LPP (LPP) Q1 24/25 earnings summary

Executive summary

• 1Q24 revenue reached PLN 4.3bn, up 18.3% YoY (25.5% in constant currency), driven by strong omnichannel growth and Sinsay's 54.1% YoY increase, which contributed 49% of revenues.

• Record-high EBIT of PLN 411m (+78% YoY) and net profit of PLN 277m (+148% YoY), with net margin improving to 6.4% from 3.1% YoY.

• Gross margin improved to 52.1% (+2.5pp YoY); operating margin at 9.5% (+3.2pp YoY).

• International sales outpaced domestic, accounting for 53.6% of omnichannel revenues, with notable growth in Romania, Czech Republic, Germany, Serbia, and Croatia.

• Opened 112 new stores (71 Sinsay), total store count at 2,382 (+337 YoY), with Sinsay leading expansion.

Financial highlights

• Double-digit growth in both online (+23.3% YoY) and offline sales (+21.5% YoY); online sales represented 27% of total sales.

• Online sales in Poland grew 32.8% YoY; abroad up 16.1% YoY.

• Gross profit: PLN 2,243m (+24.2% YoY); EBITDA: PLN 795m (+44.3% YoY); EBITDA margin: 18.5% (+3.3pp YoY).

• Inventory/m² down 19.5% YoY; inventory turnover improved from 164 to 136 days.

• Net debt at PLN 4.4bn (IFRS16), with net debt/EBITDA at 1.1x (down from 1.5x YoY).

Outlook and guidance

• 2Q24 outlook: 19% YoY revenue growth in constant currency, higher gross margin expected.

• 130 new stores planned for 2Q24; 700 new stores targeted for 2024, with Sinsay network to expand by 620 stores and 25% YoY floorspace growth.

• 2024 targets: revenue ~PLN 21bn, gross margin 52-53%, SG&A/revenue below 40%, capex PLN 1.5bn.