LPP maintains ambitious growth plans for 2024 and concludes the first half of the year with double-digit sales increases

• In the second quarter of 2024, the Polish clothing manufacturer’s sales revenues exceeded PLN 5 bn, allowing it to end the first half of the year with revenues of PLN 9.3 bn (+13.3 y/y).
• The balance sheet of the first half of the year was significantly influenced by margins kept at over 52%. As a result, LPP’s operating profit increased by 22% compared to last year, exceeding PLN 1 bn.
• The parallel double-digit sales growth in both channels is the result of the implemented omnichannel strategy, supported by the expansion of the sales network and the development of mobile applications.
• In the period from May to the end of July this year, LPP opened 122 new stores, most of them for the Sinsay brand. Thanks to the development of the network and successful collections, the company recorded positive sales growth both in Poland and abroad.
• The positive outcomes of the adopted expansion strategy encourage the company to maintain its ambitious plans for 2024. According to the assumption, LPP intends to open a total of 700 new stores of its brands this year.
• Good sales results in e-commerce, in turn, provide the basis for further investments in the development of mobile applications and increasing their geographical reach. Where they are already available, they account for the majority of online sales.

The second quarter of this year’s LPP business was marked by the implementation of one of the Group’s most ambitious development plans and the intensive expansion of the brand sales network. Thanks to new openings and the collection well fitted to the current needs of customers, especially in the Sinsay and House brands, the company generated favourable sales results during this period. In the second quarter of this year, it achieved revenue of PLN 5 bn (+ 9.4% y/y) with double-digit growth rates in both its physical stores and online networks. The financial results were positively impacted by a further improvement in gross margin by 4.6 p.p. y/y to 52.5%, which was achieved partly thanks to well-balanced collection purchase costs.

Sustained growth in sales in the traditional and online channels allowed the company to end the first half of this year with revenues of PLN 9.3 bn, an improvement of 13.3% compared to last year. In constant currencies, the dynamics reached 18.6%. During this period, operating profit increased by 22% y/y, exceeding PLN 1 bn.

– For companies in the retail sector, the past quarter was marked by an improvement in consumer sentiment, which, however, was very particular and did not give everyone the same reasons for satisfaction. In our case, successful summer collections and their adaptation to the changing lifestyle of consumers made it possible to achieve good quarterly results, which translated into a positive closing of the first half of the year with double-digit sales growth and a 30% improvement in net profit. It was important for us to achieve such a good result, above all because of our very ambitious development plans. The fact that we can already see the first positive effects of the sales of the autumn collections adds to our optimism in their fulfillment. Our proposals from the back to school collection have also been very well received – comments Przemysław Lutkiewicz, vice-president of the management board of LPP.

As in the first quarter, the priority in the company’s activities in recent months has been the expansion of the stationary network. Between May and the end of July this year LPP opened 122 new stores, most of them under the Sinsay brand. The adopted schedule of openings in the first half of the year brings the company closer to realizing the ambitious plan set for this year to open 700 new locations. It is also reflected in sales results in the stationary channel, which in the first half of the year increased by more than 19% vs. last year.

– The positive effects of the store chain expansion are reflected in the revenue dynamics of the Sinsay brand, whose sales in the first half of the year increased by 43%. On the other hand, we are mindful of the fact that ongoing investments affect operating costs. However, we treat this as a natural and temporary situation, which we will be able to turn into a source of our growth in the future – adds Przemysław Lutkiewicz.

The favourable balance of the first half of the year of LPP is also due to the high dynamics of sales in the online channel, which increased by over 17% compared to the previous year. This result was largely due to the well used potential of mobile applications, which support sales and strengthen customer loyalty to the brand. In the nine markets where the Sinsay app is available, it accounts for an average of 70% of online sales. In the case of Reserved, the figure is 55%. In turn, the Mohito app, launched at the end of last year, is gaining wide customer recognition in the company’s key markets: Poland and Romania.

The development of online sales also entails the need to strengthen the company’s logistics facilities; therefore, in the past quarter, the LPP Group launched two new warehouses for e-commerce services – near Bydgoszcz and Bucharest. The logistics processes carried out there are supported by advanced technologies that enable the automation of shipments and accelerate the handling of large volumes. The new facilities use artificial intelligence algorithms to improve real-time merchandise management and product categorization, taking into account parameters such as optimum lead times and courier pick-up times. The new logistics capacity, with strong support from advanced technologies, will allow the company to handle higher sales volumes in the company’s key markets of Central and Southern Europe.

The parallel development of both sales channels strengthens the recognition of LPP brands in Poland and abroad, which in both cases contributed to double-digit sales dynamics in the second quarter of this year. In the analyzed period, foreign sales accounted for 53.5% of the Group’s revenue, with the best results outside the country achieved in Romania and the Czech Republic.

Although Poland remains the company’s most important sales market, an analysis of the geographic structure of the physical stores network indicates that LPP is looking for growth opportunities mainly abroad. This is evidenced by a significant 25% increase in retail space outside the country in the second quarter of 2024 compared to last year. The company’s priority expansion direction remains central and southern Europe. According to the plan, the company’s sales area is expected to increase by 25% y/y by the end of the year. The majority of the 700 new stores planned for this year will be designated for Sinsay. As part of its international expansion, the brand is capitalizing on the potential of smaller towns by opening its stores in, among other places, retail parks popular in such locations.

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LPP is a Polish family business and one of the fastest growing clothing companies in the region of Central Europe. For 30 years, it has been successfully designing and selling the collections and accessories in Poland and abroad. LPP manages five fashion brands: Reserved, Cropp, House, Mohito, and Sinsay, whose offer is available today in stationary and online stores in 40 markets worldwide. The company has a chain of nearly 2500 stores with the total area of over 2 million m2 and distributes the products to 3 continents every year. LPP also plays an important role as it provides employment to 43 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.