LPP Aktie

Good afternoon, Monica Shabrovska. I would like to welcome you at the conference LPP conference results -- on the results of the first quarter. With me here is Marcin Bojko, CFO; and Magdalena Kopaczewska, Investor Relations representative. We presented the results from the first quarter, how they reflect the reality in our activity. We will talk about to you in a moment. We would like to present to you our plans for this year, but also we would like to refer to our plans for the next three years regarding our development of our stationary network.

During this meeting, we would like to present to you our financial goals for 2026 and '27 and the entire meeting will end with Q&A. You can ask questions via chat that is visible on your screens. It's already active, and it will be active till the end of today's conference. After the conference, if you have any additional issues or questions, please contact our Investor Relations department and lpp.relationsalpp.com or via our media lpp.com.

So let's move on to the results from the first quarter. Thank you. Traditionally, the summary of the first quarter, let's start with most important operational events. In the first quarter of '26, we opened 121 new stores, 102 in Sinsay brand according to our plans for this time. At the same time, we spent already PLN 600 million for investment within the first quarter. Close to PLN 3 million was allocated for logistics. This year is not going to be a record-breaking year, but constantly, we've been investing in the area that is most profitable for us, a good return on investment. And in the next quarters, that will be visible. At the same time, our comfortable financial standing, very good EBIT to 1.2 net debt relative to EBITDA makes it possible for us to invest in CapEx and share with you, our investors, the profits and the dividend that was suggested by the management is PLN 900 per 1 share. This is according to our net profit.

So constantly, we would like to share profits with you. The operational situation, when we look at these events, was positively stable, but what was not stable and very dynamic. These were profits on every level. We are very happy about these results. The first quarter with improved profitability. Profit of revenue increased slightly, we will -- only 10%. We will go back to it. When we look at EBIT or EBITDA here, the dynamics were more significant, and we are very happy about them. This is what we target, and this is what we delivered last year. So we are very proud about it. Another element, apart from financial aspect is the development of our strategy as Sinsay chain. You remember last year, we accelerated the development based on Sinsay brand. We are very happy that everything goes according to the plan. 121 new stores in Sinsay brand and the first quarter, 2,500 new stores and the entire group, 3,841. This is the value also including closed stores because we are optimizing our network within all our brands.

We are very happy about the profits and the development according to our plan, but we also feel happy about profitability in our development and KPIs. This translates into our plan. Before the acceleration we decided that we want to develop really fast, but we want this development to be a quality-based development. So mislocations, when we opened 300 stores was not -- was a different percentage. So we have the quality that we are -- that is stable. So EBITDA to Sinsay, that is around 30% or EBITDA year-over-year when we talk about the stores and profitability per 1 store. So they remain at a very good level.

Let's move on to details. This detailed section, I would like to start, honestly, when we look at the last three years, weather slide becomes a must in our presentation. So this was similar in the first quarter. Here, you can see the deviations from the historical average you can see that it's clear in February, definitely lower temperatures compared to historical average in March, the weather was pretty warm. It was reflected in the results. And in April, again, not really convenient weather conditions. We are going to move on to like-for-likes and sales. So we need to look at the following slides from this perspective. So the weather affected not only LPP, we are monitoring market information and statistical data as for detailed consumption, we know that the weather was very demanding. We saw that at the very beginning, despite such conditions, the increase in the profit is good.

So we move on to traditional slide sales in LFL stores. A difficult quarter with challenges related to weather. So the first quarter in '26, that is minus 2.8 for the entire group. Reserved Cropp House Mohito positive, plus 2, plus 2 and Sinsay a minus 7. Some of the challenges, operational challenges are going to be described further later on. But when we look at the like-for-likes from the perspective of the weather, we assessed the tendency. So had it not been for the weather conditions 3, 4 percentage points would be better. So that would be positive, below our ambitions, still, but this shows the scale of the challenges that we are facing recently asked for the sales in the first quarter.

