Slide 1: 1Q20/21 Results Presentation
1Q20/21 RESULTS PRESENTATION GDAŃSK 25TH JUNE 2020
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) was prepared by LPP SA (the “Company”) with a due care. Still, it may contain certain inconsistencies or omissions. The Presentation does not contain a complete or thorough financial analysis of the Company and does not present its standing or prospe
Slide 3: Agenda
1. 1Q20/21 financial results 2. Key corporate events 3. 2020/21 outlook GLOBAL ASPIRATIONS 3
Slide 4: Off-line and on-line: omnichannel direction
Direction: omnichannel OFF-LINE 1,731 stores 40 COUNTRIES +13.3% m2 -57.3% LFL 31 countries -35.3% 25 countries ON-LINE +120.5% sales GROUP REVENUES GLOBAL ASPIRATIONS 4
Slide 5: Results impacted by COVID-19
Results impacted by COVID-19 Shopping malls closed in majority Opening of shopping of countries, in which malls on selected LPP has traditional markets stores beginning beginning mid-March 2020 end of June 2020 of February 2020 of May 2020 Growing uncertainty, concerns regarding Acceleration Negotia
Slide 6: LPP present in 40 countries
LPP present in 40 countries 5 27 17 345 23 1 As at No. of Open as at 852 YoY 19 30.04.2020 stores 23.06.2020 89 103 56 10 LPP GROUP 1,731 +13 77% 32 6 60 29 Poland 852 -66 81% 5 19 Europe 413 +38 98% 25 CIS 458 +40 50% ME 8 +1 88% 3 on-line + off-line on-line off-line 1 1 2 1 G L O B A L NAES P A IS
Slide 7: A shifted fiscal year
A shifted fiscal year 2020/21 will include 1Q20/21 is the first 1Q20/21 encompasses 12 months and 3-month-long quarter period from encompass period of the shifted fiscal 1st February 2020 till from 1st February year. 30th April 2020. 2020 until 31st January 2021. The YoY dynamics are presented in re
Slide 8: E-commerce growth, fall in LFLs
E-commerce growth, fall in LFLs LFL DYNAMICS ON-LINE SALES (local currencies) (PLN m) 390.7 384.0 8.5% 0.9% 5.9% 0.7% 276.3 239.5 174.2 -57.3% 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 • Negative LFLs in each month of 1Q20/21, the highest falls in Apri
Slide 9: Mobile – source of on-line growth
Mobile – source of on-line growth Traffic by device type 2.4% 1.4% 174 m 80% Tablet 70.6% visits in our e-stores of traffic takes place via 79.7% Mobile in 1Q20/21 mobile devices Desktop +64% YoY 27.0% 18.9% 1Q19/20 1Q20/21 Revenues by device type 3.0% 1.4% 49.5% PLN 384m 60% 59.2% Tablet on-line re
Slide 10: More favourable dynamics than in base case scenario
More favourable dynamics than in base case scenario YoY REVENUE DYNAMICS total off-line on-line 364% As we expected, triple-digit on-line sales dynamics 251% continue despite reopening of shopping malls. 110% 72% 62% 14% -32% -68% -39% -23% Sales in traditional stores pick 10% -42% -41% up faster th
Slide 11: All brands impacted by COVID-19
All brands impacted by COVID-19 REVENUES BY BRANDS IN 1Q20/21 1Q20/21 FLOORSPACE (PLN m) (by brands) Reserved 554 - 39% YoY ths m2 1Q19/20 1Q20/21 YoY Cropp 135 - 45% YoY LPP GROUP 1,096.7 1,242.7 13.3% - 46% YoY Reserved 616.6 657.1 6.6% House 119 Cropp 134.9 149.2 10.6% Mohito 126 -38% YoY House 1
Slide 12: Foreign revenues exceed Polish ones
Foreign revenues exceed Polish ones REVENUES BY REGIONS 1Q20/21 FLOORSPACE (PLN m) (by regions) Poland 536 -41% YoY ths m2 1Q19/20 1Q20/21 YoY LPP GROUP 1,096.7 1,242.7 13.3% Europe 347 - 28% YoY Poland 515.5 521.7 1.2% CIS 292 Europe 306.3 375.9 22.7% -31% YoY CIS 267.8 336.8 25.7% ME 4 -49% YoY ME
Slide 13: Growth on-line, fall off-line
Growth on-line, fall off-line GROUP REVENUES REVENUES/ M2 (PLN m) PLN (monthly) 1Q19/20 1Q20/21 YoY 3000.0 2,696 3 000.0 2,332 LPP GROUP retail 512 211 -58.7% 2,345 2500.0 391 2 500.0 1,821 276 240 Poland 533 202 -62.0% 2000.0 2 000.0 174 1500.0 1,179 1 500.0 Europe 494 194 -60.8% 2,282 1000.0 2,049
