Slide 1: 4Q20/21 Results Presentation
4Q20/21 RESULTS PRESENTATION GDAŃSK APRIL 29, 2021
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: financial results, corporate events, outlook
1. 4Q20/21 financial results 2. Key corporate events 3. 2021/22+ outlook GLOBAL ASPIRATIONS 3
Slide 4: A shifted fiscal year
A shifted fiscal year 2020/21 included 4Q20/21 is the fourth 4Q20/21 encompasses 12 months and 3-month-long quarter period from encompassed period of the shifted fiscal November 1, 2020 till from February 1, year. January 31, 2021. 2020 until January 31, 2021. YoY dynamics are presented in relation
Slide 5: Results impacted by COVID-19
Results impacted by COVID-19 Deterioration Restrictions return Shopping malls Return to at the end of of situation in closed in majority Opening of operations in December, Restructuring October, from of countries, in shopping malls on shopping centers, shopping malls in in Germany October 24, all of
Slide 6: Lockdowns in 2020/21
Lockdowns in 2020/21 GLOBAL ASPIRATIONS 6
Slide 7: Towards omnichannel
Towards omnichannel OFFLINE 1,856 stores 38 +16.6% m2 COUNTRIES -38.0% LFL 30 countries -14.9% 25 countries ONLINE +106.3% revenues GROUP REVENUES GLOBAL ASPIRATIONS 7
Slide 8: LPP present in 38 countries
LPP present in 38 countries 5 32 20 394 23 4 1 As at No. of Open as at 866 YoY 19 31.01.2021 stores 31.01.2021 87 113 60 15 LPP GROUP 1,856 +110 45% 33 30 78 Poland 866 -8 10% 9 6 26 Europe 455 +37 47% 26 CIS 526 +80 100% ME 9 +1 100% 3 online + offline online offline 1 1 2 2 GLOBAL ASPIRATIONS 8
Slide 9: LFLs affected by lockdowns
LFLs affected by lockdowns LFL DYNAMICS LFL OF OPEN STORES (local currencies) (local currencies) 8.5% 4.9% 5.7% 1.7% 0.9% 5.9% 0.7% -7.5% -8.4% -13.3% -11.9%-11.4%-11.9% -12.5% -8.3% -23.9% -36.5% -49.6% -57.3% -74.7% 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 4Q20/21 II III IV V VI VII
Slide 10: Doubling e-commerce revenues
Doubling e-commerce revenues ONLINE SALES ONLINE BY REGIONS (PLN m) (PLN m) 778.1 PLN 778.1m 621.2 88.0 PLN 390.7m 445.9 313.3 390.7 384.0 +99% 276.3 44.0 239.5 174.2 130.4 376.8 216.3 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 4Q20/21 4Q19/20 4Q20/21 (3M) Poland Europe CIS • High doubl
Slide 11: Foreign revenues exceed Polish ones
Foreign revenues exceed Polish ones REVENUES BY REGIONS IN 4Q20/21 4Q20/21 FLOORSPACE (PLN m) (by regions) Poland 830 -36% YoY ths m2 4Q19/20 4Q20/21 YoY LPP GROUP 1,230.9 1,435.4 16.6% Europe 684 -15% YoY Poland 530.0 566.9 7.0% CIS 576 Europe 370.7 432.6 16.7% -6% YoY CIS 321.8 426.1 32.4% ME 4 -3
Slide 12: Growth online, fall offline
Growth online, fall offline GROUP REVENUES OMNICHANNEL REVENUES (PLN m) PLN m 4Q19/20 4Q20/21 YoY 3000.0 2,724.2 3 000.0 2,332.0 2,445.7 LPP GROUP 2,724.2 2,094.4 -23.1% 2,344.8 2500.0 390.7 2,129.3 2 500.0 2,094.4 Reserved 1,268.6 904.6 -28.7% 1,820.7 276.3 239.5 445.9 2000.0 2 000.0 174.2 621.2 77
Slide 13: High and growing gross profit margin
High and growing gross profit margin QUARTERLY GROSS PROFIT MARGIN PLN/US$ COVID-19 58.8% 56.6% 4.0 4.0 54.9% 51.9% 3.9 3.9 53.4% 49.3% 3.8 3.8 3.8 3.7 48.2% 47.6% 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 4Q20/21 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20/21 4Q20/21 (3M) (3M