When we add to the online channel and all the stores, not only like-for-likes, in the first quarter, our dynamics amounted to 10%, almost PLN 5.2 billion. It's not what we wanted, but when we include the weather factor here, we believe that it's a good result. We did what we could have done. When we look at two challenges we were facing, and they were growing and they were accumulated at the end of last year and the beginning of this year. So the firehouse -- the warehouse fire in Romania. So our logistics was not working properly. The goods that we transported to Romania had to be re-transported to Poland. So the Polish was -- warehouses had to deal with these goods. So this was a challenge for us.

We are slowly catching up with the situation. I'm going to refer to that later on in the first quarter results, that was really a significant burden for online channel. We focused definitely on profitability. So the agility of our organization, we didn't want to have a lot of difficulties in the cost and performance marketing. This is what we try to optimize with low spendings kept on a lower level. We generated significant increase. With such a demanding environment, this level was not efficient. So we entered the quarter with lower spending we spent 16%. Last year, marketing to revenue. Recently, it was 7 -- around 7%. So this optimization was there. And in the first quarter, we had to face this issue as well around 1% of our dynamics. This is not what we wanted, but we have a clear plan for the next part.

In total, we were looking at the broader picture despite a difficult conditions for sales, gross margin, the second element in the plan. This worked really well with lower temperatures, we practically sold out the entire winter collection. Because of this lower temperatures, we didn't have any markdowns. So later on, the sales was lower. So we started single days or periods with markdowns. These were not really effective because there was no traffic in the stores and in online as well. So we withdrew from that. So the first quarter closed with a record margin 58.2%, 4.5% above the target from last year.

When we add to that a very strong zloty against the dollar and well negotiated freight for this year, then the gross margin was writing off nicely the volume of our clients in the stores. And the third element, the cost here, as I said, in 2025, we optimized our conditions. We wanted our organization to be agile to reduce the cost indispensable level. So now it's very comfortable. We can add to it. We focus on discipline related to cost, not just a strict reduction in the cost. So you could see that in numbers, 9% improvement of cost per square meter. And here, the significant leverage is the logistics. This is what I mentioned at the very beginning, high CapEx. So we invest in robotics. This is the one that is improving our situation and also a simple discipline in corporate costs, we believe that every lot is carefully spent. We think about it before we do that. That's why such a good result, and this is the strategy that we want to continue when we combine these three elements, sales, OpEx and margin, we have a very dynamic improvement in the profit growth. What is good is the profitability and EBITDA growing by 4%. So these are the results that we want to see. That we want to focus as our goal last year. And as the management, as the organization, we are very proud of it.

The profit is nice. We are pleased with it, and we are even more pleased with operational indicators that we generated in the first quarter. And inventory was under control. The challenge that we generated and we faced in the first quarter of last year, we addressed nicely in autumn/winter 2025 season, and we continued the good work this quarter. And you can see this in the numbers. We are pleased with that, PLN 1,400 per square meter. Do we expect an improvement? No. We are -- we will be stocking up before the autumn/winter level, so we will go back to 1,500, 1,600 probably, but we improve turnover, and we can see it in the bullet in the comments on the right, improved by 8 days, and this is a good indicator of our inventory management quality good. Inventory management is also working capital under control negative indicator rotation cycle is 28 days. We keep our good level. Our operating cash flow is gradually growing. And what you are also pleased with because it is another strong foundation of our financial position is the factoring limits used only 40%.

We can focus on developing the offer business and on growth. We have quite a lot of room for maneuver here, financing the working capital is also ticked off from the back office and financial side. And this is another thing that enables us to focus us on the core business. CapEx in the period, nearly PLN 600 million, 8% below last year, but this falls into the direction that we communicated in March, which is the peak CapEx more than PLN 3 billion last year. Well, it was the peak last year, mainly because of logistics, where we spent more than PLN 1 billion on expenses in that area. Now we are fetching our main investments distribution center in [ Breisky. ] We are working on a new location in [ Chef, ] and we are continuing implementing robotic solutions.

The last slide in this section shows -- and it looks the best for me as the Financial Director because the development investment and sharing profits with shareholders is at a very debt level, the 1.2 leverage is slightly improving compared to last year even.

