GDANSK (Reuters) - Poland's biggest fashion retailer LPP reported a 7% drop in its fourth-quarter net profit to 450 million zlotys ($117.55 million) on Thursday, missing analysts' forecast by 70
LPP's Strategic Sinsay Expansion to Boost Sales by 2025
By Marta Maciag
GDANSK (Reuters) -Poland's biggest fashion retailer LPP said on Thursday it planned to open around 1,600 new stores in 2025, driving double-digit percentage growth in online sales and boosting its overall revenue growth.
The Gdansk-based group, whose stores are located mostly in Central Europe, plans to open 1,500 new Sinsay stores and around 100 stores of other brands, such as Reserved, Cropp, House and Mohito, aiming to have around 4,400 stores by the end of 2025.
However, LPP's shares fell more than 6% in early trading, and mBank analyst Janusz Pieta questioned if the plan was realistic.
"The store openings target for 2024/25 may be too ambitious, and we see a risk that not all planned stores will open," Pieta said in a note to investors.
LPP opened 572 new stores last year, 534 of which were for budget brand Sinsay that competes with fast fashion retailers like Inditex's Bershka.
As of 0807 GMT, its shares were on track for their biggest one-day drop since March 15, 2024, when short seller Hindenburg Research questioned the 2022 sale of its Russian assets.
"The success of Sinsay, which saw a remarkable revenue growth of nearly +47% in constant currencies in 2024, serves as a clear impulse for LPP's continued growth based on this sales formula, which is redefining commerce in smaller towns," LPP's CEO Marek Piechocki said in letter to shareholders.
Sinsay's business model is centred around expansion into smaller towns, providing budget-friendly fashion in areas with lower retail competition.
From 2025 to 2027, LPP will focus on expanding Sinsay in Poland and Eastern, Central and Southern Europe, with a cautious approach in Western Europe, it said.
It forecast revenue of 25-26 billion zlotys ($6.55 billion to $6.81 billion) for 2025, up from 20.19 billion last year.
Its net profit fell 7% to 450 million zlotys in the fourth quarter of 2024, missing analysts' forecast, as rising operational costs weighed on earnings amid rapid expansion.
($1 = 3.8189 zlotys)
(Reporting by Marta Maciag, editing by Milla Nissi)
