Major Polish fashion retailer LPP Group, which owns fashion brands Reserved and Sinsay among others, performed “well” in its February-April quarter, a notable result given its business is being “strongly influenced by the war on the eastern border”.
Revenues in the period increased by over 67% year-on-year, exceeding PLN3 billion (€640/£547m/$674m), excluding now-exited operations in Russia. As a result, the company now operates 1,760 stores in 25 markets.
LPP said much of the high-sales gain was due to the growing popularity of the Sinsay brand in both physical and online channels.Total sales of its youngest brand increased by almost 63% year-on-year, responsible for almost 40% of group revenues.
Net profit also came in at PLN268 million. However, gross margins fell to 53.3%, hit by the war in Ukraine, an unfavourable dollar exchange rate and the price reductions of LPP's goods originally intended for eastern markets.
And despite the suspension of online sales in Ukraine and Russia, the business recorded nearly PLN1 billion in e-commerce revenues and and saw good e-sales, with its online offer now available in 32 countries.
The good news is that after a periodic suspension of sales in Ukraine, LPP said it has now returned to “limited” business in the country, resuming e-commerce deliveries and store sales.
Meanwhile, LPP noted that leaving such an important market as Russia does not pose a threat to the company's development, while shifting the focus of activities towards Southern and Western Europe “is the right decision”. It said it saw a record increase in turnover in Europe of 98%.
And the company said it continued to achieve higher sales results from abroad, accounting for 52% in the opening quarter.
LPP also said Q1 saw growing consumer interest in more expensive Premium collections in its Reserved brand, indicating a gradual return of customers to pre-pandemic shopping habits, according to VP Przemysław Lutkiewicz.