To sum up the first quarter 2026, we can say that we are where we wanted to be. We develop fast and in a profitable way, our profits are growing very dynamically. We can see some challenges moving forward. But all the tools are at our disposal. The ball is in our court. We have strong financial foundations, so we can focus on the core business. We can focus on the initiatives to improve the customer experience and develop the offer. And this way and for these reasons, we are very optimistic about the coming quarters.

And moving into the future and looking into the future because we are on midyear now in the second part of the presentation, we want to tell you about what we have now. And as Monika mentioned, what we are looking in the longer perspective. And looking at the hard numbers after May and a couple of days of June, 20% of sales on the group level, online channel bounce back after the first quarter, 17% growth is a level that we target long term and 4% like-for-like. What is also a good thing that the bounce back is at a good gross margin higher than last year. It's not the level of 4, 5 points that we saw for the first quarter, but it is still going in the right direction.

We started into the certain markdowns for Sinsay, and we will be starting markdowns for the other brands. We will see how where this goes, but this good management of inventory plays well for us. We have -- so we have room to maneuver with the margin and to adjust the needs by maximizing the gross margin. And the last thing about 350 new shops. This is the plan for the first -- half year according -- as was announced before. So everything goes as we planned. These are the numbers that we can see for now. But if we go on back step back, and we look at the big macro, the global economic picture, we would like to comment on the trends and market behaviors. The trends in the market that we see in the key areas, countries and regions for our development.

Starting with Poland, we will move to the right clockwise. Poland, has good macroeconomic environment, strong consumer weather aside. In the first quarter, the market is behaving in the right way. Our new openings are aligned with our plans, all the conditions are met. We have no reasons to reduce or to speed up. We will be focusing on the direction that we set for ourselves this year. Ukraine, we have a very strong position there. We built it gradually for the last three years. This is our second market in the capital group. Romania has fallen down to the third place. And the strong position in Ukraine gives us market comfort it means that we can a little slow down a little bit there. We can focus on the best locations because the market is profitable, like-for-likes are normalizing, but still it remains an area that has its challenges. Unfortunately, the conflict, the ongoing contract, the war is still going on there. So we have to use common sense at this stage with our scale of more than 500 shops in Ukraine. So we need to be continuing development in more selective locations going down Central Asia, very prospective markets, very good outlook, both economic and the demographic growth, the first shops that we opened their last year showed good profitability, but we observed in recent months was that some shops in Uzbekistan and Kazakhstan when the weather was already warmer, they still had winter jackets on store. So our logistics is quite spread. And after the fire in Romania, we have our challenges in Poland, both, and in the region, but all deliveries are accumulated in Poland. And then when they get -- once they reach Poland by sea, we send them back to Uzbekistan and Kazakhstan by road. This is not optimal in terms of cost or time, so slow development there.

And before we open the new DCFC next year, we will be focusing on the best shops. And once our logistic abilities in the region are on the level to enable us to shorten the logistics. We will start the DC and all the deliveries from Asia will be related in China and send by rail to Kazakhstan.

South Europe, here, we focus on two main markets, Romania and Bulgaria. Very simple short come and very simple comment. Some of you during the regular meetings communicated us that economically-wise, Romania is slowing down over the last months in our like-for-likes. We've not noticed that yet. Probably, our strong position prolonged the good sales for us. But indeed now, what is happening with the grosometic stick product dynamics that is slowing down significantly in these two countries. Some of the -- this means that some of the -- our opening projects are on the border profitability. We do not want to push it at any cost. We will be focusing on the most profitable openings. The forecast says that a year and year and a half maximum tiers and the situation should start improving. The entire market region is in the same situation there in South Europe. If something moves there. We will be watching it close, and we will be accelerating Italy.

Western Europe is a new direction. New openings generate positive profitability there, but it is slightly below our expectations. So what we do is we slow down strategically. We focused the entire opening pipeline. On the south of Italy -- the center of Italy, and we will be improving our offer there. We will be improving our presentation in shops there displays. And until we have sorted that out the potential offered by half of the country, in fact, we will be leaving that for later as soon as we see better profitabilities. And it's not much that we miss, it's about 4%, 5%. Once we have that, we will go back to development.

