Slide 1: 2Q23/24 Results Presentation
2Q23/24 RESULTS PRESENTATION GDAŃSK, 22 SEPTEMBER 2023 PRESENTATION 2Q23/24
Slide 2: Disclaimer
Disclaimer This presentation (the “Presentation”) was prepared by LPP SA (the “Company”) with 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 prospect
Slide 3: Key Corporate Events
01 KEY CORPORATE EVENTS PRESENTATION 2Q23/24 3
Slide 4: LPP's decarbonisation plan approved by SBTi
LPP’s decarbonisation plan approved by SBTi CARBON FOOTPRINT (GHG) In July 2023, LPP became the first Polish apparel (Data for 2022/23) company with the decarbonisation plan approved Scope 1 & 2 by the global Science Based Targets (SBTi) initiative Other 3 1% 18% supporting the private sector in eff
Slide 5: Reducing greenhouse gas emissions
Reducing greenhouse gas emissions SCOPE 1 AND 2 SCOPE 3 1) 51.6% reduction of greenhouse gas emissions resulting from purchased goods and services 42% reduction per unit of product purchased by 2030 (2021 as base year). of greenhouse gas TARGET 2) Engagement and cooperation with business partners re
Slide 6: Cooperation of Reserved with the Bolesławiec ceramics factory
Cooperation of Reserved with the “BOLESŁAWIEC” ceramics factory Reserved limited home line collection available online and in selected traditional brand stores in Poland. The collection comprises of unique ceramic products (tableware), home textiles (decorative pillowcases, blankets) and clothing tr
Slide 7: Strong Back to school effect
Strong “Back to school” effect Good response to new collections. The most popular categories include sweatshirts, jackets and trousers. Maintaining low prices as a response to current consumer trends. “Back to school” more popular offline. More than 20% YoY growth in Sinsay, single-digit YoY increas
Slide 8: Introduction of instalment payments in e-commerce
Introduction of instalment payments in e-commerce Various forms of payment and delivery Payment Delivery credit card, payment pick-up at the store, on delivery, PayU courier (home delivery), payment, PayU free pick-up at DHL POP Further development of mobile apps. instalments (new), BLIK, (e.g. Żabk
Slide 9: Opening of the second Reserved store in the United Kingdom
Opening of the second Reserved store in the United Kingdom Second London store launched Westfield Stratford City Shopping on 29 August 2023 with floorspace Centre in East London is one of 1,983 m2. of the most popular malls in the UK (ca 50 million shoppers per year vs. The first store in the new co
Slide 10: New concept of Reserved stores
minimalist design, enhanced product visibility improved energy efficiency - use of reflected light effect, optimised New concept energy management through a telemetry system of Reserved stores resignation from display windows in shopping centres in favour of a wide opening along the entire length of
Slide 11: Debut of the Reserved store in Italy (Milan)
Debut of the Reserved store in Italy (Milan) 15 September 2023 - opening of the first store in Milan with Reserved debut store is located in the the floorspace of 1,230 m2 most important shopping street, Corso (women's collection solely). Vittorio Emanuele II (near the Duomo The launch of the Reserv
Slide 12: Over 2,000 stores
21 Over 2,000 stores 36 27 32 1 28 1,090 17 136 133 1 87 23 56 2 As at 31.07.2023 No. of stores YoY 26 69 161 35 73 2 62 LPP GROUP 2,141 + 385 ↑ 14 1 Poland 1,090 + 106 ↑ Abroad 1,051 + 279 ↑ 4 1 2 2 2 online + offline online offline PRESENTATION 2Q23/24 12
Slide 13: 2Q23/24 Financial Results
02 2Q23/24 FINANCIAL RESULTS PRESENTATION 2Q23/24 13
Slide 14: Towards omnichannel
Towards omnichannel OFFLINE +19.7% +25.2% 39 +11.4% revenues m2 countries Group revenues +0.6% 27 LFLs countries ONLINE 34 -8.8% countries revenues Data for 1H23/24. PRESENTATION 2Q23/24 14
Slide 15: Strong offline sales
GROUP REVENUES Strong offline sales (PLN m) 4,575.4 4,340.6 4,366.8 4,185.0 3,639.4 3,399.3 1,078.9 ▪ Group revenues in 2Q23/24 increased by 5.4% YoY, 2,990.2 3,134.0 3,034.2 1,224.6 1,032.4 1,146.7 mainly due to growth in offline sales (+10.4% YoY), 938.3 837.6 1,161.8 as a result of the opening of
