LPP, the Polish fashion retail giant, has announced strong sales in the third quarter, with a notable increase in revenues. Despite this positive performance, the company is bracing itself for a potential slowdown in the near future. LPP, which owns popular brands such as Reserved and Sinsay, plans to expand the Reserved brand in the United Kingdom and Italy.

During the third quarter, LPP experienced a nearly 40% rise in revenues, surpassing PLN4.3 billion. It’s important to note that this growth is measured on a comparable basis that excludes the Russian market. The company also saw impressive year-on-year growth in e-commerce sales, with a more than 23% increase that generated over PLN1 billion in revenues, representing 23.6% of the group’s total.

Sinsay, one of LPP’s brands, witnessed the highest growth in both physical and online revenue, exceeding PLN1.7 billion. The company’s expansion plans across other European markets also contributed to its growth, with revenues from outside Poland accounting for nearly 60% of its total revenues for the quarter.

LPP is determined to achieve double-digit revenue growth by investing in physical and online channels for its Sinsay and Reserved brands in new markets. However, the company faced challenges during this period, including a decrease in gross margin to 51%. This decline was influenced by unfavorable exchange rates, an increased share of the Sinsay brand in total revenues, and the need to sell off products intended for eastern markets. Nonetheless, LPP still generated a net profit of PLN395 million between August and October.

The success of LPP’s omnichannel sales can be attributed to the opening of new stores and its entry into new markets through e-commerce. As of October, LPP brands were available in 1,837 stores across 25 countries and in 32 online markets. The company believes that focusing on strengthening its presence in stable markets was the right approach given the situation across its eastern border.

LPP credits the entry of the Sinsay brand into new markets and the successful Mohito collections for AW22 as the drivers of growth during the third quarter. The company anticipates this positive trend to continue into the next year, particularly considering the expected inflationary pressure and potential decrease in consumer spending. LPP views its investments in value-for-money brands as advantageous in the current market climate.

Looking ahead, LPP is committed to expanding its presence in Western and Southern Europe. The company is preparing to launch Reserved in Milan next year and has plans for further expansion in key markets, including opening three new stores in London and a new location in the German market for its flagship brand. Additionally, LPP is accelerating the launch of Sinsay in new online markets such as Italy and Greece by the end of the financial year. The recent establishment of a design center in Barcelona for its youngest brand will enable LPP to better understand consumer expectations and align its collections with market trends.

However, LPP is aware of potential challenges in the early months of the new financial year that may bring a significant slowdown. As a result, the company is focused on cost control, inventory management, and strategic investments in key areas to navigate these potential headwinds.

Useful links:
LPP Official Website
Reserved Official Website