on specific Sundays, introduced this year. The Sunday demand was transferred mainly to Saturdays and, to a lesser extent, to other weekdays. Additionally, in this period, as much as 80% of stores recorded increased sales y/y.

LPP closed Q2 2018 with two-digit sales growths in Poland, Europe and former CIS states.

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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 network of over 1 700 stores and online stores of all its brands, and creates jobs for about 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.