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FAQ
The questions are answered by MT Dariusz Pachla, the vice-president
of finance
How large is the retail network at the moment?
As at the end of 2004, there were 74 brand stores in Poland with the total
commercial area of approx. 37.7 sq m and 32 outlets abroad with the total
area above 16k sq m. By the end of 2005 we plan to open another 20-30 stores
in Poland and 8-13 abroad. As at the end of 2005, the total commercial area
of Reserved brand stores should reach 75k sq m, and in the following year
(2006) it should near 100k sq m, of which in Poland 55k sq m and 45k sq m
abroad.
Moreover, on the turn of Q1 FY04 we launched a new brand - Cropp, for
clothing made for teenagers. By the end of 2004, we had 43 stores with the
total area of 10,000 square meters. By the end of 2005 we plan to open
another 25-30 Cropp Town stores. Delivery would result in increase of Cropp
commercial area to 15k square meters.
Is LPP planning further development of Reserved and Cropp Town stores
network?
We plan to complete building of the brand stores network in Poland in 2006.
Then the total commercial area of our stores will be around 55k square
meters, and we think it is the right commercial area for Poland –
considering the purchasing power of our society. We will be concentrating on
further intensive development of stores network in Central and Eastern
Europe. It is our objective to expand the Reserved network abroad to make
the brand recognized in the Central and Eastern Europe. By the end of 2006,
the total commercial area abroad will reach 43k sq m.
In addition to this, we will be developing the new Cropp brand in Poland and
abroad. We are convinced that the first stores abroad will be opened as soon
as in Q4 in 2005.
How is LPP planning to develop?
As at 30 June 2005, LPP is running retail sales via two independent networks
under the brands of Reserved and Cropp. There were 174 brand stores in
Poland and abroad, in total. According to the adopted plans, this number
will reach 200 by the end of 2005
We are working on opening a third independent brand and retail sales
network. Any relevant details on: the market segment, target customer, store
layout and development plans for the next 1-2 years are planned to be
announced by the end of 2005. The first new brand stores should be opened as
soon as in Q3/Q4 in 2006.
What is LPP’s long-term development strategy?
LPP’s long-term development strategy combines two elements: One is building
independent retail sales networks, Reserved and Cropp being the best
examples. In 2005 we will publish the details on the new brand.
The second element is gradual enlargement of collections within the existing
brand, and thus the target group. This path of development can be seen in
the Reserved brand, under which new design lines for children’s and the
“soft office” clothes have been created.
How can I purchase LPP shares?
Our shares are listed at the parallel market of the Warsaw Stock Exchange in
continuous trading. To purchase LPP shares one must open an account at the
broking house (link to the list of Broking Houses), pay the money and make a
purchase order.
Note: LPP shares have not too high liquidity, therefore when making an order
you should specify the price limit and avoid the no limit orders.
Is LPP planning to pay out the dividend?
At the moment the generated profits are allocated for further development.
As we have already declared, by the end of 2005 we will announce our plans
as to building the third independent retail sales network. The Board think
that the profits generated in 2005 should still supply the Company's share
capital. In the next years, considering the benefit of the shareholders and
the Company’s financial needs, we allow the possibility of dividend payout.
What was the sales structure as at the end of 2004?
As at the end of 2004, revenues from sales of the Reserved clothing made up
over 75% of total revenues from sales. Revenues from sales of Cropp clothing
made up 8% of total revenues. The remaining 17% was made up by exports to
unrelated companies, sales of clothing on promotion and minor sales of
clothing to hypermarkets, wholesalers and branches. At the end of 2004, LPP
finished trading with hypermarket chains and wholesalers. An exception was
made for minor sales of Cropp clothing to selected, to wholesale customers.
How is clothing in LPP designed?
Designing is similar for all brands. We offer two collections a year: spring
& summer and autumn & winter collections. Both collections comprise several
lines so that each customer may suit him- or herself. Our designers’ team is
made of a few dozens of people, graduates of mostly Łódź academic schools,
training specialists in this field. Also foreign designers are employed in
the designers' team. All of our designers participate in international fairs
in Paris or Milan to be on track with the latest trends in the global
fashion. Their comments supported with the knowledge of the Polish customer
allow designing clothes best suiting the tastes of demanding, mainly young
Polish customers. Each collection features many diverse elements, such as
skirts, trousers, shirts, blouses, jackets, caps, gloves, sweaters and many,
many more. Drawings of designs have notes about the colors, sizes and all
accessories. The graphic specialists put these drawings on electronic media
that are sent to our commercial office in Shanghai.
Where does LPP manufacture clothes?
Most of the clothing is manufactured for us in China, much less in India and
in Poland. We contract production with the manufacturers working for many
renown global companies such as Adidas, Gap, Nike or H&M. Subcontracting to
co-packers allows reduction of production costs - we have no factories which
are costly to run.
Becoming more and more a company focused on fashion that changes also in one
season, we are gradually transferring production to European countries. At
the moment this makes up 30% of co-packing.
Do the founders intend to sell their shares?
The founders believe in further dynamic growth of LPP in medium and long
term. To deliver the adopted development strategy, they intend to keep the
controlling block of shares.
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