Huge problems for LPP on the WSE. The company denies that it operates in Russia

Luc Williams

According to the American intelligence agency, the WSE-listed company LPP is still in the lead business activity in Russia. After this information was announced on Friday, the value of shares on the Warsaw Stock Exchange plummeted and at the worst moment it fell by 35.78%, writes Rafał Hirsch in his morning brief. LPP claims that it does not operate in Russia, and Hindenburg wrote untruthfully. On Friday, March 15, the company announced that “notifications have been submitted to the prosecutor's office on suspicion of committing a crime to the detriment of LPP SA and its shareholders, stock exchange investors, threatening the security of the financial market. The basis for the notification is false or manipulated information published today in the material Hindenburg Research“- we read in the material.

The statement said that as part of the agreements regarding the sale of the Russian company LPP committed itself in the so-called transitional period until the release of previously ordered goods (so-called old stock, designed and ordered before the transaction) and providing information about potential suppliers of goods and basic operational processes, including marking goods with codes.

“Contrary to the claims contained in the Hindenburg Research material, these provisions do not differ from market standards for this type and size of transactions, especially those concluded in the circumstances of the mass exodus of international business from the territory of Russia and the poor prospects for this market at the time of concluding the agreements,” the statement said.

Financial Statements

Today, LPP provided preliminary, estimated data regarding financial result for the financial year 2023/2024 (November 2023 – January 2024). Consolidated net profit from operations amounted to PLN 484.4 million. In the same period last year, the company announced a profit of PLN 183.9 million.

There are many indications that the results not only of the fourth quarter, but of the entire last financial year will be record-breaking. Over the last 12 months, the LPP group earned PLN 1.6 billion net, an 85.5% increase. more than a year earlier. These sensational results are mainly due to a 9.3% increase in revenues. y/y to PLN 17.4 billion, while reducing operating costs by 2.1%. y/y (PLN 6.6 billion). In the fourth quarter of last year revenues increased by 15.7%. up to PLN 4.8 billion, a operating costs increased by 10.3 percent up to PLN 1.8 billion.

The calculations of the above data were made according to the current knowledge of the LPP management board as of March 18, 2024 and may change after examination by the auditor, the company added. At the same time, the company announced that detailed financial report for the financial year will be published on March 27, 2024.

In defense of a good name

LPP's quick and quite unambiguous response to Hindenburg Research's accusations, along with the announced fantastic financial results for the fourth quarter of 2023, probably helped investors make up for Friday's losses. On Monday, LPP shares again recorded an increase of over 8%. However, the company's image crisis forced it president Marek Piechocki to speak at today's conference. The head of LPP announced that the company's investors will recover what they lost as a result of Hindenburg's “slander”, and the LPP company has strong foundations and development prospects, believes the company's president. He added that LPP will present forecasts for 2024 today.

“Those who have been with us for many years know that we have always emerged stronger from such crises. We are also one of the few companies in Poland that has obtained audits of a public trust company, and we have also received awards from investors many times as a transparent company. I care about to respond to the allegations today. LPP, contrary to what the report says, does not conduct operational or commercial activities in Russia, nor is it indirect owner or direct company in Russia and he has no control over it. I am sorry that we have to deal with this type of slander, but I believe that everyone who lost money on this information will regain it, because the company has strong foundations and development prospects,” Piechocki said during a video conference.

Hindenburg Research findings

The analytical and investment company Hindenburg Research claims that LPP did not abandon its operations in Russia after the invasion of Ukraine. In a report by the American intelligence agency, quoted by, we read that LPP had ambitious plans further expansion in Russia. After the outbreak of the war, LPP announced the sale of Russian assets. It announced plans to sell its Russian company on April 28, 2022, and on May 19 it announced the completion of negotiations with the buyer. The transaction was finalized on June 30, 2022, i.e. within two months. For this type of transaction, the pace was exceptionally impressive.

Pace, apparently sale of LPP assets in Russia caught the attention of Hindenburg, whose analysts claim that the actions taken were intended to conceal that the transaction was fictitious. The American company emphasized that despite the loss of approximately 20 percent. revenues due to the alleged exit from Russia, LPP recorded a 13% increase in revenues in the 2022/23 financial year, and revenues on markets other than Russia increased by 40.5%. y/y. According to analysts from Hindenburg, LPP used Kazakhstan to supply Russian stores. Import-export data show that in 2023, LPP sent goods worth approximately USD 755 million to its Kazakh subsidiary, even though “Kazakhstan is responsible for only 1 percent.” stationary LPP stores,” we read in the report.

Who benefited from the financial crash of LPP?

“The report prepared by Hindenburg Research is part of an organized disinformation attack that has been prepared for 5 months and is aimed at reducing the share price of the LPP Group. We have previously informed the Ministry of Foreign Affairs and the National Tax Agency about the matter. From what we have established, we are not the first company that has become the target of interest of the intelligence agency. Previously, a similar practice was targeted by Hindenburg against the Adani company. At the same time, we know that the intelligence agency works on behalf of third parties. It cannot be ruled out that such activities may be an attempt to take over influence in the LPP company. The Group has full control over the situation. Any We will provide additional information on an ongoing basis,” we read in the statement of the Gdańsk-based company.

Hindenburg Research is known for having demonstrated errors or even fraud in other well-known and listed companies in the past. Each of them immediately lost several dozen percent of their value. And on this occasion, the intelligence agency always made money. The procedure is as follows: the Americans occupied the so-called short positions in the shares of companies of their choice, and then profited from declines in their quotations. They took similar actions against LPP, which they informed themselves.

Whether or not LPP actually operates in Russia is not just an ethical and image issue. The company obtains loans from PKO BP, for which lack of activity in Russia is one of the conditions for granting loans. In addition, it is also a matter of possible disclosure of untruths in financial reports, which may result in serious consequences, writes Rafał Hirsch.

LPP manages the fashion brands Reserved, Cropp, House, Mohito and Sinsay. Outside Poland, the company has stores in, among others, Finland, Greece, Italy and Great Britain.


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