LPP, Poland’s largest fashion retailer, reported second-quarter net profit up 64 percent to 768 million zlotys, about $202.5 million. Operating profit rose 63 percent to 1.13 billion zlotys, ahead of the company’s own estimates. Revenue rose 18.4 percent, with offline sales up nearly 19 percent and e-commerce up 16.4 percent, helped by restored logistics capacity in south-eastern Europe including a new distribution centre in Romania. Gross margin improved 3.7 percentage points to 57.7 percent. The shares jumped more than six percent.
The company raised its 2026 targets: gross margin of 56.5 to 57 percent, EBITDA margin of 24 to 25, net margin of 10 to 11. It plans to lift selling space 15 percent with around 750 new Sinsay stores and expects to end the year above 3,000 of them. For 2027 it guides revenue of 30 to 31 billion zlotys.
Now the number that was not in the headline. Sinsay, LPP’s largest and fastest-growing banner, posted like-for-like sales down 1.2 percent in the quarter and down 3.8 percent in the first half.
Group like-for-like was positive at 1.8 percent, carried by the smaller brands. Reserved has now posted eight straight quarters of positive like-for-like growth, with House and Cropp extending their own runs.
So the biggest brand is going backwards per store while the group grows 18 percent, and it grows because there are a great many more stores.
That is the most important distinction in any expanding retail business and it is the one investors and owners alike are most willing to overlook while the headline is good.
A coffee group opening forty shops a year will show rising revenue for as long as it keeps opening them, whatever is happening inside the existing estate. New sites add turnover by arithmetic. Like-for-like asks a harder question: are the shops you already had doing better or worse than they were? A group with negative like-for-like and aggressive expansion is running up an escalator, and the day the openings slow, the whole picture changes at once. Worse, each new site is being opened on economics the existing sites are quietly disproving.
LPP is not hiding from it. Management said the Sinsay trend improved through summer and early autumn, that mid-August was still negative, the second half of August was 0.5 percent, and the first half of September was a strong single-digit positive. They credit store upgrades, self-service checkouts and a revised collection strategy, and chief financial officer Marcin Bójko described the quarter as very good while saying the company is acting to its plan. Investor relations director Magdalena Kopaczewska said the back-to-fashion and smart-value approach is working, with focus on mid-price points and better fashion quality. Inventory turnover improved to 157 days from 176.
One caution on the margin, which the company itself supplied. Of the gross margin improvement, about 0.5 percentage points came from operational efficiency and price management. Most of the rest came from a stronger zloty, and the 2027 guidance already assumes a weaker currency and higher purchase prices.
Seven hundred and fifty new Sinsay stores are coming.
Watch the ones already open.
Source: Investing.com, “LPP shares surge on strong profit growth, raised full-year targets”