Slide 14: Double-digit operating costs reductions
Double-digit operating costs reductions COSTS OF OWN STORES/ M2 SG&A COSTS/ M2 (IAS17) (IFRS16) -26% YoY -14% YoY 201 204 201 195 148 160 59 59 61 56 150 144 44 51 55 48 49 53 51 53 286 289 297 285 38 38 257 262 245 40 37 223 89 90 89 86 60 69 72 57 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q
Slide 15: Positive EBIT in 4Q20/21
Positive EBIT in 4Q20/21 4Q19/20 4Q20/21 PLN m YoY IFRS16 IFRS16 Double-digit revenue declines due to closed shopping malls in many countries where the Group's stores are Revenues 2,724.2 2 094,4 -23.1% located despite continued high online growth. Gross profit margin 51.9% 53,4% 1.5 pp. SG&A costs
Slide 16: 2020/21 EBIT above zero despite COVID-19
2020/21 EBIT above zero despite COVID-19 2019/20 2020/21 PLN m YoY IFRS16 IFRS16 Double-digit decline in revenues due to shopping malls being closed for several months of the year in most countries where Revenues 9,221.7 7,848.1 -14.9% the Group's stores are located. Triple-digit online sales growth
Slide 17: Trade liabilities finance inventory
Trade liabilities finance inventory INVENTORY WORKING CAPITAL (PLN m) 2,500 1,743 2,000 -PLN 763m 1,570 1,572 1,614 1,455 1,400 2,000 1,600 1,266 1,223 158 1,500 1,200 144 2,074 1,992 1,642 1,921 1,643 2,837 1,000 800 1,959 1,857 1,518 1,921 2,101 2,074 500 400 0 0 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q
Slide 18: Net cash on the balance sheet (IAS17)
Net cash on the balance sheet (IAS17) NET DEBT/(NET CASH) CAPEX (PLN m, IAS17) (PLN m) 4Q19/20: 4Q20/21: PLN 262m PLN 292m -272.1 53.3 -277.3 Stores Other 66.7 33.3 94.7 46.1 33.8 80.7 -561.0 -542.3 69.8 238.9 -666.3 199.7 195.6 -736.0 167.5 145.6 145.4 -789.1 106.7 91.8 -1,102.0 1Q19/20 2Q19/20 3Q1
Slide 19: 2020/21 executive summary
2020/21 executive summary Floorspace development on favourable 1 terms. 2 Triple-digit online sales growth. 3 Operating costs under control. 4 Trade liabilities exceed inventory. 5 Net cash (IAS17). GLOBAL ASPIRATIONS 19
Slide 20: Agenda: financial results, corporate events, outlook
1. 4Q20/21 financial results 2. Key corporate events 3. 2021/22+ outlook GLOBAL ASPIRATIONS 20
Slide 21: Key corporate events
Key corporate events March 2021 March 2021 EXPANSION OF FC NEW E-COMMERCE IN ROMANIA WAREHOUSE IN RUSSIA Another 21 ths m2 New warehouse with an Fullfillment Center ACCELERATION IN #LPPpomaga area 30 ths m2 will be BRZEŚĆ KUJAWSKI in Romania. dedicated to CONSTRUCTION e-commerce sales in Russia. 42
Slide 22: New e-commerce warehouse in Russia
New e-commerce warehouse in Russia LPP has signed a contract for rental of warehouse space in the Moscow Industrial Park "PNK Park Zhukovsky". Start of operations planned for 3Q21. Built Fulfillment Center with an area of 30 ths m2 will be dedicated to e-commerce sales in Russia. The new facility in
Slide 23: Acceleration of construction in Brześć Kujawski
Acceleration of construction in Brześć Kujawski JANUARY 2021 SELECTION OF GENERAL CONSTRUCTOR. MARCH 2021 FURTHER PROGRESS OF WORK AT THE DISTRIBUTION CENTER: conduct of some earth and reinforced concrete works as well as external installations. Start of construction Planned capex: Launch is planned