Slide 14: Rational promotion policy
Rational promotion policy QUARTERLY GROSS PROFIT MARGIN PLN/USD COVID-19 58.8% 4.1 4.0 54.9% 3.9 3.9 50.1% 3.8 3.8 49.3% 48.2% 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 (3M) • Gross profit margin in 1Q20/21 was lower YoY due to unfavourable impact o
Slide 15: Double-digit operating costs reductions
Double-digit operating costs reductions COSTS OF OWN STORES/ M2 SG&A COSTS/ M2 (IAS17) (IFRS16) -26% YoY -22% YoY 201 204 201 195 148 59 59 61 56 55 48 53 51 53 286 289 297 285 40 223 89 90 89 86 60 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 Rental cost
Slide 16: Results affected by COVID-19
Results affected by COVID-19 1Q19/20 1Q20/21 PLN m YoY IFRS16 IFRS16 Double-digit revenue falls due to shopping malls being closed in majority of countries in which LPP’s Revenues 1,820.7 1,178.6 -35.3% traditional stores are located. Gross profit margin 54.9% 48.2% -6.7pp. SG&A costs 913.0 815.8 -1
Slide 17: IAS17 results more favourable than IFRS16
IAS17 results more favourable than IFRS16 1Q19/20 1Q20/21 PLN m YoY IAS17 IAS17 Double-digit revenue falls YoY fall in gross profit Revenues 1,820.7 1,178.6 -35.3% due to shopping malls margin due to higher YoY being closed in majority promotions - necessity to of countries in which sell goods on-li
Slide 18: Trade liabilities finance inventory
Trade liabilities finance inventory INVENTORY WORKING CAPITAL (PLN m) 2,500 1,743 2,000 -PLN 174m 1,570 1,572 1,614 1,400 2,000 1,600 - PLN 60m 156 1,500 1,200 171 1,992 1,921 1,000 800 2,166 1,992 1,959 1,857 1,518 1,518 1,578 500 400 0 0 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 1Q19/20 1Q19/20
Slide 19: Net cash on the balance sheet (IAS17)
Net cash on the balance sheet (IAS17) NET DEBT CAPEX (PLN m, IAS17) (PLN m) 1Q19/20: 1Q20/21: PLN 233m PLN 192m 112.6 -268.5 33.3 48.8 46.1 80.7 199.7 195.6 181.3 -561.0 145.6 -655.0 -595.0 106.7 -780.8 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 Stores Other
Slide 20: 1Q20/21 executive summary
1Q20/21 executive summary Impact of COVID-19 for more than half of 1 the quarter. 2 Triple-digit on-line sales growth. 3 Sizeable cost and capex reduction. 4 Trade liabilities equalled with inventory. 5 Financial safety – net cash (IAS17). GLOBAL ASPIRATIONS 20
Slide 21: Agenda
1. 1Q20/21 financial results 2. Key corporate events 3. 2020/21 outlook GLOBAL ASPIRATIONS 21
Slide 22: Key corporate events
Key corporate events March 2020 May 2020 ECO AWARE LPP & CLOUD Google chosen as a Development of Eco Aware NEW OFFICES strategic digital partner. PRUSZCZ GDAŃSKI collections of all brands IN CRACOW EXPANSION in frames of Sustainable Decision to accelerate Development Strategy. Finishing construction
Slide 23: LPP's streamlined logistics
LPP’s streamlined logistics Distribution Centre (DC) Fulfillment Centres (FC) DC + FC GLOBAL ASPIRATIONS 23
Slide 24: A growing share of Eco Aware collections
A growing share of Eco Aware collections Eco Aware to constitute 25% of collections in 2021 Eco Aware collections present in all LPP’s brands 50% of Reserved collections to be Eco Aware in 2025 GLOBAL ASPIRATIONS 24
Slide 25: New office in Cracow
New office in Cracow AIM 1. Creating a more flexible space, adapted to our needs. 2. Increasing work comfort of House and Mohito teams. 3. Increasing the energy efficiency of the facilities in Cracow. Energy saving solutions in the building: • air recuperation, • top quality filters, • low-emission
Slide 26: Towards cloud solutions
