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LPP SA: Poland's Fashion Empire That Conquered Eastern Europe
I. Introduction & Episode Roadmap
Picture this: it's 1991, and the Soviet Union is collapsing. In the Baltic port city of GdaĆskâthe birthplace of Solidarity, the movement that helped topple communismâtwo entrepreneurs are about to make a bet that will transform them from wholesale clothing traders into the architects of Central Europe's largest fashion empire.
Today, LPP SA stands as a remarkable story of post-communist entrepreneurship. In 2022, the company generated almost PLN 16 billion in revenue and over PLN 1 billion in profits. Its current market capitalization stands at approximately $8.85 billion with 1.86 million shares. LPP owns five distinct fashion brands: Reserved, House, Cropp, Mohito, and Sinsay, each catering to different customer segments and style preferences.
The hook question driving this analysis: How did two entrepreneurs from GdaĆsk, starting in the chaotic post-communist transition, build a fashion empire that now operates across 44 markets? The answer involves a masterclass in timing market transitions, building a multi-brand portfolio strategy, executing vertical integration in fast fashion, and pivoting through crisis when geopolitics upended their business model.
LPP bases its ambitious business plans on the results of 2024, which ended with a balance of over PLN 20 billion in revenue, representing a 20% year-over-year growth in fixed currencies. As planned, the company opened over 660 new stores last year, and the chain's floorspace increased by 23% year-over-year.
This is a story about post-communist entrepreneurship, multi-brand portfolio strategy, geographic expansion, and the art of pivoting through crisis. Most importantly, it's about how LPP has navigated perhaps the most complex challenge any Polish company has faced in the modern era: what to do when your second-largest marketâRussiaâbecomes politically toxic overnight.
II. Poland's Economic Context: The Wild 1990s
To understand LPP's origins, you must first understand the chaos from which it emerged.
The Balcerowicz Plan, also termed "Shock Therapy," was a method for rapidly transitioning from an economy based on state ownership and central planning, to a capitalist market economy. Named after the Polish minister and economist Leszek Balcerowicz, the free-market economic reforms were adopted in Poland in 1989.
The state of Poland's economy as of 1989 was dire. After failed social and economic reforms of 1970s, the communist government had secretly declared its insolvency to Western creditors in 1981. Food price increases introduced first in 1970s to preserve the basic cash flow led to social unrest and formation of mass Solidarity social change movement which, by early 1980s had over 10 million members.
The shock therapy transition process was first implemented in Eastern Europe in Poland, on January 1, 1990. What followed was brutal but transformative: The fall in output of over 11 percent in 1990 reflected the impact of the fiscal balance's sharp swing into surplus and the resultant squeeze on domestic demand. A further fall of 8 percent in 1991 was caused largely by the external shock of the collapse of the CMEA.
Yet within this chaos lay extraordinary opportunity. Growth resumed in 1992 and accelerated to 4 percent in 1993, supported by a buoyant private sector and expansion of exports. In all the transition economies, resourcesâincluding workersâfrom the overdeveloped industrial sector were shifted to the service sectors, including wholesale and retail trade and finance.
This was precisely the window that founders Marek Piechocki and Jerzy Lubianiec spotted. Retail and fashion were ripe for disruption. Under communism, consumer choice had been virtually non-existent. State-owned stores offered drab, standardized clothing. There was no concept of fashion seasons, brand identity, or customer service. Suddenly, millions of Polish consumers hungered for Western-style fashion at accessible prices.
GdaĆsk, where LPP would be born, was no ordinary Polish city. As a historic port on the Baltic Sea, it had centuries of trading heritage. More importantly, it was the spiritual home of Solidarityâthe very movement that had broken communist rule. The entrepreneurial spirit ran deep here. When the barriers fell, GdaĆsk's traders were among the first to seize the moment.
According to Financial Times, Poland's shock therapy paved the way for entrepreneurs and helped to build an economy that was less vulnerable to external shock than Poland's neighbours. In 2009, while the rest of Europe was in recession, Poland continued to grow, without a single quarter of negative growth.
For investors, this historical context matters because it explains LPP's DNA. The company was forged in an environment where speed, adaptability, and opportunism weren't strategic choicesâthey were survival requirements. That cultural imprint remains embedded in how LPP operates to this day.
III. Origins: From Wholesale Importer to Brand Builder (1991â2000)
In 1991, Marek Piechocki and Jerzy Lubianiec, the founders of the company, started their business activities in the clothing industry in GdaĆsk. Marek Piechocki and Jerzy Lubianiec established the Mistral sp. z o.o. company. Partners traded in wholesale clothing.
Who were these founders? Marek Piechocki is the creator and co-founder of LPP, currently the President of the company's Management Board. Focused on developing his own business right from the start of his professional career, he has been involved in the clothing industry since 1989. In 2013, he was recognised by the prestigious Harvard Business Review magazine as the most effective CEO in Poland. Born in 1961, Marek Piechocki is a graduate of the Faculty of Civil Engineering at the GdaĆsk University of Technology.
This biographical detail matters: Piechocki wasn't a fashion insider or a business school graduate. He was an engineer who saw an opportunity and seized it. This outsider's perspective would prove crucial in building LPP's operationally excellent, systems-driven approach to fast fashion.
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). This 1995 restructuring marked the first major strategic pivotâthe shift from pure trading to building proprietary capabilities.
The early supply chain vision was remarkable for its time. In 1997, the office in Shanghai was officially opened. Think about what this meant: a small Polish company, operating in a country that had been communist just eight years earlier, was already establishing sourcing relationships in China. This wasn't common practice for Central European retailersâit was pioneering.
