LPP (company)

LPP Spółka Akcyjna is a Polish apparel retailer dealing with design, production and distribution of clothing. The company has five brands in its portfolio: Reserved, House, Cropp, Mohito and Sinsay.[1][2]

LPP Spółka Akcyjna po
LPP
TypeSpółka Akcyjna
WSE: LPP
IndustryRetail
Founded1991
Headquarters
Gdańsk
,
Poland
Area served
Europe, Asia, Africa
Key people
Marek Piechocki
Jerzy Lubianiec
ProductsClothing
Revenue€1.656 Billion (2017)
Total equityPLN 3,412,134
Number of employees
25,000
Websitewww.lppsa.com

The LPP sales network consists of more than 1,700 stores[1][3][4] located in 25 countries.[5] LPP employs over 24,000 people in its offices, distribution centre and sales network in Poland, countries in Europe, Asia and Africa.[6] LPP SA is listed on the Warsaw Stock Exchange[2] in the WIG20[7][8][9] index and belongs to the prestigious MSCI Poland[10] index.

History
Company headquarters, Gdansk

1991-2000

In 1991 in Gdańsk, Marek Piechocki and Jerzy Lubianiec started their activity in the clothing industry. After four years, the company initially operating under the name of PH Mistral s.c. was transformed into LPP (abbreviation of the surnames of its founders - Lubianiec, Piechocki and Partners). In 1997 the office in Shanghai was officially open. In the late 1990s, the owners of LPP decided to create their first  brand - Reserved - and build their own retail network. The first store of the brand, which to this day remains the pillar of LPP group, was opened in 1998[11][12] in Gdynia.

2001-2013

In 2001, LPP made its début on the Warsaw Stock Exchange.[2][13] The next two years saw the expansion of Reserved brand to the markets of Central and Eastern Europe. In 2002, the company stores were opened in Russia, Estonia, the Czech Republic, Latvia, and Hungary, and in 2003 in Lithuania, Ukraine and Slovakia. Thanks to the success of the brand, the company expanded its portfolio and opened a Cropp store in Poland in 2004. In the following years the brand was launched in Estonia, Slovakia, and Latvia (2005) as well as in Lithuania, Russia, and the Czech Republic (2006). The years 2007 - 2008 were the period of development of activity on the Romanian and Bulgarian markets. In 2008, LPP opened its Distribution Centre in Pruszcz Gdański. In the same year, LPP took over a Cracow-based company - Artman - owner of House and Mohito brands. Owing to this transaction, LPP became the largest clothing company in Poland and the owner of four brands. In 2012, the company's portfolio was expanded by Sinsay brand.[11]

since 2014

In 2014, the company was included in the WIG20 index, and the flagship brand - Reserved - appeared on the German market. In the same year, all LPP products made their début in the Balkans, in Croatia. In the following year, the company expanded into the Middle East.[12] At the end of 2017, the LPP sales network comprised more than 1,700 stores with a total area of 1 million square metres.[14][15] In 2017, the LPP product office was opened in Warsaw, and Reserved, Cropp and House brands made their débuts in Belarus and Serbia.[12] In 2017 LPP opened a Reserved store on Oxford Street in London.[16] 2018 saw further débuts of LPP stores on new markets, this time in Israel, Kazakhstan, and Slovenia.[17][18][19] In 2019 the Company opened first stores in Bosnia and Herzegovina[20][21] and Finland.[5]

Stores and distribution centres
A Reserved store in Germany

LPP has a network of stores comprising the total of over 1,700 stores of five clothing brands. Their products are offered in 25 countries.[22][23][24]

LPP is the owner of the largest and most cutting edge distribution centre in Central and Eastern Europe, located in Pruszcz Gdański.[1] In 2017, LPP launched a new Distribution Centre in SEGRO Logistics Park Stryków near Łódź, responsible for e-commerce services for the following brands: Reserved, Mohito, and Sinsay. The facility is operated by Arvato. At the same time, LPP launched a similar centre near Moscow.[1][25]

As a result of further dynamic development of the brick-and-mortar and e-commerce network, in 2018 the company announced its decision to build a distribution centre in Brześć Kujawski[26] and to open a warehouse in Romania.[27][28] A year later, the company also signed a lease contract for warehouse space in Slovakia, which will be used to serve customers of online stores of the company from Slovakia, the Czech Republic, Hungary, Slovenia, Croatia, and Bosnia and Herzegovina.[29][30][31] Modern warehouse infrastructure allows the company to sell and distribute over 265 million pieces of clothing and accessories per year.[4]

