Polish retailer LPP ramps up EMEA expansion

Polish clothing retailer Reserved has announced plans to open a further 18 stores in Israel by 2023.

After seeing stable growth in profits since opening the first Reserved store in Israel in August, LPP, the brand’s owner, has moved expansion plans forward and will open a second store in Tel Aviv before the end of 2018.

“We originally planned it for next year, but due to the high interest of clients in the brand, we decided to speed up the deadline,” Przemysław Lutkiewicz, LPP vice president for finance told Business Insider Poland.

“We can also confirm that we will open another five stores in Isreal next year, in Jerusalem as well as in Tel Aviv. All stores launched in 2019 will have an area exceeding 1000 square meters,” said Mr Lutkiewicz.

“At the moment, the results achieved by the first Reserved store in this country significantly exceed our original expectations. Such results allow us to look into the future with optimism, and our ambitions of intense development on the Israeli market seem justified,” Mr Lutkiewicz explained.

In addition to the Middle East, LPP also plans development in other parts of the world . The company’s strategy is to increase its retail space by 12-15 per cent annually.

The company’s revenues have grown considerably in recent years. In 2017 LPP reported revenues of seven billion zloty, and in the first three quarters of 2018 the group recorded sales revenues of 5.7 billion zloty, 2 billion of which was achieved in the third quarter alone. In the first nine months of 2018, the company generated a net profit of 193 million zloty, recording an increase by 36.5 per cent year-on-year.

“The results achieved in the third quarter prove that our strategy is correct. Every month, from August to October, we debuted on one new foreign market. We recorded a significant increase in gross margin, despite the sales offers in this period. Customer attention was attracted by very good autumn/winter collections, in particular by Reserved and Sinsay. We are also satisfied with the House collection, which closed the third quarter with a double-digit increase in sales,” added Mr Lutkiewicz

While Poland still remains the key market for LPP, the company are also focused in developing its sales network and increasing revenues from operations in foreign markets. Retails space abroad now accounts for more than half of the group’s total.

“In September, Slovenia became the fifth country in southern Europe where LPP brands are present. We opened a Reserved store in Slovenia, and are planning to open more. The scale of LPP’s operations in this region already requires the support of a distribution centre – hence our decision to lease a warehouse in Romania,” continued Mr Lutkiewicz. The new distribution centre in Romania will ultimately support online sales of LPP across southern and eastern Europe.

In addition to Slovenia, LPP launched Reserved in Kazakhstan in Octobe, followed by three other brands: House, Mohito and Sinsay, in November.

“The opening of the stores in Kazakhstan is the next stage of our international expansion. We assume that every year our global turnover will increase by a dozen or so per cent – such growth would not be possible without new markets. Recently, the economy of Kazakhstan has been recording very promising growth and the actions of private investors influence its systematic stimulation. This effect can also be seen in the recovery of the retail sector. Apart from the high demand, today it can benefit from an attractive offer of new retail spaces,” said Sławomir Łoboda, vice president of the LPP management board.