Record profits and over 8 bn revenues recorded by LPP in 2018
• The Polish clothing manufacturer summed up another successful year: total sales of LPP in 2018 increased by 14.5% y/y and exceeded PLN 8 bn.
• In 2018, the company achieved the highest net profit in its history at the level of half a billion zlotys.
• The company’s revenues increased due to LFL growth and doubling of online sales. The company estimates that in 2019 its revenues from e-commerce will exceed PLN 1 bn.
• The most important event of 2018 was the creation private foundations by the founders of LPP and the transfer of the company’s shares to them, which is a guarantee that LPP will remain a Polish company forever.
In the last quarter of 2018,LPP exceeded two billion in revenues. A good year end for the Polish clothing manufacturer is due to the hit autumn/winter collections – in particular the Reserved and House brands, as well as further increases in online sales. Throughout 2018, the company generated over PLN 8 bn in revenue.
Positive impact of the omnichannel
– The past year was definitely a very successful one – we generated half a billion net profits and our revenues are growing at a double-digit rate. We had a very good first half of the year and managed to maintain our margins at 54.7% per year. Regardless of the fluctuations resulting from the sale offers, we achieve increasingly better margins, which we owe to successful collections and the ability to precisely match the offer to the needs of customers. We want to maintain this trend in 2019 – comments Przemysław Lutkiewicz, Vice President of LPP responsible for Finance.
Year by year we can see the growing importance of e-commerce in the structure of revenues of the Gdańsk-based company. In Q4 2018, online sales constituted as much as 12.3% of revenues from Poland and 10.6% of the group’s sales. The core of the LPP strategy is all about tapping into the potential of the expanded brick-and-mortar store chain and the dynamic development of online sales, therefore the company focuses on the integration and development of both channels. At the same time, it is working on the qualitative change of the chain of over 1760 stores and expanding the e-commerce outreach to other countries. The turning point in the development of multi-channel sales and global supply chain management will be the implementation of RFID in Reserved chain, planned for 2019, which in the following years will include the remaining brands.
LPP investments for the years to come
In 2018, the retail space of the LPP brick-and-mortar chain increased by 9% and in the second half of the year the share of the LPP retail space abroad exceeded half out of over one million square meters. Within just three months, a clothing manufacturer from Gdańsk debuted on three new foreign markets – in Israel, Slovenia, and Kazakhstan. The company also strengthens its position in existing locations. This is evidenced by the LFL growth in sales which amounted to 7.2% y/y.
In 2019, the company is planning to enter two new markets – Bosnia and Herzegovina and Finland. By the end of 2019, the company intends to make its offer available online in every EU Member State and in Ukraine. The stable financial situation and the profit generated in 2018 will allow the company to further improve its logistics processes and invest in the development of its sales network. In total, by 2020, LPP wants to allocate half a billion for logistics centres. In 2019, the company is planning to complete the investment project concerning the e-commerce warehouse in Romania. At the turn of 2021 and 2022, the distribution centre in Brześć Kujawski will become one of the two key elements of logistics of LPP, thanks to which the company’s warehouse space will be increased by 100,000 m2 and over 1000 people will find employment there.
– Significant expenditures on the expansion of distribution centres is an investment not only aimed at increasing our logistics capabilities and improving the quality of customer service, but also a significant contribution to the Polish economy. That is why the decision of the owners to establish private foundations was so important to maintain the strength of our company. The succession process initiated in this way by Marek Piechocki, President of the Management Board, is a guarantee that the company founded by him in Pomerania will last for years or even generations. Hence, we will continue to support Polish creative thought and maintain employment for several thousand employees and hundreds of contractors – comments Przemysław Lutkiewicz.
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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 chain of 1,700 stores with the total area of over 1 million sq.m. and operates online stores in 11 European countries. LPP employs over 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.