Slide 24: Growing warehouse floorspace in Romania
Growing warehouse floorspace in Romania Due to the growing importance of the Romanian market in e-commerce sales, LPP began the expansion of its Fulfillment Center warehouse near Bucharest. Completion of works and commissioning of the new facility is WAREHOUSE scheduled for 3Q21. Doubling of space a
Slide 25: Streamlined LPP's logistics
Streamlined LPP’s logistics GLOBAL ASPIRATIONS 25
Slide 26: Focus on Next Day Delivery
Focus on Next Day Delivery Gdańsk 100% orders until 15:00 Stryków 100% orders until 18:00 In 2020, we continued to develop the Next Business Day delivery service (the next business day after the transaction). It is a priority for Bratislava 100% orders e-commerce. until 18:00 Bucharest Launch a new
Slide 27: Agenda: financial results, corporate events, outlook
1. 4Q20/21 financial results 2. Key corporate events 3. 2021/22+ outlook GLOBAL ASPIRATIONS 27
Slide 28: Omnichannel – key trend of 2021/22
Omnichannel – key trend of 2021/22 OUR CUSTOMERS: • They migrate online, in particular from large cities => effective logistics is important to them • They buy offline more thoughtfully, a preference for offline in smaller cities We respond to the needs of our clients. • From the customer side: poss
Slide 29: Acceleration of RFID implementation
Acceleration of RFID implementation Currently, RFID is successfully working in all stores of Reserved brand. We plan to implement RFID in another 867 stores in 12 countries in just 7 months. Implementation of RFID in Mohito, Cropp and House brands will be completed over 5 times faster than at Reserv
Slide 30: Concentration on own e-stores
Concentration on own e-stores ADVANTAGES OF OWN E-STORES control over inventory element of omnichannel control over promotions Rapid organic e-commerce growth is more profitable than knowledge about the customer entering external platforms. Start of e-store Opening own e-stores Israel in September S
Slide 31: Convenience is a priority in collections
Convenience is a priority in collections Casual – comfortable clothes for home office are the most frequently chosen offer Formal clothing is still on the defensive Increased interest in the Eco Aware collection - especially in large cities Impact of economic situation – interest in value for money
Slide 32: Eco Aware increasingly popular
Eco Aware increasingly popular Eco Aware tag: • products with a more environmentally friendly composition, • confirms that a given model contains an appropriate percentage of such materials, guaranteed by a certificate, • composition of the model on the back of the label. Eco Aware Production tag: •
Slide 33: LPP's new integrated report
LPP’s new integrated report Responsible decisions in the new reality GLOBAL ASPIRATIONS 33
Slide 34: Continuation of dynamic online growth
Continuation of dynamic online growth 2,800 + 2,229.3 Target for 2021/22: 1,080.8 712.0 Double-digit e-commerce 360.8 revenue growth. 173.1 64.8 79.3 2014 2015 2016 2017 2018 2019/20 2020/21 2021/22 TARGET ONLINE SALES (PLN m) GLOBAL ASPIRATIONS 34
