LPP, the clothing company, grows as it enters new markets

The total sales of LPP Capital Group, the owner of 5 popular clothing brands (RESERVED, Cropp, House, MOHITO and SiNSAY), grew in the first half-year of 2014. The company increased its retail space and its sales in LPP-brand stores both in Poland and in foreign markets. The Group is facing a new challenge as LPP’s clothing brands will debut in Germany, Croatia and the Middle East.   “In the first months of this year, we focused mainly on preparing our debut in the German market, and kept a close eye on the Eastern market. Owing to the dynamic developments in Ukraine and Russia, we have reviewed our plans a little for this region. The increase in retail space there in 2014 will be 33% rather than 52% as we originally planned. The total increase in space for all countries will therefore be around 23% instead of the originally intended 28%. At the same time, we are finalising the first stage of LPP’s venture beyond Poland’s western border, with the first RESERVED stores in Germany opening this autumn. We are also taking our business outside Europe as soon our first store begins operating in Qatar. Another important event is the debut of our five brands in the Croatian market in the autumn,” says Dariusz Pachla, Deputy President of LPP’s Management Board. “We have been the leader in the Polish clothing industry for a number of years, and we are strengthening our position in the Central and Eastern Europe. As for the investments in Germany, the Balkans and the Middle East, they mark the beginning of our global ambitions.”   In the first half of the year, LPP’s total revenues from sales were 22.3% higher compared to the same period of the previous year, amounting to 2,130,000 PLN. This is a consequence of increased retail space and higher sales in stores. The percentage margin in the period in question rose by 1.6 percentage points to reach 59.3%. Total retail space grew by 35% compared to June 2013, reaching 674,000 square meters, and the number of LPP-brand stores at the end of the first half-year of 2014 was 1488. As a result, LPP closed the first half-year of 2014 with a net profit of 154,192,000 PLN, a 10 percentage point increase compared to the profit achieved in the same period last year.   Despite the improvement of the situation in the second half of the year, throughout the first half of the year LPP’s results were considerably influenced by foreign exchange losses of 27 million PLN. This concerned mainly the Russian rouble and the Ukrainian hryvna. Owing to the unstable economic situation in Russia and Ukraine, LPP has slightly scaled down its investment in the region.   LPP’s operating costs increased by 25.9% compared to the first half-year of 2013, and earnings before income and taxes rose by 21.2% in comparison to last year’s EBIT, reaching 246,479,000 PLN.   LPP, a company listed on the Warsaw Stock Exchange from 2001, is one of the most dynamically developing clothing companies. It has been steadily growing its business in Poland and abroad for a number of years, and has enjoyed remarkable success in the clothing industry. The company manages 5 well-known fashion brands, a chain of 1500 stores, employing nearly 18,000 people in the offices and sales structures in Poland as well as other Central and Eastern European countries, and Shanghai. LPP continues to make new investments and win new markets. In March 2014, the company entered the WIG20 Index, which generates a significant part of the trading turnover on WSE.