Polish fashion retailer LPP cuts costs, focuses on value brands

Poland's biggest fashion retailer LPP is slashing its marketing budget and rethinking logistics as part of an ongoing drive to cut costs, chief financial officer Przemyslaw Lutkiewicz said during a conference call on Thursday.

Lutkiewicz said the retailer's previous attempts to hike prices were met with resistance from its customers, especially in value-for-money brands like Sinsay. Instead, LPP plans to reduce spending on logistics and use Romania's Constanta to significantly cut delivery time and costs, he said.

At the same time, the retailer is focusing on growth opportunities in southern and southeastern Europe, as well as tapping into growing demand for value ranges.

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Out of 380 new store openings planned for 2023/2024, about 150 of them will be in southeastern Europe. And of those, 100 will be Sinsay stores, Lutkiewicz said.
As high inflation bites, LPP is seeing more customers shift to cheaper brands such as Sinsay, he said.

LPP reported a 15% jump in full-year net profit to 1.10 billion zlotys ($264 million) on Wednesday, driven mainly by new store openings and like-for-like sales growth.