LPP will soon be bigger abroad than in Poland
Retail & leisureschedule 04 September 2018
Eurobuild CEE
POLAND Q2 financial results of LPP indicate that customers welcomed the spring-summer collections of brands belonging to the company.
The clothes company intends to focus on the development of new technologies and strengthening its position outside Poland. In Q2 of this year, LPP invested heavily in the development of the Sinsay brand which generates the highest turnover per sqm of retail space for the company. 17 Sinsay stores (7,000 sqm) were opened in this period, 11 of which – on six foreign markets. At the end of 2018, the company wants to have 100,000 sqm of retail space of its youngest brand. LPP is growing dynamically outside of Poland also through other brands. In August, the company opened a Reserved franchise store with a women's collection in Tel Aviv, Israel, where it will launch two more stores in 2019. By the end of this year, the brand will enter the Slovenian market and Kazakhstan, as well as launch the 20th Reserved store in Germany, in Frankfurt am Main. “In H1 2018 the share of sales area abroad will exceed more than half of the current 1 mln sqm. It is a historic moment for us in LPP – we will have more store space abroad than in Poland,” said Przemysław Lutkiewicz, a deputy CEO and the financial director at LPP. In 2019 the company will debut in Finland (with stores of all five LPP’s brands) and in Bosnia and Herzegovina. At the end of Q2, the company had 1,756 stores in 20 countries. LPP’s investment expenditure will reach PLN 590 mln this year and it will be increased by PLN 100 mln (PLN 690 mln in 2019 and PLN 790 mln in 2020) for at least the next two years. The company is focused on the development of new technologies in its field of operations, hence the intensive work on electronic RFID tags technology, which will enter the stores along with the spring/summer collection 2019. “The annual cost of servicing this technology is about PLN 60 mln but we expect that our sales will increase by about 3 pct thanks to the implementation,” points out Przemysław Lutkiewicz. The system will help the company integrate both sales channels: the traditional one and the online one. The latter shows a constantly growing trend – in Q2 it increased by 122 pct. In the case of online sales, the company maintains its declaration of an increase in the share of e-commerce to 20 pct of total sales by 2021 (it is 8.7 pct of the entire LPP group’s sales at present). LPP wants to achieve this by e.g. extending its offer to new countries – in 2019 the company plans to be present on 35 e-commerce markets. By the end of H1, it intends to make its offer available on the Internet to all European Union member states through one e-store common to these markets. LPP closes Q2 2018 with more than PLN 2 bln in revenue – thanks to this, total sales of the group for the first six months of this year exceeded PLN 3.6 bln. This is the effect of double-digit sales growth in LFL terms (+12.3 pct) as well as the next quarter of increasing the share of online sales. In Q2 2018 its gross margin reached almost 60 pct and it is 3 p.p. higher than a year ago. The company managed to maintain the costs of own stores per sqm at the same level as last year. Meanwhile the increase in total SG&A costs per sqm (general and administrative costs) amounted to 9 pct in annual terms, which was caused by the further development of e-commerce. All these factors made it possible to achieve a net profit of PLN 101.4 mln for H1 2018. “The development of our total costs was well below the growth rate of sales, thanks to which we practically doubled the profit for H1 2017. We have sufficient funds for further investments. In Q2 2018 we have invested a total of PLN 138 mln, 60 pct of which are investments in our stores. We spend the remaining investment funds on expansion of the headquarters and support of logistics and e-commerce,” adds Przemysław Lutkiewicz. One of the most important investment projects – worth almost PLN 400 mln – will be the construction of a new distribution centre in Brześć Kujawski.
An open door to redefining the commercial real estate market in Poland
An open door to redefining the commercial real estate market in Poland
Walter Herz
The investment slowdown in the commercial real estate sector that we have been observing in Poland for over a year is primarily the result of the tightening of monetary policy arou ...
The retail sector is not slowing down
The retail sector is not slowing down
Walter Herz
The pandemic, conflict in Ukraine as well as inflation and high interest rates that recent years have brought have reshaped the real estate market around the world. The global slow ...
Retail parks – current opportunities
Retail parks – current opportunities
Avison Young
Over the last few years, retail parks in Poland were mostly developed in smaller formats, around 5,000 sqm, either adding to the existing retail landscape or introducing modern ret ...