By Rafal Wojciech Nowak GDANSK, Poland, March 26 (Reuters) - Polish fashion retailer LPP has seen no major disruption to deliveries or sourcing so far from the U.S.-Israeli war on Iran, with delivery
Polish Retailer LPP Sees Minimal Delivery Disruptions from Iran War Tensions
Impact of Geopolitical Tensions on LPP's Operations
By Rafal Wojciech Nowak
Current State of Deliveries and Sourcing
GDANSK, Poland, March 26 (Reuters) - Polish fashion retailer LPP has seen no major disruption to deliveries or sourcing so far from the U.S.-Israeli war on Iran, with delivery times largely unaffected, its finance chief said on Thursday.
Delivery times from key Asian markets remain stable, with only minor delays of two to four days from India and Pakistan, Chief Financial Officer Marcin Bojko told reporters.
Collection Availability and Sourcing Signals
"This in no way disrupts the availability of our collections," Bojko said, adding that the company has not seen any "drastic" signals regarding its sourcing so far.
Supplier Price Increases and Product Impact
He said that Chinese suppliers have signalled initial price increases of 1% to 2% due to rising oil prices, in what he described as the start of discussions, while polyester products could see mid-single-digit hikes.
Transport and Logistics Costs
Air Freight and Oil-Linked Costs
Air transport accounts for just 0.8% of LPP's purchasing mix, meaning a recent rise in air freight costs will have a minimal impact on the group, Bojko added.
He added that oil-linked transport costs were likely to be the main challenge going forward.
Company Resilience and Strategic Adaptation
CEO Marek Piechocki said the company is well-adapted to global shocks, citing its experience navigating crises such as the pandemic and the loss of its Russian store network.
Potential Sector Impact and Brand Opportunities
If oil prices rise further, it will affect the entire sector, which could benefit LPP's lower-priced Sinsay brand, he added.
Financial Projections and Risk Management
Sea Freight Surcharges and Distribution Costs
In its annual report, the company estimated that in a worst-case scenario, additional sea freight surcharges linked to the escalation of the conflict could reach 30 million zlotys ($8 million) this year.
Higher oil prices could also push distribution costs, which account for roughly 30% of LPP's logistics expenses, up to 10% higher than February levels, the report showed.
Hedging Strategies and Currency Exposure
To navigate the volatility, the retailer is actively managing delivery schedules and has hedged about 90% of its U.S. dollar exposure for the spring-summer season.
($1 = 3.7053 zlotys)
(Additional reporting by Adrianna Ebert;Editing by Matt Scuffham)