Production

LPP does not operate its own factories. The clothing of the Group's brands is produced mainly in Asia, but also in Poland and other European countries, including Italy, Portugal, Romania, Bulgaria, and Turkey. Currently, 87 clothing factories are working in Poland for the needs of LPP, where sewing of dedicated collections is commissioned to about 1,700 employees full-time.[32] Since 1997, the company has had an office in Shanghai, and since 2015 also in the capital of Bangladesh - Dhaka. The employees of the facility are responsible, among others, for the acquisition of suppliers, support for particular stages of production, as well as quality control.

Presence on the Warsaw Stock Exchange

LPP SA has been listed on the Warsaw Stock Exchange since 2001. At the time of its début, the price per share was PLN 48. In 2014, LPP was included in the WIG20 index of the 20 largest companies listed on the Warsaw Stock Exchange. In the same year, LPP was included in the MSCI[7][10] index.

Shareholding structure

According to the company's own data, the number of votes at the General Meeting of Shareholders is as follows:[33]

  • Semper Simul Foundation – 31,5%
  • Sky Foundation – 28,6%
  •  Others – 39,8%

In 2018 the founders of the company, in order to ensure its long-term continuity and avoid the fragmentation of LPP capital in the future, decided to establish a foundation and contribute their shares there.[34]

Selected awards and distinctions
  • 2001: Puls Biznesu award — Gazele Biznesu[Business Gazelles] for LPP as one of the most dynamically developing companies
  • 2002: Gazeta Giełdy Parkiet award — Najlepiej Zarządzana Spółka Giełdowa [Best Managed Listed Company]
  • 2003: Economic Award of the President of the Republic of Poland — Najlepsze Polskie Przedsiębiorstwo [Best Polish Enterprise]
  • 2004: Dziennik Rzeczpospolita award — Orzeł Rzeczpospolitej [Eagle of the Republic of Poland]
  • 2004: Central & Eastern European Retailer of the Year
  • 2008: Dziennik Rzeczpospolita award — Orzeł Rzeczpospolitej [Eagle of the Republic of Poland]
  • 2008: Puls Biznesu award — Filary Polskiej Gospodarki [Polish Economy Pillars]
  • 2008: Dziennik Rzeczpospolita award — Ranking Najcenniejszych Polskich Marek [Most Valuable Polish Brands]
  • 2009: Puls Biznesu Award — Giełdowa Spółka Roku — Relacje Inwestorskie [Listed Company of the Year — Investor Relations]
  • 2011: Puls Biznesu Award — Giełdowa Spółka Roku [Listed Company of the Year] 1st place in the main ranking, “Kompetencje Zarządu” [“Competence of the Board”] category, “Sukces w 2011 roku” [“Success in 2011”] category[35]
  • 2012: Gazeta Giełdy Parkiet award — Spółka Roku mWig40 [mWIG40 Company of the Year]
  • 2013: Forbes magazine award – Diamenty [Diamonds][36]
  • 2013: Dziennik Rzeczpospolita award — Dobra Firma [Good Company]
  • 2014: The Polish Agency for Enterprise Development PARP award — Pracodawca Jutra [Employer of Tomorrow][37]
  • 2015: Gazeta Giełda Parkiet award — ranking of companies with the best investor relations — 1st place
  • 2015: American Forbes magazine award — “Most Innovative Growth Companies”[38]
  • 2016: Budowa Roku 2015 [Construction of the Year 2015] — the competition is organized by the Ministry of Construction, the Polish Association of Construction Engineers and Technicians and the Main Office for Construction Supervision[39]
  • 2016: Award of the decade — “Rzeczpospolita” and Deloitte's ranking[40]
  • 2017: Wprost magazine Ranking 200 Największych Polskich Firm 2017 [Ranking of 200 Biggest Polish Companies 2017][41]
  • 2017: Forbes magazine award
  • 2017: Polska Firma — Międzynarodowy Czempion [Polish Company — International Champion], distinction in the category: Eksporter: Polska Firma Prywatna — duże przedsiębiorstwo [Exporter —Polish Private Company—Large enterprise][42]
  • 2018: Dziennik Rzeczpospolita award — Ranking Najcenniejszych Polskich Marek [Most Valuable Polish Brands]: 1st place Reserved, 3rd place House, 4th place Cropp[43]
  • 2018: 3rd place in Research on investor relations in WIG30 companies according to institutional investors[44]
  • 2019: Narodowy Sukces [National Success] — During the Congress 590, one of the largest cyclical economic events in Poland, at the gala of Economic Awards of the President of the Republic of Poland, the company received an award in the National Success category.[45]