Slide 35: Growth acceleration in 2021/22
Growth acceleration in 2021/22 I.2022 Floorspace I.2022 • Continuation of floorspace growths in 2021/22: I.2021 former YoY (ths m2) target +20% YoY. target • End-2021/22 Reserved traditional stores should be in BY REGIONS 26 countries (entry to Northern Macedonia). Poland 566.9 629.8 618.0 9% • 2021
Slide 36: Investments in LPP's future development
Investments in LPP’s future development PLN m 2021/22 2022/23 suma Return to floorspace expansion, new Stores 840 750 1,590 larger stores, expansion of Cropp, Stores domestically and abroad 840 750 1,590 House and Sinsay Offices 50 50 100 New offices Gdańsk Łąkowa – 0 0 0 Building 1 Return to invest
Slide 37: Targets for 2021/22
Targets for 2021/22 Challenges Targets for 2021/22 Opportunities A new model of customer Continuation of double-digit Successful collections of all behavior after COVID-19. floorspace growth. brands - favorable price-to- Another wave of infections. Dynamic online growth. quality ratio. C
Slide 38: Targets for upcoming years
Targets for upcoming years Directions for further development Product development Further digitization following customer of the business, aimed at expectations supporting omnichannel Strengthening and Stronger development development of value for money of omnichannel (affordable fashion) organizati
Slide 39: Q&A
Q&A GLOBAL ASPIRATIONS 39
Slide 40: Back-up
B a c k -up GLOBAL ASPIRATIONS 40
Slide 41: Lockdown details
Lockdown details GLOBAL ASPIRATIONS 41
Slide 42: Network development
Network development Floorspace (ths m2) 31.01.2019 30.04.2019 31.07.2019 31.10.2019 31.01.2020 30.04.2020 31.07.2020 31.10.2020 31.01.2021 Reserved 605.0 616.6 634.3 655.0 664.8 657.1 669.7 667.8 674.7 Poland 268.7 263.5 267.6 272.0 270.3 262.9 262.5 264.8 267.7 Europe 188.0 204.4 215.1 218.4 225.3
Slide 43: Network development details as at I.2022
Network development details as at I.2022 Floorspace (ths m2) 31.01.2021 31.01.2022 Nom. growth Growth YoY No. of STORES 31.01.2021 31.01.2022 Nom. growth Growth YoY Reserved 674.7 707.6 32.9 5% Reserved 440 447 7 2% Poland 267.7 273.1 5.5 2% Poland 189 188 -1 -1% Europe 233.2 242.6 9.4 4% Europe 131
Slide 44: Changes in group 4Q20/21 floorspace
Changes in group 4Q20/21 floorspace CHANGE IN FLOORSPACE BY BRANDS CHANGE IN FLOORSPACE BY REGIONS (ths m2) (ths m2) -1.8 1,435.4 +51.7 +1.4 1,435.4 +6.4 +4.9 +2.9 +64.3 +15.4 +15.1 +6.8 1,351.8 1,351.8 +83.6 ths m2 +83.6 ths m2 3Q20/21 Reserved Cropp House Mohito Sinsay Outlets 4Q20/21 3Q20/21 Pola
Slide 45: Geographical revenue split in 4Q20/21
Geographical revenue split in 4Q20/21 TOP 5 COUNTRIES BY REVENUES IN 4Q20/21 PLN m 4Q19/20 4Q20/21 YoY (PLN m) LPP GROUP 2,724.2 2,094.4 -23.1% Poland 830 Reserved PL 571.9 347.7 -39.2% Reserved EX 696.8 557.0 -20.1% Russia 414 Cropp PL 156.3 82.8 -47.1% Ukraine 144 Cropp EX 211.2 177.0 -16.2% House
Slide 46: Geographical revenue split in 2020/21
Geographical revenue split in 2020/21 TOP 5 COUNTRIES BY REVENUES IN 2020/21 PLN m 2019/20 2020/21 YoY (PLN m) LPP GROUP 9,221.7 7,848.1 -14.9% Poland 3,398 Reserved PL 1,949.2 1,391.7 -28.6% Reserved EX 2,420.6 2,075.0 -14.3% Russia 1,393 Cropp PL 552.3 368.3 -33.3% Ukraine 500 Cropp EX 736.4 604.0
