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P R E S E N T A T I O N WARSAW, 21 ST NOVEMBER 2017 Disclaimer This - PowerPoint PPT Presentation

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3 Q 1 7 F I N A N C I A L R E S U L T S P R E S E N T A T I O N WARSAW, 21 ST NOVEMBER 2017 Disclaimer This is presentatio ion (t (the Presentation) was was prepared by by LPP SA SA (t (the Company) wit ith a due care. Stil

  1. 3 Q 1 7 F I N A N C I A L R E S U L T S P R E S E N T A T I O N WARSAW, 21 ST NOVEMBER 2017

  2. Disclaimer This is presentatio ion (t (the “Presentation”) was was prepared by by LPP SA SA (t (the “Company”) wit ith a due care. Stil ill, it it may contain in certain inconsis istencie ies or or omis issions. The Presentation does not contain in a complete or or thorough financial analysis is of of the Company and does not not present it its standing or or prospect cts in in a comprehensive or or in in-depth manner. Therefore, anyone who in intends to to make an an investment decis ision wit ith respect ct to to the Company should rely on on the information dis isclosed in in the offic icial reports of the Company, published in of in accordance wit ith the laws applic icable to to the Company. This is Presentatio ion was prepared for informatio ion purp urposes on only and nd doe oes not not co constit itute an an off offer to to buy uy or or to to sel sell any fin financial instruments ts. The Presentatio ion may contain in 'forward‐looking statements'. However, such statements cannot be be treated as as assurances or or projections of of any exp xpected future result lts of of the Company. Any statements concernin ing expectations of of future financial results cannot be be understood as as guarantees that any such results wil ill actually be be achieved in in future. The expectatio ions of of the Management Board are based on on their ir current knowledge and depend on on many factors due to to whic ich the actual results achieved by by the Company may dif iffer materially from the results presented in in this is document. Many of of those factors are bey eyond th the aw awareness an and co contr trol of of th the Co Company or or th the Company’s ab abil ility to to fo foresee th them. Neit ither the Company, nor it its dir irectors, offic icers, advis isors, nor representativ ives of of any such persons are lia iable on on account of of any reason resulting from any use of of this is Presentatio ion. Addit itionally, no no information contained in in this is Presentation constit itutes any representation or or warranty of of the Company, it its offic icers or or dir irectors, advis isors or or representatives of of any of of the above persons. The Presentatio ion and the forward‐looking statements speak only as as at at the date of of this is Presentation. These may not not be be indic icativ ive of of results or or developments in in future periods. The Company does not undertake any obligatio ion to revie to iew, to to confir irm or or to to release public icly any revis isions to to any forward‐looking st statements to to reflect events that occur occur or or circumstances th ci that aris ise after th the date te of of th this is Presentation. G L O B A L A S P I R A T I O N S 2

  3. 3Q17 financial results 1 Key corporate events 2 3 2017 and 2018 outlook G L O B A L A S P I R A T I O N S 3

  4. Almost PLN 5bn revenues in 9M17 1,683 + 8.8 % STORES LFLs +1 7 % 20 GROUP REVENUES COUNTRIES +114% + 6 % E-COMMERCE m2 G L O B A L A S P I R A T I O N S 4

  5. 20 countries, 3 continents 26 @ 304 30.09.2017 No. of stores YoY 19 @ LPP GROUP 1,683 +15 28 @ Reserved 454 +5 3 Cropp 373 -2 1 @ 982 @ House 324 -2 19 @ 74 Mohito 285 -3 79 @ Sinsay 213 +28 56 @ Tallinder 0 -8 19 @ Outlets 34 -3 35 @ 17 3 1 12 1 3 1 xx Numbe xx ber of of stores @ Int nter ernet stores G L O B A L A S P I R A T I O N S 5

  6. LFL and e-commerce growths LF LFL L DYN DYNAMICS ON-LI ON LINE SA SALE LES (PLN LN m) m) (lo local cu currencies) 74.8 15.2% +137% YoY +127% 9.2% YoY 6.6% 6.2% +9% 5.1% 4.6% 4.2% 2.8% 31.6 YoY 1.5% +93% YoY 13.9 12.8 6.6 -0.8% -1.5% 3Q13 3Q14 3Q15 3Q16 3Q17 LFLs LF Ls wer ere posit itive in ea each mo month and and fo for ea each brand in 3Q17. . • 3Q17 LFL LFLs wer ere in n th the e bla lack in n all ll co countries (th the hi highest gr growth rates were rec ecorded in in Hu Hungary, , Ro Romania, Uk Ukraine and nd • Cz Czech Rep Republic). On-line sa On sales amounted to to 5, 5,4% % rev evenues in Pola oland and nd 4, 4,1% % of of group revenues in n 3Q17. . • Fu Further e-commerce gro growth due ue to to investments in n int nternet t and nd mo mobile stor stores of of all ll brands and dev evelopment t of of e-sto tores • ou outs tside Pol oland. G L O B A L A S P I R A T I O N S 6