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 was opened in 1998 in Gdynia. The first store of the Reserved brand, which remains the flagship brand of the Group, was founded in 1998 in Gdynia, and its floor area was smaller than the current rest and refreshment facilities of the largest stores in the LPP network.
LPP SA, founded in 1991 by Marek Piechocki and Jerzy Lubianiec as a wholesale clothing importer under the name Mistral and restructured as LPP in 1995, shifted toward retail with Reserved to capitalize on growing domestic demand for affordable, trend-inspired fashion. In 1998, the company introduced its flagship brand Reserved, targeting casual and contemporary apparel, and opened its inaugural stores in Poland, initiating a proprietary retail network. This shift emphasized in-house design and direct consumer sales, differentiating LPP from pure wholesalers by controlling the full value chain from production to retail.
This transition from wholesale to branded retail was the company's first key strategic pivot. The wholesale business was profitable but commoditized. By creating Reserved, LPP could capture the margin that previously went to brand owners and retailers. More importantly, they could build a direct relationship with Polish consumers who were just discovering what it meant to shop for fashion.
By the close of the 1990s, LPP had established the template it would follow for the next two decades: source in Asia, design in Poland, and sell through company-owned stores with strong brand identities. The foundation was laid. Now they needed capital to scale.
IV. Going Public & CEE Expansion (2001â2007)
In 2001, LPP made its début on the Warsaw Stock Exchange. At the time of its début, the price per share was PLN 48.
By 2001, the company had established approximately 15 Reserved stores across Poland, reflecting steady early expansion amid Poland's post-communist economic liberalization. In November 2001, LPP conducted its initial public offering on the Warsaw Stock Exchange at PLN 48 per share, raising capital to fuel further retail growth and supply chain investments, including its Shanghai representative office established in 1997 for sourcing from Asian manufacturers.
The timing was strategic. Poland was preparing for European Union accession (which would happen in 2004), and the country's economy was stabilizing after the turbulence of the 1990s. Capital markets were developing. For LPP, going public provided not just growth capital but also credibility with landlords, suppliers, and potential employees.
What followed was the "CEE Blitz"âan aggressive expansion into post-Soviet markets that were undergoing their own consumer awakenings.
In 2002, the company stores were opened in Russia, Estonia, the Czech Republic, Latvia, and Hungary, and in 2003 in Lithuania, Ukraine and Slovakia.
The company expanded its portfolio and opened a Cropp store in Poland in 2004. This represented the beginning of the multi-brand strategy that would become central to LPP's approach. 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.
The strategic logic was compelling: Poland's EU accession in 2004 triggered a consumer boom across the entire Central and Eastern European region. Citizens who had lived under communism for decades suddenly had access to credit, rising wages, and a hunger for Western-style consumption. LPP moved faster than Western European competitors like H&M and Zara, who were initially hesitant about these markets.
Being first mattered enormously. Shopping mall space was limited and competition for prime locations was intense. Landlords preferred established tenants with track records. By entering early, LPP secured positions that would be almost impossible to replicate later. This geographic arbitrageâbeing the "local champion" in CEE before Western giants arrived in forceâbecame a durable competitive advantage.
Russia, in particular, became central to LPP's story. The Russian consumer market was enormousânearly 145 million peopleâand desperately underserved in terms of quality affordable fashion. LPP's brands resonated with Russian consumers, and the company would eventually grow Russia into its second-largest market after Poland. This success, however, would later become a vulnerability when geopolitics intervened.
V. The Artman Acquisition: Becoming Poland's Fashion Giant (2008)
In 2008, LPP executed a transaction that would define its multi-brand future.
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.
Creator of the House and Mohito brands, which were sold to LPP in 2008 for almost PLN 400 million.
In 2008, LPP SA, a Polish multinational fashion retailer, acquired Artman SA, the parent company of the House brand, through a merger that integrated House and Mohito into LPP's portfolio, positioning LPP as Poland's largest textile retail network at the time.
Artman's story with fashion had its beginnings in 1992 when it was cofounded, launching two fashion brands during the next years: HOUSE and MOHITO. As the President of the Board Management at Artman, its founder was responsible for areas related to strategic management, marketing, brand and product creation, locating production in the countries of South East Asia. Together with his business partners, he led the company to IPO in 2004 and finally sold the company to LPP.
The strategic rationale was multi-layered. House and Mohito served different demographics than Reserved and Cropp, creating complementary rather than cannibalistic relationships. House targeted energetic young consumers interested in casual wear and denim, while Mohito focused on confident women seeking fashion-forward elegance.
The transaction, which included a controlling premium to delist Artman from the Warsaw Stock Exchange, was finalized in 2009, allowing LPP to leverage House's established youth-oriented casual wear line alongside its existing brands like Reserved and Cropp.
Simultaneously with the acquisition, LPP was building the logistics backbone to support its expanding empire. In 2008, LPP opened its Distribution Centre in Pruszcz GdaĆski. The company's first distribution centre in Pruszcz GdaĆski was launched in 2008. Operationally, LPP doubled the capacity of its Pruszcz GdaĆski distribution center to 66,000 mÂČ to streamline supply chains for international outlets.
This combinationâtransformational M&A plus infrastructure investmentâcreated a platform for multi-brand international expansion. LPP now had four distinct brands, each with clear target demographics, supported by centralized design, sourcing, and logistics capabilities. The company had transformed from a single-brand retailer into a portfolio company, a structure that would prove remarkably resilient.
For investors examining LPP today, the Artman acquisition demonstrates management's willingness and ability to execute strategic M&A. The integration was successfulâHouse and Mohito remain core brandsâand the acquired design teams in Cracow continue operating independently, preserving the creative identity that made these brands valuable in the first place.
