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LPP S.A. Press room PLN 7 billion revenue in 2017, a record year for the company

PLN 7 billion revenue in 2017, a record year for the company

14.03.2018

• The value of sales for the whole years of 2017 amounted to PLN 7 billion – this is the best result in the history of LPP. • The value of e-commerce sales doubled compared to 2016. • In the year 2017, the total area of LPP salons exceeded 1 million m2. | • Shops LPP are already operating in 20 countries in Europe and the Middle East, and in 11 of them online sales are conducted.

The last quarter of last year, just like the entire 2017 for the Polish fashion company strongly finished in the black. On an annual basis, the total sales of the group increased by 17% and reached a level of PLN 7 billion. The surface area of all 1743 LPP salons worldwide exceeded 1 million m2. For comparison – they can fill entirely even the 15 largest shopping malls such as Warsaw Zlote Tarasy.

A strong base of revenues

The increase in sales was achieved not only by the opening of new salons but primarily due to well-received new collections, in particular Reserved, Sinsay and Cropp – evidence of which is the high, two-digit sales ratio for 2017 comparable shops (10% y/y according to LFL trade measure, i.e. Like For Like). The current commodity management policy also helps. As a result, the gross margin in the last quarter of 2017 amounted to 58% and was over 7pp higher than the corresponding period in 2016.

“Such good results were possible mainly due to the customers’ appreciation of our last year’s offer. I am pleased that in addition to traditional, well-accepted collections for women and children by our flagship brand Reserved, all other brands recorded significant sales increases in the fourth quarter. Importantly, we doubled our Internet sales in the fourth quarter of 2017, which reached the level of 8% of the total sales in Poland. We will try to maintain this trend by developing online sales in subsequent countries where our outlets are already operating. At the moment, our collections are available online in more than half of the 20 countries in which we conduct sales.” – comments Przemysław Lutkiewicz, Vice-President and Finance Director of LPP.

Qualitative change of the sales network in Poland

In our country, LPP focused in 2017 on adjusting the sales network to the changing tastes of consumers, among others, by investing in the modernization of Reserved salons through the opening of new shops in accordance with the innovative Open To Public concept. The entire collection is placed in the customer’s sight. The concept involves the use of minimalist interiors and light, easy-to-arrange furniture as well as equipping shops with modern technologies. Large format LED screens, dedicated DALI lighting system which allows controlling light intensity, colour temperature or dynamics from anywhere in the world and creates “lighting scenarios” or automated changing rooms, are just a few of the selected technological solutions. The last open salon under the Open To Public concept is located in Warsaw’s Złote Tarasy. Previously, the concept was used in prestigious locations in Berlin and London.

2017 – United Kingdom, Serbia and Belarus

Abroad, the Reserved brand has had an important and long-awaited debut on the prestigious Oxford Street in London – with the participation of Kate Moss, the world-famous British model being the face of the advertising campaign. The results for the first months of presence in Great Britain are encouraging LPP to take further steps – the investment of a dedicated logistics centre to handle operations in this country is being considered. Other important LPP openings in 2017 are the first salons in Belarus (franchise) and in Serbia.

Poland, is a socially responsible, Polish business

LPP clearly emphasizes being a socially responsible family company which roots have always been grounded in Poland. By way of example, it shows that Polish entrepreneurs can export not only products but also concept, design and know-how which represent as much as 65% of the value of each collection. This product added value is created by its employees – the company from Gdańsk provides over 14,000 jobs in Poland and permanently cooperates with 300 contractors which employ over 3,500 people. This is a significant contribution to the Polish economy.

LPP’s activity in the social field with PLN 2M spent in 2017 is an important part of its business operation. Among the projects implemented in Poland, there were, among others, Pierwsza Przymiarka, Programme Ambassador or LPP Team for Kids. Also, LPP is the only Polish clothing company which signed an agreement with the international Accord association, safeguarding the safety of employees working in factories in Asia. In December 2017, LPP decided to sign another agreement with Accord in order to prepare the Bengali government to carry out independent inspections and audits in the factories within the next few years. Since 2017, LPP has also been cooperating with the international company SGS, which is an independent auditor supporting the assessment of risks in the area of compliance with the LPP Code of Conduct by the factories commissioned to manufacture the collection. Until now, LPP has spent over PLN 16M on the improvement of safety in Asian factories.

Acting globally, the company does not forget its Polish family roots, which is why it joined the Family Business Network in 2017 that associates many family businesses, including those from Poland.

Half a billion of PLN for investments, development and openings in Kazakhstan, Slovenia and Israel Due to revenues and earned profit, LPP wants to allocate as much as PLN 520M for capital expenditures in 2018. Approximately PLN 350M will be invested in new salons – a large portion of this amount will be related to new market debuts planned in 2018. LPP intends to open its own shops in Kazakhstan and Slovenia. In Israel, however, they will be based on the franchise model. Even PLN 75M is planned for the development of logistics and IT as well as nearly PLN 100M for office space to accommodate the constantly growing teams of the LPP Head Office.

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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 been continually operating in Poland and abroad, achieving successes in the demanding clothing market. LPP S.A. manages 5 fashion brands: Reserved, Cropp, House, Mohito and Sinsay. The company has a network of more than 1700 sales salons and on-line shops of all their brands and creates jobs for about 25 thousand people in offices and sales structures in Poland, Europe, Asia and Africa. Currently, traditional salons already operate in 20 countries and in 11 countries LPP conducts online sales. The company LPP SA is listed on the Warsaw Stock Exchange as part of the WIG20 index and belongs to the prestigious MSCI Poland Index.