Slide 16: Over a billion online sales in the quarter
ONLINE SALES (PLN m) Over a billion online sales in the quarter 1,161.8 1,224.6 1,146.7 1,078.9 988.1 1,032.4 938.3 837.6 748.2 ▪ 11.9% YoY lower online sales due to a slowdown in e-commerce and increased customer interest in shopping in traditional stores. 2Q21/22 3Q21/22 4Q21/22 1Q22/23 2Q22/23 3Q
Slide 17: Foreign markets as a source of revenue growth
SHARE OF FOREIGN SALES IN REVENUES Foreign markets as a source of revenue 5,000.0 4,000.0 51% 53% 57% 60% 58% 58% 58% growth 50% 52% 3,000.0 2,000.0 ▪ In 2Q23/24 sales on foreign markets were higher than 1,000.0 in Poland and accounted for 58.0% of Group’s revenues vs. 57.0% in 2Q22/23. 0.0 2Q21/22
Slide 18: Significant inventory reduction YoY
QUARTERLY GROUP GROSS PROFIT MARGIN Significant inventory reduction YoY 58.3% 60.5% 54.0% 52.0% ▪ A 29.7% YoY decline in inventory level due to the effective 51.0% promotional policy and termination of sell-offs of older 48.9% 49.6% 49.6% 47.9% collections. ▪ A 43.9% YoY decline in inventory/ m2 to
Slide 19: Significant YoY decrease in SG&A costs/m2
Significant YoY decrease COST OF OWN STORES/ M2 (IAS17) in SG&A costs/ m2 -13.5% YoY 193 196 174 176 179 173 171 166 167 59 66 56 60 62 62 56 52 57 ▪ A YoY decline in rental costs/ m2 → resulting from a higher 66 65 50 55 number of launched Sinsay brand stores at lower rentals 51 58 55 57 53 and a f
Slide 20: Changes in historical results
2022/23 profit reduction of PLN 608 million Changes in historical PLN m, IFRS16 2022/23 (before Data 2022/23 (after results restatement restatement) restatement) Sales 15,926.5 15,926.5 EBIT 1,459.7 -275.3 1,184.4 Net profit (continuing ▪ In connection with the PFSA's recommendation, a change 1,144.
Slide 21: Over PLN 0.6 bn EBIT in the quarter
Over PLN 0.6 bn EBIT in the quarter PLN m, IFRS16 2Q22/23 (before 2Q22/23 (after 2Q23/24 YoY restatement) restatement) ▪ Single-digit YoY revenue increase due to new traditional store openings. Revenues 4,340.6 4,340.6 4,575.4 5.4% ▪ Lower gross profit margin YoY due to: higher share Gross profit ma
Slide 22: Over PLN 0.5bn net profit in the first half
Over PLN 0.5bn net profit in the first half PLN m, IFRS16 1H22/23 (before restatement) 1H22/23 (after restatement) 1H23/24 YoY Revenues 7,374.8 7,374.8 8,214.8 11.4% ▪ Double-digit sales growth YoY due to new store openings and positive LFLs. Gross profit margin on 51.6% 51.6% 48.7% -2.9pp. sales ▪
Slide 23: Strong operating cash flows in the quarter
WORKING CAPITAL Strong operating cash (PLN m) flows in the quarter 4,445 ▪ Significant improvement in operating flows due to: 5,789 3,126 3,925 ▪ growth in pre-tax and depreciation, ▪ decline in inventory (reduction of excess inventory 1,323 895 from earlier quarters), 2Q22/23 2Q22/23 2Q23/24 2Q23/2
Slide 24: Safe net debt level
NET DEBT Safe net debt level (PLN m, IFRS16) 7,000.0 2.5 2.1 6,000.0 1.9 1.8 2.0 5,000.0 1.5 1.4 1.3 1.2 1.3 ▪ At the end of 2Q23/24, net debt under IFRS16 amounted 4,000.0 1.1 1.5 to PLN 4.0 bn due to: 3,000.0 1.0 4,463 4,849 4,299 4,190 ▪ higher use of long-term bank loans (PLN 0.5 bn), 2,000.0 3,
Slide 25: 1H23/24 executive summary
IH23/24 executive summary 1 High dynamics of offline sales. 2 Maintaining cost saving policy. 3 10% operating margin. 4 A billion of operating cash flows. 5 Safe debt level. PRESENTATION 2Q23/24 25
Slide 26: Plans for 2023/24+
03 Plans for 2023/24 + PRESENTATION 2Q23/24 26
Slide 27: Positive outlook for the second half of the year
Positive outlook for the second half of the year Autumn/Winter collections Online sales Offline sales purchased Positive impact YoY growth growth of over at a more of cost savings of several ten percent favourable percent USD/PLN FX rate Strong start of the season (August). Positive reception of new
Slide 28: Expansion in Western Europe