And Central Europe, by which we mean Czechoslovakia and Hungary here, especially in Czech and Slovakia, we can see economic development, the same as in the south of Europe. We already noticed that before and reflected in our profitability, and we communicated that to you. And this is the moment to actually push on the brakes a little bit harder. And what we see and what we do is what we call control cannibalization because in the region, we have very good recognition of the brand. We have been there for quite a long time. But because of that, we have quite high saturation in some of the regions, about 55% to 60% in some of the regions, and there, the like-for-like sales is slowly cannibalizing. We have provided that for a -- we see that in the KCF and in profitability, the incremental shops that we add are continuing to add positively to EBIT, but we have to be more selective here, especially given what's happening in Czech and specifically in Slovakia.

A very brief summary of what we see in the macro scale in our regions. What does it mean for our plans moving forward, 950 shops that we set for the end of 2025, we limit that to 750 and same number of openings for Sinsay is our assumption for the next year. We believe that this is the optimal number of the opening of new stores. As we have always said that we want to grow grow fast, but we want to grow in a profitable manner. And to give you a comment -- an illustrative comment after the half year when we focus on Sinsay we said that we moved to Formula 1. So probably, we are on the 20th lap of the race, and there are 40 more to go, and we are not working for the record in 1 lap, but I want to be the winners of the race by the end of the season. This is the way we look at our development.

So we want to grow and develop long and sustainably. So this is the reason for our decision. So this is the number that we are comfortable with moving forward. So far about the new stores, new openings and looking for the next years, but we -- remember about our like-for-like shops because new stores is one thing, one part of the story, they accelerate the development. But in Sinsay, we already have more than 1,800 like-for-like stores. It's the biggest share of the like-for-like stores that have been with us for more than 14 months. And here, looking at this, the like-for-like that we generated the results on comparable stores. We set ourselves or identified five main areas for ourselves, that we want to focus on in the next future.

We believe that these areas will improve the dynamics and our sales. So very briefly, let's move on to what we understand by all of these collection. In Sinsay -- all initiatives related to Sinsay, value for money. This is what we see from the second half of last year and the beginning of this year. In value for money segment, we focused on money, meaning the price, but this value component is slightly missing, or we can't see that. So we had some hits. We were not able to order more. So we moved away from fashion heritage a bit. And how do we want to work with that looking forward. We have this action back to fashion. So we focus on smart approach to value. It was not going to be a lowest price, but a trend-related product the latest fashion-related products. This is our strength. This is how we do it, and we know how to do it. So we want to go back to it. So this is what reserved two years ago. They went back to their basics, identified the clients in the region. And right now, as the only brand generates for the 8 or 9 quarters, very good like-for-likes. So this is the new approach, the new path for Sense. It seems like a new part, but this is not really a revolution. This is going back to where we are good at to the core of our business. So this is what we are going to focus on in the newest future. The second area, a customer experience. As I mentioned before, in '25, we focused on significant cost optimization. So to be a very lean organization focused on the development and the cost was not problematic for us. And the stores were hit bluntly saying, so the budgets were limited, what it meant in a practical aspect, you signaled that to us. The presentation in the stores of our collection, our windows were not really good in quality like compared to two years ago. So we want to change that. So there are use fewer staff translated into more queues. So we are going to increase the budget in the best source. We are verifying that.

On an ongoing basis, we add personnel to these stores. So this experience, this customer experience is going to be improved. So we add on top of that, the marketing budget, better presentation, better windows, displaying our collections, the fashion side of our business. And we also implement self-service checkouts. We have them in 350 stores at the end of this year, we want to have 1,100, 1,200 stores with self-service checkout. This will free time for our personnel in our stores.

Another area of performance marketing. This is what I mentioned at the very beginning, in '23 and '24, we spent a lot in this area. And at the end of '24 and '25, we've been using that. So this snowball was still rolling and generated significant dynamics, and we generated also a good profitability in e-commerce [indiscernible], it was comparable to our stores. We can see that this potential is slowing down. Those who are with us on a regular basis asked questions. We commented on the -- that we have this, these resources. We have these P&L resources, so we can spend more on advertisement on the internet that will be like 1 -- plus 1 percentage point year-over-year related to the revenue.