Towards cloud solutions Google as LPP’s strategic digital partner Targets 1. Increasing the use of cloud solutions potential to on-line development 2. Supporting digital transformation of marketing 3. A more Agile organisation Actions Possibility of further dynamic e-commerce expansion, costs optimi
Slide 27: Restructuring in Germany
Restructuring in Germany The corrective measures at LPP Deutschland GmbH are aimed at improving the situation and restructuring of the company selling our goods in Germany, including a temporary (3-month) creditor protection. REASON: negative effects of the COVID-19 pandemic – closing down of tradit
Slide 28: Agenda
1. 1Q20/21 financial results 2. Key corporate events 3. 2020/21 outlook GLOBAL ASPIRATIONS 28
Slide 29: New reality, new trends
New reality, new trends Affordable garments Universal design, which can be used for a couple of quarters Clothes from eco fabrics and materials NEW TRENDS Homewear type of clothing Offer of all LPP’s brands is a good response to these trends GLOBAL ASPIRATIONS 29
Slide 30: Continuation of growths in 2020/21
Continuation of growths in 2020/21 Floorspace I.2020 I.2021 target YoY (ths m2) • Continuation of floorspace growths in 2020/21 – 8% YoY (majority rolled-out in 1H2020/21). BY BRANDS • Shift in entry with own stores on a new market – Reserved 664.8 676.6 2% Northern Macedonia in 2021/22. Cropp 147.9
Slide 31: Dynamic on-line sales growth to continue
Dynamic on-line sales growth to continue 2,000+ 1,174.1 712.0 360.8 2020/21 target: 173.1 79.3 over PLN 2 bn 64.8 e-commerce revenues, 2014 2015 2016 2017 2018 2019/20 2020/21 TARGET doubling of revenues YoY. ON-LINE SALES (PLN mln) GLOBAL ASPIRATIONS 31
Slide 32: Omnichannel development acceleration
Omnichannel development acceleration On-line Omnichannel Off-line E-commerce orders Floorspace growth delivered from stores in 2020/21. of all brands. Development in centers Greater use of RFID offering fit-outs and for on-line integration. turnover-based rentals. Further improvements Sinsay develop
Slide 33: Sound cash management
Sound cash management The aim of the Management is to run the Group through the difficult times. Inventory/ sell-offs Lower cash outflows No dividend Timely service of interest payments Our goal is to reasonably manage the Reduction of capex or their transfer from bonds issued in 2019 (interest inve
Slide 34: Further capex reduction
Further capex reduction 2020/21- PLN m 2020/21 2021/22 2022/23 2022/23 Stores 300 600 500 1,400 Stores domestically and abroad 300 600 500 1,400 HQs 30 20 130 180 New HQs Gdańsk Łąkowa – Building 2 20 20 0 40 New HQs Gdańsk Łąkowa – Building 3 0 0 130 130 New offices in Cracow 10 0 0 10 Logistics 20
Slide 35: Opportunities and risks for 2020/21
Opportunities and risks for 2020/21 Risks Revenue fall not exceeding Successful collections of all 30% YoY. brands - favorable price-to- A new model of customer quality ratio. Gross margin in the range behavior after COVID-19. Further e-commerce of 47-49%. Possible second wave of develop
Slide 36: Q&A
Q&A GLOBAL ASPIRATIONS 36
Slide 37: Back-up
B a c k -up GLOBAL ASPIRATIONS 37
Slide 38: Network development
Network development Floorspace (ths m2) 31.01.2019 30.04.2019 31.07.2019 30.10.2019 31.01.2020 30.04.2020 Reserved 605.0 616.6 634.3 655.0 664.8 657.1 Poland 268.7 263.5 267.6 272.0 270.3 262.9 Europe 188.0 204.4 215.1 218.4 225.3 223.7 CIS 141.2 141.6 143.2 156.1 160.8 162.1 ME 7.1 7.1 8.4 8.4 8.4
Slide 39: Network development details as at I.2021
Network development details as at I.2021 Floorspace (ths m2) 31.01.2020 31.01.2021 Nom. growth. YoY growth No. of STORES 31.01.2020 31.01.2021 Nom. growth YoY growth Reserved 664.8 676.6 11.8 1.8% Reserved 454 443 -11 -2% Poland 270.3 265.0 -5.3 -2.0% Poland 200 189 -11 -6% Europe 225.3 233.9 8.6 3.