VI. Building the Portfolio: Brand Differentiation Strategy
LPP's five-brand portfolio is not accidental. Each brand occupies a distinct position in the market, targeting different customer segments with different price points, aesthetics, and shopping occasions.
Reserved is the flagship brand of LPP â a Polish family company. It was established in Poland in 1998. Since then, it has gained a strong reputation and high recognition in Central and Eastern Europe. Reserved collections are an interpretation of the world's leading trends, created with attention to the dynamically developing needs of its customers.
Reserved, as the leader in Central Europe, remains the first-choice brand for people seeking functional and fashionable styling, ideal for both casual contexts and special occasions that require a special treatment.
Cropp is a streetwear brand for all those who are not afraid to be themselves. Inspired by the world of music, art and sport, the brand creates statement clothes, shoes and accessories for men and women. Cropp is just like its customers â bold, uncompromising, and 100% authentic. It is a community of passionate people who want to express themselves through clothing. The brand draws on its almost 20-year history, creatively combining street style, modern inspirations and local identity.
House is a Polish fashion brand specializing in casual apparel for young adults, emphasizing self-expression through trendy and essential styling with a particular focus on denim collections. Launched in 2001 by the Artman company, it was acquired by LPP SA in 2008.
Mohito targets a different demographic entirelyâconfident women who combine comfort with elegance. The brand has a more sophisticated, feminine aesthetic compared to the casualwear orientation of House and Cropp.
The portfolio approach solves several strategic problems simultaneously. First, it allows LPP to capture consumers across their lifecycleâteenagers might start with Sinsay or Cropp, graduate to House, and eventually shop at Reserved or Mohito as adults. Second, it enables geographic expansion without brand confusionâReserved might be the anchor in upscale malls while Sinsay targets value-conscious consumers in smaller towns. Third, it provides natural hedgingâwhen one brand underperforms, others may compensate.
The company has collaborated with a number of artists and models who participated in advertising campaigns, including Kate Moss, Kendall Jenner, Cindy Crawford, Brooklyn Beckham, Cara Delevingne, Freja Beha Erichsen, Georgia May Jagger, Magdalena FrÄ ckowiak, Anne Vyalitsyna, Adwoa Aboah, Jourdan Dunn, Jon Kortajarena, Irina Shayk and Anna JagodziĆska.
It was only in 2019 that Reserved signed Kendall Jenner as its brand endorser. The model was part of the multimedia AW19 campaign, which showcased her in a backdrop of an Italian villa playing dress-up with Reserved's latest collection.
The former Global Marketing Director of Reserved was responsible for marketing activities in 24 countries, overseeing the brand's entry onto London's Oxford Street, and co-creating campaigns with international fashion stars such as Kate Moss, Cindy Crawford, Kendall Jenner, and MaĆgosia Bela.
These celebrity collaborations served a strategic purpose beyond marketing buzz. By associating Reserved with globally recognized fashion names, LPP elevated brand perception in Western European markets where the company was less known. When you're a Polish retailer opening on Oxford Street, having Kate Moss in your campaign signals that you belong.
The critical question is how LPP avoids brand cannibalization while maximizing market coverage. The answer lies in discipline: each brand has its own design team, its own creative identity, and clear guardrails about target demographics. Reserved doesn't chase Cropp's streetwear customer; Cropp doesn't try to be sophisticated like Mohito. This clarity prevents the portfolio from collapsing into undifferentiated offerings.
VII. The Sinsay Revolution: Creating a Growth Engine (2013â2019)
In 2013, the company's portfolio was expanded by Sinsay brand.
Sinsay's journey began in 2013, when the brand debuted as a concept offering affordable fashion for teenage girls. Since then, the brand has evolved to serve entire families and has become one of the cornerstones of the LPP Group's development strategy. A turning point came with the introduction of the Design & Value concept, uniting great design with exceptional value for money.
What began as a niche offering for teenage girls would transform into the most important strategic asset in LPP's portfolio. But that evolution took time and deliberate reinvention.
The original Sinsay concept was relatively narrow: trendy, affordable fashion for young women who wanted to express themselves without breaking the bank. The brand featured bold patterns, statement t-shirts, and accessoriesâthe kind of items a teenage girl might buy with pocket money.
The Sinsay brand is the only one in the market that combines the four pillars of modern commerce: availability of physical stores, a wide range of e-commerce, designer products, and reasonable prices. Transformation of Sinsay into a brand with products for the whole family, where non-garment products now account for as much as 50% of Sinsay's sales.
This transformationâfrom teenage girls' fashion to a family-focused value retailerâwas the key inflection point. In 2019, Sinsay gained a new, expanded concept supplemented with clothing for the entire family, as well as interior design elements and a line of makeup and care cosmetics.
The "Design & Value" concept deserves particular attention. This isn't just marketing languageâit represents a distinct competitive positioning. Traditional value retailers compete primarily on price, often sacrificing aesthetics. Traditional fashion brands compete on design, often at premium prices. Sinsay attempts to do both: attractive, well-designed products at value prices.
Ready for rapid scaling, the Sinsay concept is a combination of two business models: fashion brand and value retailer.
Today, Sinsay stands for much more than fashion: non-fashion items now account for half of total sales, from accessories and home décor to everyday essentials. This shift mirrors changing consumer behaviour and the growing demand for comprehensive solutions in one place.
The addition of non-clothing products fundamentally changed Sinsay's unit economics and competitive positioning. A store selling only clothing faces inventory risk from fashion cycles and seasonality. A store also selling home goods, cosmetics, and everyday essentials has more stable traffic and basket composition. Customers visiting for basics may impulse-purchase fashion; customers visiting for fashion may pick up household items.
