Results after the third quarter of 2017

• LPP recorded nearly $ 2 billion in revenue in Q3 of 2017.
• The increase in revenue as compared to the Q3 of 2016 amounted to 22% and for the first 9 months it amounted to 17% y/y.
• The Company recorded a further increase in the e-commerce segment, achieving revenues of almost PLN 75 million in Q3 (an increase of 137% as compared to the same period last year).

LPP ends Q3 of 2017 with very good financial indicators. The Company can boast almost PLN 2bn in revenue and a net profit of PLN 85 million. This means that in y/y terms, the Company recorded a 22% increase in revenue. Sales in comparable stores (LFL) also reached a significant increase – in terms of y/y it was over 15%, and after the first 9 months this factor is almost 9% higher than in the corresponding period of 2016. The significant improvement is also visible in the gross margin which reached 49% in the Q3 of 2017 – it was almost 2 percentage points better than in the same period last year.

We are pleased with the profitability we have achieved in Q3 of this year. There were several contributing factors. Firstly, the good reception of our collections by the customers – especially the women’s and children’s Reserved collections. Another important factor is the continued growth of the importance of e-commerce in our revenue. Already 30% of sales in this segment come from our foreign online stores. Finally, a significant increase in gross margins thanks, among others, to favourable currency trends but also the effectiveness of our new policies in commodity management – commented Przemysław Lutkiewicz, Vice President of the Board and Financial Director of LPP.

The growing importance of e-commerce in the LPP business is confirmed by the expansion of the online sales network to other countries. In Q3 of 2017, in parallel with the spectacular debut of Reserved in the UK capital, the sales of the brand launched in England, Wales and Scotland with its own e-shop. An important step for the Company was the opening of online sales in Russia in recent weeks. In Russia the Company has adopted a model of cooperation with an external company. This will allow to fully utilise the local partner’s know-how on this highly promising but also competitive market for clothing companies. This means that LPP continues to increase its engagement on the Internet in further European markets.

LPP maintains its adopted strategy also in the case of traditional outlets abroad. In August, it launched the Reserved flagship store in Serbia. It has recently announced plans to enter the Israeli and Slovenian markets next year, and will also announce the launch of its first showrooms in Kazakhstan.

The revenue of our showrooms in the East has prompted us to become more courageous in Kazakhstan. We decided to open our own showrooms there, instead of the originally planned franchise model. We will start a little later than previously announced, but with a greater commitment – added Przemysław Lutkiewicz. This decision requires a bit more preparation than cooperation with local business partners, so the Company decided to postpone its debut to 2018.

The Company also invests in the Gdańsk office. Works on the construction of a new office building at ul. Łąkowa are under way. This is a result of dynamically growing employment – in recent months the Company hired several hundred new employees who primarily deal with IT services and support for e-commerce logistics and processes. Ultimately, the creation of LPP Fashion Lab campus consisting of a complex of four office buildings, which will enable all employees of the Gdańsk central office to work while enjoying the best conditions of state of the art office buildings is planned. The project is managed by JEMS Architekci – an award-winning architectural studio.

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LPP SA is one of the most dynamically developing clothing companies in Central and Eastern Europe. The company has been consistently pursuing its business both at home and abroad for 26 years, successfully operating on the demanding apparel market. LPP SA manages 5 fashion brands: Reserved, Cropp, House, Mohito and Sinsay. The company has developed a network of nearly 1700 retail stores and on-line stores of all its brands and created 25,000 jobs in offices and sales structures in Poland, Europe, Asia and Africa. LPP SA is listed on the Warsaw Stock Exchange within the WIG20 index and is a part of the prestigious MSCI Poland index.