LPP Achieves Double-Digit Profit Growth as Cold Weather Hits Sinsay Sales
Financial Performance and Brand Overview
May 8 (Reuters) - Poland's biggest fashion retailer LPP said on Friday its key growth brand Sinsay saw like-for-like sales fall in the first quarter due to cold weather, but strong group-wide margins should deliver high double-digit percentage growth in operating earnings.
LPP operates a portfolio of brands including its flagship Reserved and budget-friendly Sinsay. The group's strategy is heavily focused on an aggressive international expansion driven by Sinsay and supported by big investments in technology.
Key Financial Highlights
Revenue and Margins
• Preliminary February-April revenue rose 10% in constant currencies, while gross margin is expected to reach a record 58% to 59% in Q1, helped by pricing and a stronger zloty
Brand Performance
Sinsay Sales
• Sinsay's like-for-like sales slumped 6.8%, dragging the group's overall number to a 2.8% decline
Other Brands
• Other brands collectively saw a 2.2% rise like-for-like
Market Conditions and Analyst Commentary
Impact of Weather and Sales Trends
• Unseasonably cold weather in April hurt demand for spring-summer collections, but LPP has since seen a sharp rebound, with sales up more than 20% year-on-year in the first week of May
Analyst Insights
• Trigon analyst Grzegorz Kujawski said the results were slightly positive, with operating profit set to beat forecasts thanks to the strong margin
• However, Kujawski would have preferred a smaller margin with positive LFL growth, as negative figures could raise questions about competitive pressures
Store Expansion
• LPP added 121 stores to its network in the first quarter, out of which 102 were for Sinsay
(Reporting by Alicja Surdy, editing by Milla Nissi-Prussak)