This category expansion positioned Sinsay to compete not just with fast fashion retailers like Bershka but with value retailers like Pepco or even discount grocers' general merchandise aisles. The competitive set expanded, but so did the addressable market.
The significance of Sinsay's evolution would become fully apparent only after 2022, when LPP lost Russia and needed a new growth engine. As it turned out, management had been building exactly that.
VIII. Western Expansion & Premium Market Entry (2014â2019)
In 2014, LPP was included in the WIG20 index of the 20 largest companies listed on the Warsaw Stock Exchange.
This index inclusion was more than symbolic. WIG20 membership brings institutional investor attention, index fund buying, and enhanced liquidity. For LPP, it marked recognition as one of Poland's corporate eliteâa remarkable achievement for a company founded just 23 years earlier in the chaos of post-communist transition.
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 debut in Croatia.
In the following year, the company expanded into the Middle East.
Germany represented the real test. This was Europe's largest consumer market, home to sophisticated shoppers and intense competition from established players like H&M, Zara, and German discount chains. If Reserved could succeed in Germany, it could succeed anywhere.
In 2017 LPP opened a Reserved store on Oxford Street in London. LPP opens its first Reserved store on Oxford Street in London. The debut of LPP's flagship brand on one of the world's most prestigious shopping streets is another step in the implementation of the global strategy and an important step in the international expansion of the Polish company.
The Oxford Street opening was audacious. This is arguably the world's most famous shopping street, where every major fashion retailer competes for attention. The landlords demand proven track records and strong balance sheets. For a Polish company to secure space hereâtaking over the former British Home Stores flagship locationâsignaled serious intent.
At the end of 2017, the LPP sales network comprised more than 1,700 stores with a total area of 1 million square metres.
2018 saw further debuts of LPP stores on new markets, including in Israel, Kazakhstan, and Slovenia. In 2019 the Company opened first stores in Bosnia and Herzegovina and Finland.
The geographic diversification strategy during this period was deliberately balanced: continuing to strengthen the CEE core while making selective entries into Western Europe and the Middle East. LPP wasn't trying to out-Inditex Inditex in Western marketsâthey were planting flags, building brand awareness, and learning about these markets while maintaining dominance in their heartland.
The challenge of competing with Zara and H&M in Western markets remained real. These competitors had advantages in brand recognition, store networks, and supply chain sophistication. LPP's response was to compete on value and local market understanding rather than trying to match the leaders head-to-head. Reserved could be the affordable alternative to Zara for price-conscious German or British consumers.
IX. The Russia Question: Rise, Fall, and Controversy (2002â2024)
This is the most complex and consequential chapter in LPP's modern history.
Before the war in Ukraine, Russia was the biggest market for LPP following Poland. Sales in Russia accounted for around one-fifth of LPP's global business. However, in March 2024, Hindenburg Research alleged that the divestment was a façade, accusing LPP of continuing to operate in Russia through a shell buyer.
Until Russia invaded Ukraine in February 2022, Russia was LPP's biggest international market, generating approximately 19.2% of revenue from over 550 stores. This wasn't a marginal businessâit was structurally important to LPP's economics.
On 4 March 2022, LPP suspended all of its business activities on the Russian market alongside many other global companies as a response to the 2022 Russian invasion of Ukraine. As of 2022, Russia remained the second biggest market for the company with approximately 500 stores and a distribution centre located in Russia.
On 28 April 2022, LPP sold its Russian subsidiary to a "Chinese consortium" and closed their 20-year presence on said market.
Following the outbreak of war in Ukraine, LPP immediately decided to leave Russia as soon as possible. The investor search process was conducted under time pressure and with a very limited pool of potential buyers. Some of them were only interested in buying back merchandise from LPP, others offered to take over the most attractive locations in shopping centres, while still others offered to swap stores for European locations. At the time of the war outbreak, the company had a portfolio of 557 stores located in the Russian market. After considering all possible options, with the primary aim of maintaining the company's stability and the safety of its employees, the Russian business was sold in 2022 to a buyer with no connection to the LPP Group.
Then came Hindenburg.
Shares in one of eastern Europe's biggest fashion retailers plunged 36% after activist short-seller Hindenburg Research said the Polish company's withdrawal from Russia was a "sham."
However, on 16 March 2024, Hindenburg Research, an American short-selling research firm, published an extensive report detailing how they had not sold their Russian subsidiary, but continued to mask operate in Russia using front entities.
"We think LPP devised an elaborate sham 'divestment' strategy to continue retailing in Russia while trying to fool investors and consumers in Poland, Ukraine, and its other markets into thinking otherwise," Hindenburg said in its report.
The Hindenburg allegations were detailed and technically sophisticated. Once decrypted, the barcodes from "divested" Russian FES Retail stores, which at first sight looked like mostly out-of-date Chinese barcodes, were a perfect digit-for-digit match to "active" barcodes currently registered to LPP in Poland, and which correspond to specific items of clothing.
LPP's response was forceful.
The report prepared by Hindenburg Research is part of an organised disinformation attack prepared for five months, seeking to decrease the share price of LPP Group. We had previously informed the Ministry of Foreign Affairs and the head of the National Revenue Administration about the case.
The Company firmly and entirely denies and disclaims the information contained in the Hindeburg Research material. In particular, the Company informs that: it does not carry out commercial activities on the territory of the Russian Federation.