Slide 40: Changes in group 1Q20/21 floorspace
Changes in group 1Q20/21 floorspace CHANGE IN FLOORSPACE BY BRANDS CHANGE IN FLOORSPACE BY REGIONS (ths m2) (ths m2) +17.2 +0.0 1,242.7 +5.2 +15.0 +0.0 1,242.7 +1.3 +2.4 -1.2 -8.3 1,230.9 -7.8 1,230.9 +11.9 ths m2 +11.9 ths m2 4Q19/20 Reserved Cropp House Mohito Sinsay Outlets 1Q20/21 4Q19/20 Poland
Slide 41: 1Q20/21 revenue growth contributors
1Q20/21 revenue growth contributors REVENUE GROWTH BY BRANDS PLN m 1Q19/20 1Q20/21 YoY 1,821 -350 -112 LPP GROUP 1,820.7 1,178.6 -35.3% -103 PLN m -75 +6 -8 1,179 Reserved PL 420.8 232.2 -44.8% Reserved EX 483.8 322.0 -33.4% Cropp PL 110.3 52.5 -52.4% Cropp EX 136.2 82.0 -39.8% House PL 134.9 64.4 -
Slide 42: 1Q20/21 revenue and COGS split
1Q20/21 revenue and COGS split 1Q20/21 REVENUES BY REGIONS TOP5 REVENUES BY COUNTRIES IN 1Q20/21 (PLN m) (PLN m) ME CIS 0% 25% Polska 536 Poland Rosja 221 46% Ukraina 66 Europe 29% Rumunia 65 1Q20/21 PURCHASES BY REGION (PLN m) Czechy 54 Poland Other 2% 3% Turkey China 11% 20% Poland remains our mos
Slide 43: Costs of stores and HQs
Costs of stores and HQs SG&A COSTS SG&A COSTS (PLN m, IFRS16) (PLN m, IFRS16) 1,021 1,040 913 964 913 816 322 816 279 324 271 279 271 +3% YoY 279 642 685 696 717 537 642 -17% YoY 537 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 1Q19/20 1Q20/21 Costs of stores HQs costs Costs of stores HQs costs • Co
Slide 44: 1Q20/21 other operating and net financial lines
1Q20/21 other operating and net financial lines OTHER OPERATING ACTIVITY NET FINANCIAL ACTIVITY PLN m 1Q19/20 1Q20/21 PLN m 1Q19/20 1Q20/21 OTHER OPERATING REVENUES 6.3 9.1 FINANCIAL REVENUES 3.8 3.4 Inventory excess 1.7 0.4 FX gains 0.0 0.0 Gain on sale of assets, write-ups 1.6 1.4 Interest 3.8 3.4
Slide 45: IFRS16 impact summary
IFRS16 impact summary EBITDA PLN 169.5m additional amortisation of right of use asset. 1Q20/21 EBIT 72% rentals under IFRS16 (PLN 168.2m). These are replaced 1Q20/21 with amortisation of right of use asset. NET INCOME Financial costs related to the asset (-PLN 32.3m) and FX losses (-PLN 95.3m). 1Q20
Slide 46: IFRS16 impact in 1Q19/20
IFRS16 impact in 1Q19/20 IFRS16 adjustments 1Q19/20 1Q19/20 IFRS16 IAS17 rentals D&A interest FX differences tax Revenues 1,820.7 1,820.7 Gross profit 999.2 999.2 Gross profit margin 54.9% 54.9% SG&A costs 913.0 144.9 -141.8 916.1 Other operating line -22.1 -22.1 EBIT 64.0 -144.9 141.8 0.0 0.0 0.0 6
Slide 47: IFRS16 impact in 1Q20/21
IFRS16 impact in 1Q20/21 IFRS16 adjustments 1Q20/21 1Q20/21 IFRS16 IAS17 rentals D&A interest FX differences tax Revenues 1,178.6 1,178.6 Gross profit 567.8 567.8 Gross profit margin 48.2% 48.2% SG&A costs 815.8 168.2 -170.1 813.9 Other operating line -12.6 -1.3 -13.8 EBIT -260.5 -169.5 170.1 0.0 0.
