Polish retailer LPP's profit hit by mild weather, strong dollar
today Nov 7, 2014
WARSAW, Poland - Poland's largest clothes retailer, LPP, posted a larger-than-expected 25 percent drop in third-quarter profit, hit by mild weather and a rising U.S. dollar, sending its shares down as much as 8 percent on Friday.
The company, which sells brands including Reserved, Cropp and House in eastern Europe, the Balkans, Baltics, Germany and Russia, said it made a net profit of 82 million zlotys ($24 million), well below analysts' average forecast of 106 million.
Monthly sales in September, when clothing stores usually put out their autumn and winter ranges, rose 3 percent year-on-year, far below the company's usual double-digit percentage growth rates.
"Unfortunately, October and November are still warm," LPP's deputy chief executive Dariusz Pachla told a news conference. "Frankly speaking, I wish it were 10 degrees less."
LPP, which orders and buys clothes in dollars around Asia to sell them in a variety of currencies in Europe, was also hurt by the strengthening U.S. currency.
Exchange rate moves knocked 35 million zlotys from LPP's net profit in the third quarter, Pachla said.
The company reported falling sales in Russia, where it takes around a fifth of its revenue. A dip in the rouble and a resulting rise in inflation saw Russian shoppers focus on essential items rather than clothes.
At 1100 GMT, LPP shares were down 6.8 percent at 9,320 zlotys, having touched a one-month low of 9,201 zlotys.
1 US dollar = 3.4063 Polish zloty
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