Pursuant to the sales agreement concluded in 2022, the Russian company â as a completely independent entity, acting on its own behalf and on its own account â sells goods in Russia, including, inter alia, goods acquired during the so-called transition period. According to the contract, this is the time during which the investor will gradually assume complete autonomy over the individual business areas of the acquired company. The payment for the sale of the company including the receivable from the stores in the amount of PLN 601 million â in accordance with the plan agreed with the investor â was split into tranches. The transition period is scheduled to last until the end of 2026 at the most.
The regulatory response eventually provided some clarity. In October 2024, the KNF launched administrative proceedings against LPP, stating the company may have breached its disclosure obligations by failing to promptly inform the public about the key terms and structure of its Russian divestment deal. LPP has stressed that the KNF's investigation was "not related to the Hindenburg Research report and does not confirm the allegations" made by the research firm.
However, on Monday this week, LPP's management said it had accepted the KNF's proposed settlement, and an administrative decision finalising the arrangement is expected to follow. According to the financial daily Parkiet, which cited information from LPP, the KNF proposed leniency by reducing the fine by 40%. This suggests the original penalty was set at 3 million zloty.
The decision to reduce the fine by as much as 40%, to 1.8 million zloty, equivalent to just 0.01% of our Group's revenue last year, is positive news for the capital market, as it resolves uncertainty for our investors regarding the ongoing sanction proceedings," said SĆawomir Ćoboda, vice-president of LPP.
Despite the controversy and brief market shock following the Hindenburg report, LPP's share price has since rebounded and it remains one of Poland's most valuable listed companies.
LPP has no plans to return to the Russian market, CEO Marek Piechocki said during a press conference, adding the group was focused on expanding in Poland and Eastern, Central and Southern Europe.
For investors, the Russia situation remains an area requiring ongoing monitoring. The regulatory fine was modest, but disclosure practices and the transition period arrangement warrant attention. More fundamentally, the episode demonstrates both the geopolitical risks inherent in emerging market exposure and LPP's ability to execute crisis pivots.
X. COVID & Digital Transformation (2020â2021)
In 2019 the Company opened first stores in Bosnia and Herzegovina and Finland. In 2020, the company underwent an accelerated digital transformation in response to the restrictions on stationary trade caused by the COVID-19 pandemic, thereby transforming itself into an omnichannel organisation.
The new commercial reality marked the beginning of far-reaching changes for LPP, setting a new direction to the company's business strategy for the post-pandemic times. The technological, logistic and sales transformation planned by the Polish clothing company for the next three years has materialised in three weeks. By way of a genuine and full integration of sales channels, LPP, as the first Polish company of this size, operating in the trade sector, has today become a truly omnichannel organisation.
This compression of a three-year digital transformation into three weeks is one of the most remarkable aspects of LPP's COVID response. In the course of the Covid-19 pandemic, online sales quadrupled. For this reason, it was necessary to optimise our logistics and IT systems to meet demand without compromising the product quality and the lead time of online orders.
The starting point for the whole transformation was a change in approach and recognition that in the new reality only harmonised sales channels make sense. â Over the last months, LPP has been reborn in a way. From a company in which the various sales and customer communication channels have been intertwined, but not integrated, we have turned into a truly omnichannel organisation. This change has affected virtually every area of the company: product, sales, logistics, IT and above all the innovative approach of our teams. We look at sales holistically, without dividing it into traditional stores and e-commerce. The product is to be available to the customer here and now, regardless of where the sales takes place and through which tools â says Marek Piechocki.
The technology investments that enabled this transformation had been years in the making. LPP decides to spin off its existing IT department and establish a separate software house called Silky Coders. From now on, the newly established company constitutes the technological foundation for all five brands of the Group.
Silky Coders is a company within the LPP SA Group, employing more than 700 experts in various fields. As a software development company, it provides digital tools to support every area of our business. With Silky Coders, we keep abreast of the fast-paced technological developments.
LPP's success is also built on cutting-edge technology and logistics supported by our technology company Silky Coders and in-house logistics operator LPP Logistics.
The decision to spin off IT into a separate software house rather than outsourcing was strategic. Silky Coders â one of the LPP Group companies was created by and for IT experts. The company implements proprietary technological solutions in the field of IT, data science and e-commerce, primarily to further strengthen LPP's position as a fashion tech leader.
2020: Digital Excellence competition, recognizing companies making digital transformations, LPP was awarded the Digital Excellence award in the Digital Capabilities category.
The omnichannel integration means that inventory from physical stores can fulfill online orders, online orders can be picked up in stores, and customer data flows seamlessly between channels. This creates operational flexibility and improves customer experience. A customer who sees something online can check store availability; a customer in-store can order out-of-stock items for home delivery.
A growing support in revenue generation is online sales, which in the third quarter of this year accounted for more than 26 per cent of total sales.
For a company that started as wholesale traders in 1991, developing into a technology-forward omnichannel retailer represents a remarkable evolution. LPP now describes itself as "a technology company" operating in fashionâa framing that reflects genuine operational reality rather than marketing spin.
XI. The New Strategy: Sinsay as the Growth Engine (2022â2027)
Two years later, following the Russian aggression against Ukraine, LPP took the key decision to cease operations in Russia altogether and sell the subsidiary to a Chinese consortium. As a result of the loss of its second-largest market, the company adopted a new development strategy, which involves further expansion in the central, southern and western parts of Europe and increased sales volumes in the e-commerce channel.
Losing nearly 20% of revenue overnight would cripple most companies. LPP's response was to accelerate a strategy that had been building for years: Sinsay-led expansion.
LPP announces a new business strategy which focuses on accelerating the development of Sinsay. The brand will become the driving force of the Group and is expected to account for 75% of its revenue by 2027.