Another area that we defined for our initiative for next years, this is home. In '24, that was 60% growth. So it was the novelty. So we built a very broad offer. So it contributed to like significantly. But now naturally through the development of this department, we see we need to focus on the development for '26 winter and fall, we owe that less than 20% of these roll colors. So we crossed out not profitable aspect. We omitted the products that are cannibalizing each other. So in Sinsay, you won't have 17 different pillows in the shape of a pumpkins, but the best ones and the best -- the most profitable ones.

Online, the offer is going to be definitely broader. And in traditional stores, we are also changing our furniture. Fashion heritage is a strong element of LPP. Home was being developed constantly. And in the stores, the manner of presenting also makes sense. So we started with Sinsay stores, the best ones when home is from the beginning of our stores. So we are going to improve this aspect in Sinsay stores. So it will be refreshed. So we had a small department of Home, and now the sales speed up.

The first results are going to be there. We are not waiting for them. We are just summing up. This situation for you in a brief form regarding the initiatives we are going to focus on. So this is our day work. First results are visible already. The best orders, the best -- the improved quality in the Sinsay, this is the only department that had positive like-for-likes, and it is continued. So this is the direction we are going to focus on. And the last area, last leverage, logistics. It is also the core in this group when we have a good offer, then you can provide good products for the clients reliably, and we had some issues with the fire in Romania with lead times and with products in the stores with the stock from 4 to 5 days. It prolongs up to 15 even. So the client can accept it once or twice, but in the third time. So this is something that we had to face. We did what we could. So the dynamics here on the southern market slowed down, but this is the area on our size.

So we select the new locations. We have the new [ FC ] in Romania from October. At the beginning of July, we are going to have the new distribution center in Romania, so -- in place of the one that [ get ] fire. We are going to use this location, and we are going to speed up in November this should reach the target level. So we go back to the port in Constanta to stock in Romania. So now from the ports in Constanta, we are storing up our new warehouse. So these were difficulties we had faced last year. So everything is going back on track combined. With other initiatives in time, we will regain the trust of our clients. At the end of the day, what does it bring positive like-for-likes, the increase in e-commerce on the internet from the P&L point of view. It is not affecting our estimation for OpEx in this year because these activities whether performance marketing or improved budget in the stores. This increased cost on the one hand, but this operational leverage and our discipline regarding corporate cost is significant. So it is compensated.

So we don't have any indication to to adjust that for OpEx and for CapEx. This is just the change in the home department in our stores. When we look also at our CapEx, this is not a very significant amount. So target for this year regarding investments is a bit lower than what we described or what we planned.

What is also crucial for us. So here, you have the notes in what area, what initiatives should be operational or -- so LFLs understood as e-commerce and stores. Sinsay here, this is 3 omnichannel. So we believe that through this leverage the synergies here are going to be greater than the result of single initiatives. So through omnichannel, in our case, in Sinsay, 2 plus 2 is going to equal 5 this time. So this leverage for the entire group is going to work perfectly, diluting a little bit OpEx.

Let's look at the numbers. So this is an important aspect. What does it mean? So the openings and all the initiatives, what does it refer to? Slide update us for '26 related to P&L. With lower stores, new stores and a weaker first quarter dynamics in [indiscernible] forecasted a bit lower. Looking at the margin, looking at the best forecast and the data that we have for the second half of the year. It's really comfortable situation. Gross margin is going to be -- to reach around 56% costs at the same level. So basically a little bit less revenue, a bit -- a very good margin, EBITDA, and no change, profitability.

Slide change. As for '27, this is similar versus the numbers we presented to you in December '25. And less revenue, better margin cost discipline. And finally, at the end, when we look at the profitability, we have the same result. As expected, of course, reduced by fewer openings and the financial stands very comfortable. The systematic -- the leverage will systematically be going down? 2027 for us is not a goal in itself, a street 3-year strategy 2025, say, 7 -- this will be the last year or strategy. But for us, it is not the target, but milestone rather, and we continue looking ahead, and would like to show you now a framework plan for 2028. How we look into the modest future and what our strategic vision is for the off-line stores is positive like for likes above inflation. Theres [indiscernible] there. If we have a good situation there, the automatically business works very well there.

