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LPP S.A. Press room Record-high revenues and PLN 1 bn in taxes – Gdańsk-based company LPP summarizes 2019

Record-high revenues and PLN 1 bn in taxes – Gdańsk-based company LPP summarizes 2019

21.05.2020

• The Polish clothing manufacturer ended last year with another record revenues of almost PLN 10 bn.

• A historic moment for the Gdańsk-based company – foreign revenues accounted for 52% of the entire Group’s revenues last year.

• Translating the good results into almost PLN 1.1 bn of contribution to the state budget in taxes.

Last year was definitely a successful one for LPP. The company’s revenues in the last 4-month quarter of 2019 amounted to PLN 3.5 bn, with a stable gross margin of 53.4%. On an annual basis, the company recorded an increase of over 13% compared to 2018, generating PLN 9.9 bn in revenues and a net profit of PLN 500 m. The record revenues were the result of maintained cost effectiveness of the implemented projects and the extension of the availability of brands belonging to the LPP portfolio to 39 markets. These results also translated into a significant economic contribution to the Polish economy. Last year, the company from Gdańsk paid PLN 1.1 bn in taxes and other levies to the state budget. Exceptionally, in the audited period, the company’s financial results were closed in a 13-month operating period. The change in reporting from the calendar year to the financial year which ends on the last day of January better reflects the seasonality of the business.

– Another successful year is behind us, in which, for the first time in the history of the company, already in the second quarter our foreign revenues exceeded those achieved in Poland. This confirms above all the good reception of our collections, mainly in Europe. Importantly, our younger brands, apart from Reserved, also recorded excellent results – practically every month House, Mohito and Sinsay recorded positive LFLs. We are particularly pleased with the highest ones, i.e. in Israel, Romania, Germany and the UK, where the markets are very competitive – comments Przemysław Lutkiewicz, Vice-President of LPP.

Last year was also a period of further growth in online sales for the Gdańsk family company. In the last quarter, it accounted for 15.8% of Polish revenues and 14.2% of the Group’s total revenues. In the same period, revenues from this channel in Poland already accounted for 54% of LPP’s total e-commerce revenues. – Thanks to the further development of online stores abroad, marketing expenses and the change in the shopping habits of Polish customers, resulting from Sundays without trade, e-commerce sales for the whole last year brought over PLN 1.1 bn in revenues. Such good results confirm the validity of our decisions to invest in the expansion of the distribution network and technological support in logistics as a basis for further development of the multi-channel sales. Moreover, thanks to this, our contribution to the state budget exceeded PLN 1 bn. Good financial standing of the company also allowed us to prepare the ground for the implementation of many projects supporting our pro-environmental activities – adds Przemysław Lutkiewicz.

Due to the outbreak of the pandemic, many of the company’s business plans have changed. It has been a primary goal of the LPP’s Management Board to lead the company through this difficult period, and all actions taken are aimed at maintaining the company’s stable situation, thus ensuring the safety of employees and long-term contractors in Poland and worldwide.

– A new reality in commerce is emerging before us. We have achieved a lot in recent years, but now we have no certainty about the future. Observing the events of the first quarter of this year, we decided to implement a scenario assuming a reduction of costs and investment outlays. We also focus only on areas that support the company’s growth in these particular market conditions, such as the surge in growth in the e-commerce channel. The new reality is also a space for the development of the omnichannel, which remains a priority for us and this area will certainly speed up – adds Przemysław Lutkiewicz. – We believe that flexible response to changes in commercial conditions, diversification of sales channels and a good price offer of our brands will render it possible for us to survive this tough time. We hope that we will manage to maintain a safe balance sheet and return to growth after the crisis – concludes Przemysław Lutkiewicz.

Full version of the LPP’s integrated report for 2019/20 financial year is available at

https://www.lppsa.com/en/sustainable-development/annual-report.

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LPP SA is a Polish family business and one of the fastest growing clothing companies in the region of Central and Eastern Europe. For over 25 years it has been successfully operating in Poland and abroad, offering its collection already on 25 markets, including in such prestigious capitals as London, Berlin, Tel Aviv or Moscow. LPP SA manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay. The company has a chain of over 1700 stores with the total area of over 1 million sq.m. The online offer of the brands collections is available on 30 markets. LPP plays another important role as it employs over 25 thousand people in its offices and sales structures in Poland, Europe, Asia, and Africa. The company is listed on the Warsaw Stock Exchange in the WIG20 index and belongs to the prestigious MSCI Poland index.