By expanding its physical stores network to around 7,500 stores and increasing e-commerce sales to PLN 10bn, LPP intends to scale up its business and double its revenue to PLN 40bn within three years.
By the end of 2027, Sinsay's physical stores network will grow to approximately 6,000 stores. LPP has already secured over 1,100 new locations, which proves that the Company is well prepared for the rapid expansion.
The LPP Group recorded a remarkable sales growth of over 20% (in constant currencies), with the dynamic expansion of our Sinsay brand, which saw a spectacular revenue increase of nearly +47% in constant currencies in 2024, with more than 600 new shops opening within just twelve months.
The scale of this expansion plan is extraordinary. "So far LPP has been going fast, now we are shifting to Formula 1. Opening 1,500 stores in one year is something unprecedented in our industry and in the region. It shows the scale of our ambitions," Bojko said.
In 2025 alone, Sinsay has added over 500 new locations, from major cities to smaller towns with just a few thousand residents. Sinsay now has stores in 24 countries and is preparing to debut in two more: Georgia and Moldova. Sinsay marks a major milestone with the opening of its 2,000th store, in Turkistan, Kazakhstan.
The geographic focus has shifted decisively. The LPP Group is going ahead with its business strategy announced in April, which includes plans to accelerate the expansion of its Sinsay brand in new international markets. Following a successful rollout in Central and Southern Europe, the next phase of the company's global expansion targets Central Asia. The first Sinsay shop in Uzbekistan is set to open in early August, with the network expected to grow to over 20 locations by the end of the year. In addition, LPP plans a significant scale-up in Kazakhstan, adding approximately 60 new shops to the existing 24 by year-end.
While nearly half the population still shops at local bazaars, we see an opportunity to reshape their habits by offering a new quality with a compelling alternative: modern and accessible shopping â says Marcin Piechocki, Vice President at LPP. We've noticed that many foreign brands operate only in capital and large cities, often via franchises. We aim to go further, to places others haven't dared to reach. Sinsay's strategy involves opening shops not just in shopping centres, but also along main streets and in residential neighbourhoods, where people actually live and shop every day.
We are creating a market category unlike any other, Design&Value, which will allow us to reach up to 300 million customers in 27 markets â comments Marek Piechocki, CEO of LPP.
â Over the next three years, we intend not only to double our revenues to PLN 40bn, but above all to realise the largest commercial expansion in the history of Polish business. I am convinced that we are well prepared to accomplish this task. For many years, LPP has been building its position in the market and strengthening strategic areas. The past year, in particular, was a time of intensive preparations for us. In 2024, we generated a very solid operating profit of PLN 2.4bn, which represents a 19% increase YoY in the core business alone. We met all financial targets, paying particular attention to a safe level of debt and balance sheet discipline. â comments Marcin BĂłjko, vice-president of the management board of LPP for finance.
The financial forecast for the end of 2027 predicts a doubling of the company's revenues and a twofold increase in EBITDA operating profit in comparison to 2024, all while maintaining a safe level of debt.
This strategy represents a fundamental bet: that the Sinsay formula can scale rapidly across Central Asia, Southern Europe, and smaller towns throughout Central and Eastern Europe. The addressable market is enormousâhundreds of millions of consumers who are currently underserved by modern retail. The execution risk is equally significantâopening 1,500 stores per year requires extraordinary operational capability.
XII. The Governance & Family Business Model
Polish entrepreneurs Marek Piechocki and Jerzy Lubianiec founded the company with the idea of its longevity and securing its successful operation for generations. Both are keen to ensure that LPP will forever remain a multigenerational Polish company whose growth is possible thanks to its cultivated values and determination to preserve the status quo. We put the well-being of the company, responsibility for employees and future generations first, rather than short-term profits.
In order to ensure its long-term continuity and avoid the fragmentation of LPP capital in the future, the founders of the company decided in 2018 to establish a foundation and contribute their shares there.
This foundation structure is crucial for understanding LPP's governance. By placing shares in a foundation, the founders created a mechanism that prevents hostile takeovers, ensures continuity of management philosophy, and protects the company from pressure to maximize short-term returns at the expense of long-term investment.
The succession planning includes the next generation. From 2018, Marcin Piechocki managed the process of opening and operating the largest Reserved brand stores in the region. At that time, he was entrusted with supervising and co-creating the new concept for Sinsay, the latest brand in the LPP Group's portfolio. He was responsible for the Sinsay range, collection sales and the brand's expansion in new locations. In the following years, he served as Managing Director of Sinsay and Mohito and was responsible for the company's internal communication and LPP's external relations. In 2021, he was appointed to the company's management board as its vice-president. Marcin Piechocki's professional career began in 2013, when he joined Citibank International, managing its IT team until 2017.
Expansion is not just about numbers â it is also about responding to evolving consumer needs. Today's customers shop omnichannel and expect a seamless experience, regardless of where they make their purchase. That is why Sinsay's growth is a process of constant evolution â a concept that evolves alongside its customers â says Marcin Piechocki, Vice President of the LPP Management Board and Managing Director of Sinsay.
That Marek Piechocki's son now leads Sinsayâthe brand that will drive 75% of future revenueâis no coincidence. The succession has been deliberate, with Marcin Piechocki gaining experience across multiple functions before taking responsibility for the company's most strategically important asset.
This family business orientation contrasts sharply with the governance structures at Western competitors like H&M (also family-controlled) or Inditex (where founder Amancio Ortega retains significant influence). LPP's founders have been explicit about prioritizing long-term continuity over short-term profit maximizationâa philosophy that manifests in heavy reinvestment and aggressive expansion even when it pressures near-term margins.