Like numbers 2028, we can see that we will be able to maintain the 750 openings of Sinsay. And starting from 2029, we will be focusing on 350 openings per year, the best projects and selectively the is very big, but the potential is 10,000 stores. Can we yield the whole potential? Probably not, but will it be 60% or 65%. There still will be a lot to be done in that area, and we will be focusing on the best. As I already mentioned, the macro Hungary is a very good example. The last two years was a very difficult market in Hungary. Previously, we already slowed down the openings there. But with every coming quarter, we see better profitabilities, better information reaches from the market. So if we wait another two quarters, then and the improvement is constant. We will go back to dozen or so more projects on that market. The other brands, the heritage brands, Reserved Cropp Mohito will be focusing on opportunistic development there are not many new shopping galleries for us to open new reserved stores, but it's not that there are none. For example, Upper House last year is a good example. We are monitoring the situation. We are focusing on that. And all the brands, the Sinsay and our Heritage brands, we will be focusing on closing unprofitable stores because this is not generally it improves the image of the entire network and enables us to generate better profitability in the e-commerce leg. We targeted 15% to 20% growth. And here, we see a lot of room for generating the dynamics, still looking at online penetration versus Western Europe and other markets, still our penetration is quite low compared to them. So this channel will be growing in importance.

We, as LPP, are open in 27 markets -- operate in 27 market most of them, our e-commerce is nonexistent. So the result of potential to use the channel synergy that I mentioned is also accelerating and driving the channel in the marketplace. This year, we want to start in back-to-school period, August, late August, we will start with small steps, but we have high hopes about this project, we focus on complementary project that will naturally supplement and support the Sinsay brand. This will be more marketplace -- quality marketplace, we'll not be focusing on volume but on quality more, and how it presents to generate natural synergies. Speaking of financial result, minimum margin is 35%. Looking at history, without the macro effects, this is the level that we can comfortably ensure the cost discipline LPP is known for cost discipline, and we will not be changing anything here. This is our strength, and we combine it with good like-for-likes, good margins, stable margin and cost discipline, then we are certain that we will be able to systematically quarter-by-quarter, year-by-year, improve our profitability. This will mean -- but the free cash flow, but also a potential to pay out the dividend because we are a dividend company after all. We used to be, we are and we want to continue to be in the coming periods.

How will we do it through our people with the passion of our people in May this year for celebrated the '25 years on the Polish Stock Exchange. It's thanks to people who have passion. Some of them -- most of them are still with us. They worked on the success for the last 25 years. And our stocks grew by 50% in value. We know how to do it despite the challenges we experienced many successes on which we will fund our development for the future years. Whether we'll meet in 2 years or 12 or 20, I'm certain that LPP will still be continuing as gradual development, and this is what we wish for ourselves. And with the technology that we are using and developing and ring on recently, I'm sure that our development will be even faster and more visible starting with the coming quarters. This is the end of our summary of the results and the look ahead. And we can move on to the Q&A session.

Let's start with the question about the gross margin. How how much -- what was the influence of freight on foreign currency and improved pricing on the gross margin, 4.5% of positive deviation year-over-year 3 percentage points is the macro effect, the freight and the foreign exchange and the rest is the effectiveness.

Next question is about like-for-like of House and Mohito. House generated 15% LFL, while Mohito, minus 16%.