Production in Asia, supply chain control and ACCORD agreement

Since 2013, LPP has been systematically working on the implementation of standards for improving safety and working conditions in the clothing industry in Asia. Since 2014, a Code of Conduct[46] has been in force for all suppliers working with LPP. The document takes into account the key provisions of the International Labour Organization conventions and the Universal Declaration of Human Rights and sets out the requirements for suppliers, including, among others, wage policy, prohibition of child labour, voluntary nature of work, freedom of association, occupational health and safety principles. In order to increase supervision over the factories producing for LPP in Bangladesh, in addition to controlling its own inspectors, the company decided to commission an international auditor, SGS, to verify the actual compliance of suppliers in Bangladesh with the Code of Conduct.

In addition, in October 2013, LPP, as the only Polish clothing company, joined the ACCORD agreement aimed at improving safety in clothing factories in Bangladesh (Accord on Fire and Building Safety in Bangladesh).[47] Thanks to the cooperation and financial support of the signatories of the agreement, a total of more than 1600 Asian production plants and sewing plants were subject to inspection. ACCORD also contributed to the implementation of recovery programmes in more than 90% of the factories (as at the end of 2017). As part of the “Safety Committee Training” programme, one of the key projects of the agreement, by the end of 2017, 882 training courses were conducted in which nearly 1.2 million employees participated.

At the beginning of 2018, LPP signed another 3-year extension of the agreement, the so-called “Transition ACCORD”.[48] Its main objective is to prepare the Bengali government to carry out independent inspections and audits in the factories and to ensure further implementation of measures aimed at sustainable improvement of working conditions.

LPP as a tax payer

According to a report by the Ministry of Finance, in 2018, LPP was ranked third among the largest CIT payers in Poland in the commercial sector.

Year Revenues (PLN bn) Income (PLN mn) CIT (PLN mn)[49]
2018 6.9 1044 144.8
2017 6.1 536 41
2016 5.2 243 6
2015 4.8 419 44
2014 4.4 622 86
2013 3.8 542 87
2012 3 393 57

Since 2015, the company has paid a total of PLN 4.2 billion to the state budget for taxes and other tributes, while its contribution to the Polish budget in 2019 alone exceeded PLN 1 billion.[4]

CSR and charitable activity

Since the very beginning of its operations, LPP has donated more than PLN 20 million, supporting nearly 1000 organisations.[50][51] With a view to continuing the charitable activity pursued by the company for many years, in December 2017 the LPP Foundation was established. The aim of its activities is to support people threatened by social exclusion, help people in difficult life situations and ensure health protection.[52]

Taking care of the environment

LPP conducts activities aimed at respecting natural resources at various stages of the company's activity — from the selection of raw materials for clothing, through sales, to the operation of the company's offices and logistics facilities.

Selected activities of LPP related to environmental protection

  • introduction of the Eco Aware line consisting of more environmentally friendly materials (organic cotton, Tencel Lyocel, EcoVero, certified linen) in collections of the flagship brand Reserved[53],
  • declaration of the introduction of ecological lines to the collection of all brands belonging to LPP from 2019,
  • resignation from natural fur and angora in the production of clothes,[54]
  • declaration that the use of mohair should be phased out by 2020 or obtained in a humane manner,[55]
  • introduction of recycled cardboard boxes in the online sale of the Reserved and Mohito collections,[56]
  • reduction of electricity consumption in the new LPP stores thanks to the use of modern HVAC and progressive LED lighting,
  • performance of an energy audit in LPP offices and stores,
  • launching a used garments collection programme and donating the clothing to the homeless as part of activities combining aid with care for the environment and giving second life to textiles,[57][58]
  • joining the New Plastics Economy Global Commitment and committing to eliminate plastic packaging that is no longer usable, recyclable or compostable by 2025,[59][60]
  • announcement of the new Sustainable Development Strategy "For People for Our Planet" for 2020–2025.[61]

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