In the first two quarters of 2015, LPP SA, the owner of five popular clothing brands (RESERVED, Cropp, House, MOHITO and SiNSAY), generated PLN 2.3 billion in sales revenue, reaching PLN 100 million net profit. The company continued its international expansion by opening, among others, its first RESERVED brand stores in Egypt, Kuwait and Qatar, and three more stores in Germany. By the end of the year, RESERVED brand stores will be present in no less than 17 countries.
Revenues from sales in the period of January-June 2015 amounted to PLN 2 294 million, an increase by 8 % on a year-to-year basis. In the analysed period, the company rapidly expanded its sales network. In the first half of 2015, LPP opened 78 stores with a total area of about 56 thousand sqm, bringing the total retail area to 778 thousand sqm (1 594 stores), an increase of 16 % year on year.
Majority of new LPP stores in the first half of 2015 were opened in Poland, where the sales network expanded by 30 thousand sqm. Dynamic increase in area by about 8 thousand sqm was also noted in other European countries, among others, through the acceleration of development in Romania, where 8 stores were opened in 2Q only, with a total area of almost 6 thousand sqm.
In subsequent quarters, we plan to increase sales above 10 % with a strict cost control. At the same time, we will consistently increase the network area. We estimate that by the end of the year it will increase by 17 % and we will allocate about PLN 390 million for the development of stores – says Przemysław Lutkiewicz, Executive Vice President and Chief Financial Officer of LPP. In 2016 we want to increase the area by about 15 %. In turn, the development will be triggered by the debut of a new brand, franchising of RESERVED in Belarus and Kazakhstan as well as further network growth in Germany and the Middle East – he adds.
In 1Q, LPP began its expansion in a new region. In cooperation with the local franchisee RESERVED opened stores in Egypt, Qatar and Kuwait, whereas in September this year, the brand is to have its debut in Saudi Arabia. Thus, at the end of this year RESERVED brand stores will be present in 17 countries on 3 continents.
In 2015, LPP will also focus on the development in Germany, the company’s first market in Western Europe. In the first half of 2015, the RESERVED brand network increased from four to seven stores. All facilities have an area of over 2 thousand sqm and they are situated in attractive locations. In 3Q, the company will open more stores: one on the prestigious street in Leipzig and the second, its flagship store, in Stuttgart.
Revenues from sales in comparable stores (LFL) increased in the first half of 2015 by 0.5% thanks to good results in May and June. After four quarters of negative growth rates, in 2Q of 2015, LFL grew by 1.5 %. During this period all brands of LPP achieved positive LFL results.
Despite the political situation in Russia and the Ukraine, sales growth in these countries remained positive at a double-digit rate. The development of LPP network in the area is on hold due to, among others, the high exchange rate risk.
The company limited operating costs with lower marketing expenses and reduced costs of external services. Operating costs of its stores in the first half of 2015 declined by 16 % per sqm thanks to renegotiated rents in Poland, Russia and Ukraine. The efforts to reduce costs helped to develop high net profit for the LPP Group in the first half of 2015, at the level of PLN 99.3 million.
LPP SA, a company listed on the Warsaw Stock Exchange since 2001, is one of the fastest growing clothing companies in the region of Central and Eastern Europe. For 20 years the company has consistently carried out its operations in Poland and abroad, being successful on the demanding clothing market. LPP SA manages 5 well known fashion brands (RESERVED, Cropp, House, MOHITO and SiNSAY) and a network of nearly 1 600 shops. It provides jobs for nearly 20 thousand people in its offices and sales structures in Poland, Europe, Asia and Africa. The company invests in and acquires new markets by opening its first stores in Egypt, Kuwait and Qatar in 2015. In 2014, the company advanced to the stock exchange index WIG20, which generates a significant part of the turnover on the Warsaw Stock Exchange and belongs to the prestigious MSCI Poland.
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