Could you comment on the factors that caused the different results of the two brands. The house brand -- well, it's a very good question. Thank you for asking it. Beginning from second half of last year, our model has slightly changed. Before starting the season, the purchasing budget, that we allocated to brand to purchase new collections is used less in the sense that House does not contract models at 100%, but leaves a certain buffer. I will not tell you exactly how much the buffer is, but it's quite a high margin buffer. And when the season starts, House works on the trends observed in social media has AI tools to scan the social media to identify the trends and they react in real time, and they contract several fashion proposals in reduced number of items. And when it comes to say about 10 models, 3, 4 of them sell very well, generate very good margins and like-for-like, and then we stock up on them fast, and this is the model of House that House operates in, and this is reflected in the results. They know how to do it. But we also want to scale also to other brands as well. As being LPP, we are conservative about that and result of -- is a different scale of Mohito, but probably this is the reason that -- of the House is like good likes. But for Mohito, we rediscovered ourselves with this brand. This is the brand only for women two years ago, that brand was an example of, for others, how to develop, how to generate positive like-for-like beginning with 2024. Our collections did not catch up the expectations of the customers. So now we bet on better quality materials. In autumn, you will see the best effects. We have a new team that that is doing a great job there. They have ideas. They will be using the solutions developed by how the new approach. So I think that we need to be patient about Mohito. But the full picture, well, it's still a very profitable brand. Two years ago -- a year ago, it was the most profitable right now, it is at the level of reserve, maybe slightly below. But despite the challenges and the poor like-for-likes, it still is a very good result at the EBIT level.

Next question is about e-commerce revenue from e-commerce remained unchanged year-over-year, while the average dynamics of growth over the last two years was about 23% plus. Please comment on the reasons for the result. How was it affected by limiting the expenses on performing marketing and whether the current quarter should be regarded as a onetime deviation. And additional question was Sinsay brand result behind -- the cost behind the result.

Yes, let me repeat what I mentioned during the presentation, we look at the dynamics, 1% dynamics in the quarter scale in the e-commerce area, about 5%, 6% of the dynamics was taken away by the weather, but 6%, 7% is a poor result compared to historical results, we target more at 15%, 16%. And the other effect, 15%, 20% and the other effect is the performance marketing reduced costs and our logistics problems and to give you the sense of the importance of the logistics problems after the fire in Romania, we maintained sales, our organization. It's not the our organization is comparable and the logistics should be praised. But yes, the dynamics slowed down, specifically in Southern Europe, Romania, Croatia, Bosnia, Macedonia, Greece, the markets that were served by the warehouse in Romania. The other areas grew but like-for-like and the economics was below last year. And we can see that I do not want to give you specifics on what the impact of the respective factors. But the logistics is improving with our strong P&L, we can safely add to the performance marketing budget. We are waiting. We -- this is hard work before in front of us we have to convince our customers that they will once again receive their products in 3, 4 days rather than 2 weeks. So we are targeting the third, fourth quarter where new location will have full operational capacity.

Next question is about settlement of the losses, the damages for the loss property in Romania, what was the receivables and the balance of -- the liabilities of the balance at the end of April, what is the insurance. Were you wanted to claim insurance in the report. You say that you have additional costs and lost sales.

So I assume the numbers are quite high. As for the insurance, we have a PLN 350 million reserve booked last year after the fire. And out of that, over 2/3 the money came to our bank accounts. The rest in our assets and stock, we are still working with the insurers so this settlement takes time. So we provide documentation, and we've cooperating with the liquid data, but some business interruption and the lost profits that ended at the end of March. At the beginning of May, we sent the documentation. I'm not going to give you the exact number but this covers what was in the question. So lost margin that we assessed at that particular period and additional costs related basically to inefficiencies related to logistics. So on an ongoing basis, we are going to provide information for you. So the liquidation and the talks with the insured are ongoing. So please give us some more time. Please give us details as for the economics of the latest new openings in Sinsay stores. What's the profitability and return on investment related to the new stores opened in Sinsay compared to those opened in the recent years.

When we look at the results from last year and the first quarter of this year, payback period prolonged by 2, 3 months. So from 13 months, we entered 1.5 years, the level of 16, maybe 17 months, but this is definitely below our benchmark that we defined 24 months. So everything goes according to the plan. We tried on the slide presenting macroeconomics, give you more details.

How do we look at that? How do we read region by region, what is going on. So this is just case-by-case scenario. This is how we react, and we globally at Sinsay result as a brand, and the results are really good, especially compared to the pace of development.

Another question refers to competition. How the management assess the SHEIN and Temu competition compared to situation from which segments are more sensitive. When -- where are the most significant advantages related to LPP. So probably you would need a number and customer traffic. So we can summarize it as we saw platforms that entered Poland, especially at the beginning, they grew significantly, but then they stabilized -- the situation stabilized. Naturally because of these price-related benchmark, this is similar to Sense. So omnichannel leverage being present in both channels, good up, good quality security related to our stock. This is our advantage.