For investors, this governance structure presents both opportunity and risk. The opportunity lies in alignment with long-term value creation and protection from activist pressure for short-term returns. The risk lies in potential entrenchment, limited accountability, and the possibility that family interests may diverge from minority shareholder interests.
XIII. Playbook: Business & Investing Lessons
LPP's thirty-year journey offers several lessons that transcend the specific context of Polish fashion retail.
Lesson 1: Timing Market Transitions
LPP entered retail during Poland's post-communist transformation, when consumer markets were underdeveloped and Western competitors were hesitant. This timing advantage created a foundation that proved durable even when competitors eventually arrived. The lesson: markets undergoing structural transition offer opportunities that don't exist in mature environments.
Lesson 2: Multi-Brand Portfolio Strategy
The company specializes in the distribution of clothing, footwear, accessories, as well as home and pet products, offered under its own brands through an extensive network of brick-and-mortar stores and e-commerce channels. LPP owns five distinct fashion brands: Reserved, House, Cropp, Mohito, and Sinsay, each catering to different customer segments and style preferences.
By serving different customer segments with distinct brands, LPP captures value across demographics while avoiding brand dilution. This requires disciplineâeach brand must maintain clear identityâbut creates powerful cross-selling and lifecycle opportunities.
Lesson 3: Vertical Integration in Fast Fashion
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. Since 1997, the company has had an office in Shanghai, and since 2015 also in the capital of Bangladesh - Dhaka.
LPP's model concentrates value-adding activities (design, branding, retail) in Poland while outsourcing capital-intensive manufacturing. This creates flexibility and allows the company to focus on its core competencies.
Lesson 4: Geographic Arbitrage
By becoming the dominant local champion in Central and Eastern Europe before Western giants fully committed to these markets, LPP secured prime retail locations and built consumer loyalty that proved defensible.
Lesson 5: Capital Allocation Discipline
We met all financial targets, paying particular attention to a safe level of debt and balance sheet discipline.
Despite aggressive growth, LPP has maintained financial discipline. The company finances expansion primarily through operating cash flow rather than excessive leverage, creating resilience for economic downturns.
Lesson 6: Crisis as Catalyst
Losing Russia forced LPP to accelerate its Sinsay-led strategy, which may ultimately prove superior to the pre-war trajectory. The company's ability to pivot rapidlyâcompressing a three-year digital transformation into three weeks during COVID, or redirecting geographic expansion after Russiaâdemonstrates organizational agility.
Lesson 7: Technology as Competitive Advantage
We operate in the fashion sector, but at the same time, in response to the revolution observed in the clothing industry, we are a technology company. We create IT solutions tailored to our format ourselves.
LPP's investment in proprietary technology through Silky Coders creates capabilities that are difficult for competitors to replicate. This technology orientation distinguishes LPP from retailers who view IT as a cost center rather than a competitive weapon.
XIV. Porter's 5 Forces & Hamilton's 7 Powers Analysis
Porter's Five Forces Analysis
1. Threat of New Entrants: MODERATE
Entry barriers in fast fashion retail are significant but not insurmountable. Capital requirements for store networks and logistics are high. Strong local brand recognition creates customer stickiness. However, e-commerce lowers barriers for international players, and Chinese fast fashion brands like Shein demonstrate that new entrants can disrupt incumbents.
2. Bargaining Power of Suppliers: LOW
LPP SA, a Polish apparel retailer, outsources the majority of its manufacturing to third-party suppliers in Asia, with approximately 93% of its over 1,200 suppliers located there as of 2024. The company maintains no owned production facilities, instead contracting sewing and assembly to external factories primarily in countries such as China, Bangladesh, India, and Turkey.
The diversified supplier base across multiple countries reduces dependency. LPP's scale provides negotiating leverage. Fashion manufacturing is competitive with many suppliers, limiting any single supplier's power.
3. Bargaining Power of Buyers: MODERATE-HIGH
Switching costs for consumers are lowâcustomers can easily shop at competing retailers. Price sensitivity is high in LPP's target markets. However, brand loyalty exists for Reserved and is growing for Sinsay, providing some insulation from pure price competition.
4. Threat of Substitutes: MODERATE
Online-only retailers like Shein offer alternative purchasing options. Second-hand fashion markets are growing, particularly among younger consumers concerned about sustainability. However, the physical retail experienceâtrying on clothes, immediate gratificationâremains valued by many consumers.
5. Competitive Rivalry: HIGH
Competition in fast fashion is intense. Global players like H&M and Inditex have superior scale and brand recognition. Regional competitors and discount retailers compete on price. However, LPP's local market knowledge and first-mover advantages in CEE provide defensible positions.
Hamilton Helmer's 7 Powers Framework
1. Scale Economies: LPP achieves modest scale economies through centralized sourcing, logistics infrastructure, and technology investments. However, scale benefits are partially offset by the complexity of managing five brands across 44 markets.
2. Network Effects: Limited direct network effects, though mobile apps and loyalty programs create some switching costs and data advantages.
3. Counter-Positioning: LPP's Sinsay strategyâtargeting smaller towns with Design & Value positioningârepresents counter-positioning against competitors focused on major metropolitan areas. Western competitors would need to cannibalize their existing strategies to replicate this approach.
4. Switching Costs: Customer switching costs are low for any individual purchase but cumulate through loyalty programs, mobile apps, and brand familiarity.
5. Branding: Strong brand equity in core CEE markets, particularly for Reserved. Brand recognition in Western Europe remains a work in progress.
6. Cornered Resource: LPP's primary cornered resources are its prime retail locations in CEE markets, secured through early-mover advantage, and its deep understanding of Central and Eastern European consumers.
