Poland's LPP posts fourth-quarter profit beat, raises 2026 margin outlook (updated)
26/03/2026 06:10
Fourth quarter results top estimates, sending shares higher Upgrades 2026 margin outlook Warns Middle East tensions could inflate transport costs Recasts on margins and other profitability drivers, rewrites throughout, adds share move in paragraph 5, Middle East details in paragraphs 3-4 analyst comment in paragraph 6, GDANSK, Poland, March 26 (Reuters) - Poland's biggest fashion retailer LPP LPPP.WA reported fourth-quarter results that topped analysts' expectations on Thursday, as higher margins, sales growth and lower store and logistics costs supported profitability. However, LPP warned Middle East tensions driving up fuel prices could affect its performance this year by increasing transport and distribution costs. In a pessimistic scenario, additional sea freight surcharges could reach 30 million zlotys ($8 million), while distribution costs might rise up to 10%, it said. The company said its improved performance was driven by a strong zloty and favourable margins during winter clearance sales, which offset its budget chain Sinsay’s growing share in revenue as LPP expands its low-cost retail model. As of 0930GMT, shares in the company were up 6.4%, leading gains in Poland's blue-chip index WIG20 .WIG20, which fell 0.6% Analysts at Jefferies and Erste said higher-than-expected gross margins drove the earnings beat, with gross margin rising by 2.3 percentage points to 56.2% in the quarter. LPP plans to invest 2.6 billion zlotys in 2026 and open around 1,000 new stores, predominantly for its Sinsay chain, saying that brand's share of group revenue could reach 65% by 2027. The profit jump was also supported by a 10.1% drop in operating costs per square meter, driven by lower rents at new Sinsay stores, head-office cost control and logistics automation. Its fleet of autonomous warehouse robots increased sixfold last year as the group invested more than 1.3 billion zlotys in logistics, it said. LPP now uses AI algorithms across its operations, including design, customer service, logistics and sales network expansion, CEO Marek Piechocki said. The retailer also raised its outlook for 2026, lifting its estimated gross profit margin to between 55.0% and 55.5% while upgrading its expectations for both core and net profit margins to 23-24% and 9-10% respectively. ($1 = 3.7039 zlotys) (Reporting by Rafal Nowak; Editing by Matt Scuffham) ((RafalWojciech.Nowak@thomsonreuters.com; +48 58 769 66 63;))