Slide 47: Revenue and COGS split
Revenue and COGS split 4Q20/21 REVENUES BY REGIONS 2020/21 REVENUES BY REGIONS (PLN m) (PLN m) ME ME 0% CIS 0% CIS 25% 27% Poland 40% Poland 43% Europe Europe 33% 32% 4Q20/21 PURCHASES BY REGION 2020/21 PURCHASES BY REGION (PLN m) (PLN m) Poland Other Poland Turkey 1% Other 1% 1% 6% Turkey 1% 5% Chi
Slide 48: Costs of stores and HQs & e-commerce
Costs of stores and HQs & e-commerce SG&A COSTS SG&A COSTS (PLN m, IFRS16) (PLN m, IFRS16) 1,020 1,040 1,036 1,029 913 964 967 3,937 3,848 816 324 322 396 279 423 271 394 1,196 279 1,492 +25% YoY 642 685 695 717 640 537 573 606 2,740 -14 YoY 2,355 1Q19/20 2Q19/20 3Q19/20 4Q19/20 1Q20/21 2Q20/21 3Q20
Slide 49: Results under IAS17
Results under IAS17 4Q19/20 4Q20/21 2019/20 2020/21 PLN m YoY PLN m YoY IAS17 IAS17 IAS17 IAS17 Revenues 2,724.2 2,094.4 -23.1% Revenues 9,221.7 7,848.1 -14.9% Gross profit margin 51.9% 53.4% 1.5pp. Gross profit margin 53.6% 52.0% -1.5pp. SG&A costs 1,048.7 995.9 -5.0% SG&A costs 3,930.5 3,705.1 -5.
Slide 50: IFRS16 2020/21 impact summary
IFRS16 2020/21 impact summary EBITDA EBITDA PLN 118.7m additional amortisation PLN 617.2m additional amortisation of right of use asset. of right of use asset. 4Q20/21 2020/21 44% rentals under IFRS16 EBIT EBIT 55% rentals under IFRS16 (PLN 85.5m). PLN 15.1m gain from (PLN 389.2m). PLN 29.6m write-o
Slide 51: FX differences details
FX differences details 4Q20/21 2020/21 PLN 8.2m gains PLN 178.3m losses on FX differences, on FX differences, including including PLN 6.0 m losses on rubble and hryvna, PLN 64.2m losses on rubble and hryvna, PLN 0.4 m losses on US$, PLN 4.1m losses on US$, PLN 15.1m losses on other currencies PLN 7.
Slide 52: Historical quarterly results
Historical quarterly results 4Q19/20 2019/20 4Q20/21 2020/21 3Q19/20 3Q20/21 1Q19/20 2Q19/20 IFRS16 IFRS16 1Q20/21 2Q20/21 IFRS16 IFRS16 IFRS16 IFRS16 IFRS16 IFRS16 (November (February IFRS16 IFRS16 (November (February PLN m (August- (August- (February- (May–July 2019- 2019 (February- (May-July 2020
Slide 53: Cash flows
Cash flows CASH GENERATION IN 4Q20/21 4Q20/21 CASH FLOWS (PLN m) (PLN m) 2,055 +257 685 410 -44 +49 1,278 -4 -456 -14 -18 -292 -83 -261 -287 -644 -745 4Q19/20 4Q20/21 Operating CF Investing CF Financing CF Total CF • Operating cash flow slightly in the red due to lower pre-tax profit and higher in
Slide 54: A strong balance sheet despite pandemic
A strong balance sheet despite pandemic PLN m 4Q19/20 4Q20/21 Non-current assets 5,870.7 5,620.6 • IFRS16: right-of-use asset and lease finance liability. fixed assets 2,312.4 2,439.8 • YoY increase in fixed assets due to network intangibles (incl. goodwill) 413.3 397.2 development and investments i
Slide 55: Brands' summary
Brands’ summary WE FOCUS ON MAINSTREAM PRICE LEVEL A brand that combines An anchor brand with A streetwear brand Clothes for everyday BRAND comfort and elegance for a broad customer base inspired by hip-hop and Optimistic fashion brand inspirations and original DESCRIPTION business and informal offe
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