7. Process Power: The operational capabilities to open 1,500+ stores annually represent genuine process power. This requires integrated excellence across real estate, store design, supply chain, IT systems, and human resources that would take competitors years to develop.
XV. Bull & Bear Cases
The Bull Case
Growth Runway: LPP has a clear path to PLN 40 billion revenue by 2027 through Sinsay expansion. The addressable marketâhundreds of millions of consumers in underserved marketsâis enormous. Management has demonstrated execution capability with 600+ store openings in 2024.
Value Creation Machine: The Design & Value positioning creates differentiated value that neither pure fashion brands nor pure discounters can easily replicate. Non-clothing products now represent 50% of Sinsay sales, improving economics.
Technology Advantage: In-house technology through Silky Coders creates operational capabilities that drive efficiency and enable rapid scaling. Omnichannel integration positions LPP well for evolving consumer preferences.
Financial Discipline: Despite aggressive expansion, LPP maintains balance sheet discipline. The company generates strong operating cash flow to fund growth without excessive leverage.
Management Alignment: Family ownership through foundation structure aligns management with long-term value creation. Succession planning appears thoughtful with next generation in key positions.
The Bear Case
Execution Risk: Opening 1,500+ stores annually is unprecedented. Any execution stumblesâconstruction delays, staffing challenges, logistics bottlenecksâcould derail the strategy and pressure profitability.
Competitive Response: Success with Sinsay may attract competitive response. Larger, better-capitalized competitors could replicate the small-town strategy or engage in price competition.
Russia Overhang: The Hindenburg allegations, while largely addressed, demonstrate ongoing reputational risk. Any evidence of continued Russia connections would be severely damaging.
Currency Exposure: Operating across 44 markets creates complex currency exposures. The Polish zloty's movements against the euro and other currencies affect reported results.
Margin Pressure: Aggressive expansion typically pressures near-term margins. If revenue growth disappoints, the cost structure built for higher volumes could weigh on profitability.
XVI. Key Performance Indicators to Track
For investors monitoring LPP's progress, three KPIs are most critical:
1. Same-Store Sales Growth (Like-for-Like)
This metric separates organic performance from expansion-driven growth. Positive like-for-like sales indicate that existing stores are gaining market share and that brand health is strong. Negative like-for-like would signal that expansion is coming at the expense of store productivityâa warning sign.
2. Sinsay Revenue as Percentage of Group Revenue
Management targets Sinsay at 75% of revenue by 2027, up from approximately 40% today. Tracking this ratio quarter-by-quarter reveals whether the strategic pivot is proceeding as planned. Acceleration above target would be bullish; deceleration would raise execution concerns.
3. E-commerce Sales Growth and Share of Revenue
Online sales, which in the third quarter of this year accounted for more than 26 per cent of total sales.
Digital channel growth demonstrates omnichannel strategy execution. The trend toward online shopping is structural; LPP must participate to maintain relevance. E-commerce also tends to have different unit economics than physical retail, affecting overall profitability.
XVII. Conclusion: From GdaĆsk to the World
LPP's journey from a small wholesale trading company in post-communist GdaĆsk to Central Europe's largest fashion retailer is a remarkable entrepreneurial story. The founders' original insightâthat Polish consumers wanted Western-style fashion at accessible pricesâproved correct. Their willingness to evolve from traders to brand builders to portfolio managers to technology-enabled omnichannel retailers demonstrates adaptive capability that has kept LPP relevant through three decades of dramatic change.
The current strategic moment is arguably the most ambitious in LPP's history. The plan to double revenue to PLN 40 billion by 2027, primarily through Sinsay expansion into smaller towns across Central Asia and Southern Europe, represents both extraordinary opportunity and significant execution risk.
The company has nearly 3,200 stores, with a total area of more than 2.6 million m2, distributing products to 3 continents every year. LPP also has a vital role in creating jobs for more than 54,000 people in offices and retail structures in Poland, and elsewhere in Europe, Asia and Africa.
The Russia controversy, while painful, may have forced LPP toward a superior strategic path. Rather than dependence on a geopolitically risky market, the company now pursues diversified growth across more stable geographies. The Sinsay-led strategy targets underserved consumers in markets where LPP faces less direct competition from global giants.
Whether LPP achieves its ambitious targets depends on executionâopening stores on schedule, achieving productivity targets, maintaining brand differentiation, and managing the organizational complexity of rapid growth. Management has demonstrated these capabilities historically, but the scale of the current undertaking is unprecedented.
For Poland, LPP represents something larger than a commercial success story. It demonstrates that world-class companies can be built from post-communist origins, that Polish entrepreneurship can compete globally, and that the transformation begun in 1989 continues to yield returns three decades later.
We deploy this Polish creative thought around the world, promoting our indigenous creativity and driving Polish exports. We make sure that our Polish clothing company remains true to the principles that guided its founders from the very beginning. Today, it is no longer only collections that are created here â in Poland â by our talented designers. Also, the new generation of showrooms, such as those in Helsinki and London, are entirely the result of the work of our domestic partners â Polish architects and construction companies. We also implement proprietary hi-tech projects in all markets where the stores of our Polish clothing company LPP are present, because we are a creative company that focuses on the development of Polish innovation in the world.
From two traders in GdaĆsk to Central Europe's fashion empireâthat's the LPP story. Where it goes from here depends on execution, competitive dynamics, and the continued appetite of hundreds of millions of consumers for well-designed fashion at value prices. The next chapter is being written in store openings across Kazakhstan, Moldova, Georgia, and dozens of small towns throughout Europe where Sinsay is becoming the shopping destination of choice.
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