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LPP S.A. Press room Financial results of LPP SA for the first half of 2016

Financial results of LPP SA for the first half of 2016

30.08.2016
In the first half of 2016, LPP, a company managing six clothing brands – Reserved, Tallinder, Cropp, House, Mohito and Sinsay, earned revenues of nearly PLN 2.7 billion, an increase of nearly 17 per cent year-on-year. Over the last year, the company doubled the percentage of online sales. In the reporting period, LPP increased their store area by over 12 per cent year-on-year. At the end of June, clothing brands belonging to LPP were available in 1,686 stores located in 18 countries in Europe and the Middle East.   Revenues from sales in the period from January to June 2016 amounted to PLN 2.7 billion, i.e 16.7 per cent more on a year-to-year basis. In the first half of 2016, LPP opened 59 stores with a total area of 29 thousand sqm, bringing the total retail area to almost 873 thousand sqm, i.e. over 12 per cent more year-on-year. In the reporting period, trade margin was 48.2 per cent, which is 4.8 pp less compared to last year. The decline in margin is caused primarily by high exchange rate of the US dollar, the currency in which LPP pays most of its suppliers, as well as price pressure from major competitors and increased sales in the Reserved stores.   Net profit in the first half of 2016 amounted to PLN 24.2 million, whereas it was significantly affected by the result generated in the first quarter of 2016, which LPP closed with a net loss of PLN 66 million. In the period from April to June, the company significantly improved the result, achieving a profit of PLN 90 million. It should be noted that the sale per sqm for the entire LPP network in the first half of 2016 increased by 3.5 per cent as compared to the previous year.   LPP once again recorded a dynamic growth in online sales. In the first half of 2016, revenue from e-commerce accounted for approx. 2.7 per cent of the Group’s revenue, which means that over 12 months we doubled the value of online sales – says Przemysław Lutkiewicz, Vice-President of the Management Board and Financial Director of LPP. By the end of the year, we will open online stores of all of our brands in the fast fashion segment in the Czech Republic, Hungary, Romania, Slovakia and Germany. Interestingly enough, in the German market, where we are expanding our chain of retail stores of the Reserved brand, our younger brands will be available exclusively online. By 2020, we plan to increase the share of online sales to 7-8 per cent of the entire Group’s sales – adds Lutkiewicz.   The increase in revenues is due primarily to Sinsay (+45 % y/y to 205 million), Mohito (+28 % y/y to 333 million), Cropp (+18 % y/y to 400 million) and House (+13 % y/y to 323 million). The value of sales in the Reserved stores continues, however, to fall below expectations (+8 % y/y to 1.2 billion). Due to the fact that the scale of the challenges relating to the flagship brand of LPP turned out to be higher than initially expected, 2016 and 2017 is the period of internal change for the Reserved brand. For several months the brand management model, operation system of the product preparation department and the supply logistics for stores have been systemically improved. In addition, in order to strengthen the brand design teams, the company plans to open a Reserved representative office in Warsaw.   In the first half of 2016, capital expenditure, mainly the cost of building new stores and modernising previously opened facilities, amounted to over PLN 125 million and was lower than in the previous year by 45 per cent, mainly due to completed modernisation of the logistics centre and the head office of LPP. Throughout 2016, capital expenditure will amount to approx. PLN 370 million, of which PLN 270 million will be spent on the development of the sales network.
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 more than 20 years, the company has been consistently operating in Poland and abroad, being successful on the demanding clothing market. LPP SA manages 5 popular fashion brands: RESERVED, Cropp, House, MOHITO and SiNSAY, and early in 2016, it has unveiled its first premium brand – Tallinder. The company has a network of almost 1,700 stores and creates jobs for over 21 thousand people at its offices and sales structures in Poland, Europe, Asia and Africa. LPP SA invests and wins new markets. In 2015, the company opened, among others, first stores in the Middle East. In 2014, the company advanced to WIG20 stock exchange index, which generates a significant part of the turnover on the WSE, and is listed on the prestigious MSCI Poland index.   Contact for media: Marta Chlewicka LPP Spokesperson media@lppsa.com