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LPP SALPP fashion plans to reduce inventory per square meter; sees potential to exceed gross margin target
Listed fashion group LPP aims to lower inventory levels per square meter in the coming quarters and sees potential to surpass its full-year gross sales margin target, said the deputy CEO Marcin Bojko during videoconference.
Bojko said the company faced challenges in the first half of 2025 but remain near their forecast’s top. With strong sales ahead, they are confident in reaching full-year goals and may raise the forecast by the third quarter results.
"We’re giving ourselves time to work on inventories. After the third quarter, we'll be wiser. We agree there’s upside potential, but given the macro environment, we want to see how we'll handle discounts on a large volume of goods," he said when asked why the company maintains its 2025 financial year gross sales margin target in the 53-54 percent range after achieving 54 percent in the first half of the year.
He reported the group wants to reduce inventory per square meter.
"Our inventories naturally grow with network expansion (...), but as company management, we aim to keep inventory value per square meter from rising. In the short- to medium-term, our target is PLN 1,800-1,900 inventory per square meter, but reaching this will likely take two to three more quarters," said Bojko.
"By mid SS26 season, we should have control over inventory. The inventory structure is high quality; we allocate it for new store openings and will manage it to return to our short-term optimum," he added.
In the first half of 2025, the group increased inventory levels by PLN 1.3 billion (EUR 305 mln), or 33.6 percent year on year.
At the end of the second quarter, inventory value was PLN 5.2 billion (EUR 1.22 bln). The increase was due to preparations for opening new Sinsay brand stores and expanding its online offerings in the second half of 2025.
Inventory per square meter rose 8.2 percent year on year from PLN 1,816 (EUR 426) to PLN 1,964 (EUR 461) at the end of the second quarter. Inventory turnover in the first half was 176 days versus 134 days in the first half, 2024.
According to the presentation, over 75 percent of inventory at the end of the second quarter was the Fall-Winter 2025 collection, and about 15 percent was the Spring-Summer 2025 collection.
LPP expects to open around 200-250 new stores in the third quarter. As deputy CEO said 400-450 Sinsay brand stores and 20–40 stores of other brands are planned for the fourth quarter.
pel/ nl/