  7. Floorspace growths in all brands REVENUES BY REV BY BR BRANDS 3Q17 FL 3Q FLOORSPACE (PLN LN m) (by brands) + 25% YoY Reserved 825 ths m2 3Q16 3Q17 YoY GRUPA LPP GR 888.0 939.9 5.9% Cropp 302 + 22% YoY Res Reserved 487.2 526.8 8.1% House 205 + 8% YoY Cropp 116.7 121.4 4.0% Mohito +4% YoY 200 House 103.8 105.6 1.7% Mohito 97.6 98.5 0.9% Sinsay 165 + 38% YoY Sinsay 65.2 76.0 16.7% E-commerce 75 + 137% YoY Tallinder 3.7 0.0 -100.0% Other 41 Outlets Ou 13.8 11.6 -15.6% Dynamic Res Reserved 3Q17 revenue gr growth res esulted fr from: flo floorspace dev evelopment as as wel ell as as mo more fa favourable YoY • rec eceptio ion of of brand ’s co coll llectio ions by y cu cust stomers. Double-dig igit t LFL LFLs and nd revenue gr growth in n Cr Cropp in 3Q17 – str strong back-to to-school ef effect. . • Sinsay’s floorspace and revenues grew at a higher pace than those of other LPP’s brands, due to development in Poland • and nd abroad. G L O B A L A S P I R A T I O N S 7

  8. Growths in key regions REVENUES BY REV BY REG REGIONS 3Q 3Q17 FL FLOORSPACE (PLN LN m) m) (by reg egions) ths m2 3Q16 3Q17 YoY Poland + 20% YoY 1,000 LPP GROUP 888.0 939.9 5.9% CIS 407 + 16% YoY Pola Po land 471.2 490.5 4.1% Europe Eur 205.2 224.1 9.2% Europe 401 + 36% YoY CIS 204.0 218.7 7.2% ME 4 - 55% YoY ME ME 7.6 6.6 -13.3% Revenue gr Re growth th in Poland hig igher th than flo floorspace gr growth due to to posit itiv ive LF LFLs Ls. • Dynamic revenue and nd flo floorspace gr growth in n Eur Europe in 3Q17 among ot others due ue to to dev evelopment in th the e UK UK and Ser erbia. . • Flo Floorspace gro growth in n CI CIS co contin inued in 3Q 3Q17 to together wit ith fa favourable im impact t of of YoY oY rub ubble appreciatio ion to to zlot zloty. • Among co countries, th the hi highest t no nominal YoY oY revenue gr growth was rec ecorded in n Ru Russia and nd Pola oland. • G L O B A L A S P I R A T I O N S 8

  9. Acceleration of sales/ m2 growth GROUP REV REVENUES REV REVENUES/ / M2 (PLN LN m) m) 2,000 25% 17.8% 21.8% 12.1% 13.5% PLN (monthly) 3Q16 3Q17 YoY 16.4% 18.0% 20% 16.0% 17.2% 9.0% 1,500 2.2% LPP GROUP (ret etail) 547 547 638 638 16.6% 16. 6.1% 15% 1,000 Po Pola land 560 560 661 661 18. 18.0% 10% 500 Europe Eur 497 497 605 605 21. 21.7% 5% CIS 570 570 625 625 9. 9.8% 0 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 LPP GROUP 567 567 648 648 14. 14.3% Retail sales (brands) E-commerce Other (incl. outlets) Revenue growth Gr Group revenues gr grew 21.8 .8% % YoY in 3Q17 due to to hig igher flo floorspace, , posit itiv ive LF LFLs Ls and and hig igh e-commerce gr growth. • In n 3Q17 bot oth gr group revenues/ m2 m2 and nd ret etail sa sales/ m2 m2 were dou ouble-dig igit hi higher YoY oY. • The The hi highest t dou ouble-dig igit t ret etail sa sales/ m2 m2 were rec ecorded in 3Q17 in n Ce Central and Ea Eastern Eur Europe. . • G L O B A L A S P I R A T I O N S 9

  10. Gross profit margin improvement continues QUARTE QU TERLY Y GROSS PR PROFIT IT MAR ARGIN IN AV AVERAGE QU QUARTERLY US$ S$/P /PLN NEW INVENTORY FX LEV EVELS IMP MPORTANT T FOR MANAGEMENT POL MA POLIC ICY SETT ETTIN ING AW17 17/18 PR PRIC ICES 4.1 56.5% 4.1 54.2% 54.8% 4.0 49.9% 52.6% 52.1% 3.9 50.8% 3.9 3.8 49.0% 47.1% 46.1% 45.6% 3.6 3.6 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Siz Sizeable 3Q17 YoY gr gross profit t ma margin pick-up up, due to to: : (1) ) improved co collectio ions, (2) ) fa favourable FX FX tre trends, an and (3) ) new ew • inventory ma management pol olic icy. The ne The new pol olic icy res esults in n si sizeable gro gross profit ma margin differences betw etween th the e sel sell-off and ful full ma margin mo months: 36 36% % • in Jul uly 201 2017 (-2p.p. YoY oY), 47% 47% (+2 +2p.p. YoY oY) in Aug ugust 201 2017, co compared to to 62% 62% (+3 p.p. YoY oY) in n Sep eptember or or 61% 61% (+1p.p. YoY (+ oY) in n Oct ctober 201 2017. Due to to new inventory management t polic icy we e are are bet etter prepared fo for weather ch changes in th the e sea season. • G L O B A L A S P I R A T I O N S 10

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