Slide 48: Historical quarterly results
Historical quarterly results 1Q19/20 3Q19/20 4Q19/20 2019/20 1Q20/21 2Q19/20 IFRS16 IFRS16 * IFRS16 * IFRS16 * IFRS16 PLN m IFRS16 (February-April (August-October (November 2019- (February 2019 (February-April (May–July 2019) 2019) 2019) January 2020) -January 2020) 2020) Revenues 1,820.7 2,344.8 2,
Slide 49: Cash flows
Cash flows 1Q20/21 CASH GENERATION 1Q20/21 CASH FLOWS (PLN m) (PLN m) +790 1,639 623 -88 1,361 +278 236 11 -66 -26 - 419 -192 -121 -83 -193 -104 -283 1Q19/20 1Q20/21 Operating CF Investing CF Financing CF Total CF • Operating cash flow negative level due to a pre-tax loss versus earnings in the ba
Slide 50: A strong balance sheet despite pandemic
A strong balance sheet despite pandemic PLN m 1Q19/20 4Q19/20 1Q20/21 Non-current assets 5,413.4 5,870.7 5,961.1 fixed assets 1,906.0 2,312.4 2,379.7 • IFRS16: right of use assets and finance lease liabilities. intangibles (incl. goodwill) 387.6 413.3 417.6 • YoY growth in fixed assets due to networ
Slide 51: Reserved revenues
REVENUES (PLN m) 1,269 1,120 1,077 905 554 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 NUMBER OF STORES: 441, -7 YoY WOMEN, MEN 1998 AND CHILDREN YEAR OF LAUNCH AN ANCHOR BRAND WITH A BROAD CUSTOMER BASE OFFERING THE LATEST TRENDS. GLOBAL ASPIRATIONS 51
Slide 52: Cropp revenues
REVENUES (PLN m) 368 341 334 246 135 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 NUMBER OF STORES: 356, -7 YoY TEENAGERS – BOYS 2004 AND GIRLS. YEAR OF LAUNCH A STREETWEAR BRAND INSPIRED BY HIP-HOP AND POP-CULTURE. GLOBAL ASPIRATIONS 52
Slide 53: House revenues
REVENUES (PLN m) 338 298 278 222 119 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 NUMBER OF STORES: 316, -1 YoY TEENAGERS (BOYS AND 2001 GIRLS) WHO LIKE BRAVE YEAR OF LAUNCH FASHION CHOICES. OPTIMISTIC FASHION BRAND. GLOBAL ASPIRATIONS 53
Slide 54: Mohito revenues
REVENUES (PLN m) 279 260 246 201 126 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 NUMBER OF STORES: 276, -12 YoY 2008 YOUNG WOMEN YEAR OF LAUNCH A BRAND THAT COMBINES COMFORT AND ELEGANCE FOR BUSINESS AND INFORMAL MEETINGS. GLOBAL ASPIRATIONS 54
Slide 55: Sinsay sales
SPRZEDAŻ (mln PLN) 415 344 298 225 231 1Q19/20 2Q19/20 3Q19/20 4Q19/20 (3M) 1Q20/21 NUMBER OF STORES: 335, +57 YoY TEENAGERS, WOMEN, 2013 MEN, CHILDREN YEAR OF LAUNCH CLOTHES FOR EVERY DAY INSPIRATIONS AND ORIGINAL PARTY OUTFITS. GLOBAL ASPIRATIONS 55
Slide 56: Glossary
Glossary Poland Retail sales in Poland and other sales of LPP SA. CEE Region including: Czech Republic, Slovakia, Hungary. Baltic Region including: Lithuania, Latvia, Estonia. CIS Region including: Russia, Ukraine, Belarus and from 2018 also Kazakhstan. SEE Region including: Bulgaria, Romania, Croat
Slide 57: Contact details
GDAŃSK HQs LPP SA Łąkowa 39/44 80-769 Gdańsk, Poland Tel. +48 58 76 96 900 Fax.+48 58 76 96 909 Email: lpp@lppsa.com DISTRIBUTION CENTRE LPP SA Tczewska 2 83-000 Pruszcz Gdański, Poland CONTACT FOR INVESTORS Email: LPP.investor.relations@lppsa.com CONTACT FOR MEDIA Email: media@lppsa.com CRACOW BRAN