online + offline online Expansion 25 in Western Europe 2H23/24 targets: 4 17 Further expansion of the Reserved brand in the United Kingdom and Italy. Increasing floorspace in Finland, development of younger brands. Openings of subsequent Sinsay brand stores in Italy 10 as Western Europe's youngest m
Slide 29: More than 500 stores in the SEE region
More than 500 stores in the SEE region 29 199 77 41 84 2H23/24 targets: 77 24 Strong developmend potential of traditional store network, particularly in Romania, Bulgaria and Serbia. 6 Openings of further Sinsay brand stores in Greece, the youngest traditional market of the region. Use of logistics
Slide 30: Sinsay's continued dynamic development
Sinsay's continued dynamic development The brand with the highest share 1,000 Sinsay stores of sales in the Group. by the end of 2023/24. Flexible approach to the size Competitive advantage in the form of stores (possible floorspace of a wide range of products below 1,000 m2). available online. Anot
Slide 31: Medium-term double-digit floorspace growth
Medium-term double- digit floorspace growth FLOORSPACE GROWTH Floorspace I.2024 I.2025 2 I.2023. YoY YoY (ths m ) target target At the end of 2023/24 2 million m2 floorspace Poland 753 845 12% 905 7% Abroad 921 1.155 25% 1,395 21% Growth target for the next two years: TOTAL 1,673 2,000 20% 2,300 15%
Slide 32: 2023/24 target: growth in profitability
2023/24 target: growth in profitability Offline revenues - 25% PLN 1.1bn CAPEX, Gross profit margin YoY growth due to including PLN 800m for on sales 51-53% higher floorspace and stores positive LFLs PLN 0.5bn+ cost Working capital reductions Online revenues - stable normalisation: liabilities (perf
Slide 33: 2023/24 opportunities and risks
2023/24 opportunities and risks Opportunities Risks ▪ Impact of the economic ▪ Collections tailored slowdown on the purchasing to the tastes and needs behaviour of clients. of clients. ▪ Persistent inflationary ▪ Development on new markets pressure. (South Eastern-Europe, Western Europe). ▪ Increase
Slide 34: Q&A
04 Q&A PRESENTATION 2Q23/24 34
Slide 35: Back-up
05 Back-up PRESENTATION 2Q23/24 35
Slide 36: Correction of the financial statements for 4Q21/22
Correction of the financial statements for 4Q21/22 4Q21/22 Data 4Q21/22 2021/22 PLN m, IFRS16 1Q21/22 2Q21/22 3Q21/22 (before (after (after restatement restatement) restatement) restatement) Revenues 1,815,3 2,990,2 3,134,0 3,399.3 3,399.3 11,338.8 COGS 824.4 1,374.4 1,306.1 1,343.0 1,343.0 4,847.9
Slide 37: Correction of the financial statements for 2Q22/23
Correction of the financial statements for 2Q22/23 2Q22/23 2Q22/23 1H22/23 Data PLN m, IFRS16 1Q22/23 (before (after (after restatement restatement) restatement) restatement) Revenues 3,034.2 4,340.6 4,340.6 7,374.8 COGS 1,486.3 2,084.7 2,084.7 3,571.1 Gross profit on sales 1,547.9 2,255.8 2,255.8 3
Slide 38: Correction of the financial statements for 3Q22/23
Correction of the financial statements for 3Q22/23 3Q22/23 3Q22/23 9M22/23 9M22/23 Data PLN m, IFRS16 (before (after Data (after restatement restatement) restatement) restatement restatement) Revenues 4,366.8 4,366.8 11,741.5 Other operating costs COGS 2,131.5 100.7 2,232.2 100.7 5,803.3 Reversal of
Slide 39: Correction of the financial statements for 4Q22/23
Correction of the financial statements for 4Q22/23 4Q22/23 4Q22/23 2022/23 2022/23 Data PLN m, IFRS16 (before (after Data (after restatement restatement) restatement) restatement restatement) Revenues 4,185.0 4,185.0 15,926.5 COGS 2,093.0 17.1 2,110.2 117.9 7,913.4 Other operating income Gross profi
Slide 40: Glossary
Glossary Poland Retail sales in Poland and other sales of LPP SA. Region including: CEE (Czech Republic, Slovakia, Hungary), Baltic (Lithuania, Latvia, Estonia), SEE (Bulgaria, Romania, Croatia, Serbia, Slovenia, Bosnia and Herzegovina, and from 2021/22 Other countries Northern Macedonia), WE (Germa
Slide 41: Contact
Contact LPP SA HQ ul. Łąkowa 39/44, 80769 Gdańsk CONTACT FOR INVESTORS Email: LPP.investor.relations@lpp.com CONTACT FOR MEDIA Email: media@lpp.com Tel. +48 58 76 96 900 Email: lpp@lpp.com PRESENTATION 2Q23/24 discoverlpp company/lpp-sa discoverlpp discoverlpp