By Marta Maciag

(Reuters) -Poland's biggest fashion retailer LPP reported on Thursday a better-than-expected first-quarter net profit but lowered its sales forecast for the 2025/26 financial year, blaming sluggish market conditions due to unseasonably cold weather.

LPP, owner of fashion chain Reserved and other brands located mostly in central Europe, said net profit for the first quarter totalled 334 million zlotys ($90.49 million), above analysts' forecast of 246 million zlotys.

However, LPP reduced its revenue forecast for the 2025/26 financial year to about 23-24 billion zlotys from the previously projected 25-26 billion zlotys, saying exceptionally cold weather in May had reduced demand for spring-summer collections.

"This year's start of the second quarter for us was recorded as a quarter influenced by the weather, a historically cold May," Chief Financial Officer Marcin Bojko said during a conference call.

"At that time, our stores were offering the summer collection. Customer purchasing motivations for this type of clothing were low due to the cold weather and low temperatures(...) however in June we are already seeing a significant improvement", he added.

A sluggish spring has also impacted other European fashion retailers. H&M's sales grew by just 1% in March compared to 4% in the same period a year earlier.

Inditex, owner of Zara, reported weaker-than-expected results on Wednesday as tariff fallout and unfavourable weather conditions weighed on sales across the sector, complicating the fast-fashion retailer's efforts to maintain strong growth.

EXPANSION PLANS

As of April 30, LPP had 2,959 stores, 1,611 of which are Sinsay stores, its budget brand which aims to compete with fast fashion retailers like Inditex's Bershka.

In 2025, LPP plans to expand its retail space by about 25-30%, focusing mainly on the development of the Sinsay brand and aiming for around 1,100 stores.

Under its three-year strategy announced in April, LPP aims to double its annual revenue to 40 billion zlotys by 2027, with Sinsay set to account for 75% of the group's total sales.

The company also plans to expand its store network to around 7,500 outlets by the end of 2027.

(Reporting by Marta Maciag, additional reporting by Julia Kotowska; Editing by Himani Sarkar, Kim Coghill and Susan Fenton)