Quick logistics. Well, for the Southern Europe, this is not really the case, but we are working on it. And this is a task that we can improve easily when the warehouse is fully operational. So these are our advantages. This is what we want to compete with, and we can compete with. Based on one quarter, it's difficult to extrapolate the results we've been growing 20%, 25% on the internet. So we still have tools and still have reserves to grow. And this is what we are going to do. So we are going -- getting back on track. We have a lot of initiatives doing that. When we look at the recent results, we can see that everybody is just experiencing a certain stabilization, especially with Tomo platform. So the number of users was like 20 million. Now it's 17 million. So they all have challenges. We are convinced that through these strong points, we can compete with them and with other players in off-line and in online.

Also a question related to TikTok shops starting in June in Poland. The question is, what kind of impact do you expect -- impact on the company. At this point, we are looking at one of the platforms where you can purchase one of the tools. We had also examples from our domestic market. impost also showed new solutions. So I believe that this is one of the means for the client to make it possible to reach different brands. It is, I believe, too early to give precise numbers or precise impact exactly for LP or for the market as such.

A question related to guidance. In guidance for '27 in the upper level of gross margin, there is a comparable level to '26 despite high quarter in '26. So we can see the level when you can cover the results from that, yes, the lower level indicated is there because we predict, or we hope for a normalization of the situation in '26 is an exceptional year because a lot worked well in the margin and all the factors coincided with each other. So when we look at like-for-likes and history, we can see from the operational point of view, we still have some buffer zone. So with better like-for-likes with better collection, this is what we see in house. Price reductions if they hit trends very well, then the markdowns are not necessary at such level. So the product is very successful. So thanks to that, we can see space for balancing the cost of right because the other a difficult year for the sector.

And with oil price, the price increases are going to be there. will translate into the purchase, but we believe that the dollar is going to be pretty much stable. And thanks to our effectiveness, we can balance that.

Another question about guidance, the revenue part for 2026, 2027, what is the reason for the significant cut. The main factors include fewer openings, assumption of lower likes in brands because of the listings that suffering the dynamics -- the e-com dynamics below the 25% that we assumed for e-com, but we are improving. August will be the first month that the logistics center in Romania will be operational at 40%. And in autumn, it will reach 80%, 90%. So we are realistic about guidance. We want to share the best numbers. And after the first quarter, the second quarter, speaking honestly, in terms of sales, it will be very demanding, May was very good. But last year after for May, we had very strong June. But with a strong base this year, June will be normalized. But with the good margin and lower markdowns, we are certain that the margin, year-over-year, will be high, and we will repeat the situation of the first quarter. So we see that in the top line because the operational challenges will lag something, but it will be compensated by higher margins. So the quarter in terms of results will be good, but the full initiatives that we listed in today's presentation and the full effect and full scale is expected for the second half year.

Revision down of the number of opening in guidance after 2025 suggests several potential reasons. First, lower than initially assumed absorbability of the market, higher operational challenges with managing multiple regions, stronger competitive pressure, higher cannibalization effect or availability of attractive locations, which of these factors have the strongest impact on your decision.

I would have to look at the least one more time. But the way we look at it, there are a number of factors, and I could add economic challenges to at least the customer sentiment in different countries. Logistics channels in Central Asia, but we look at with sensitively at the [indiscernible] pipeline is 10,000 Sinsays. This is the maximum potential of market. Right now, we have 2,500. Over the next 3 years, we will add another 200. So we will be practically at the level of a saturation of 45%, 50%, then naturally, this is a level where cannibalization start, and we'll have to be careful about, and we'll have to focus on the most profitable projects. And gradually, we assume reaching about 55%, 60% of the full potential. This will involve lower CapEx, of course, we will be optimizing our network. We look more from the perspective of the entire organization. We want to be healthy and sustainably profitable. But the way we did it last year. And now we will be opening in such way that long term, not in two years, not in 2027, but in 2037, LPP remains to be a healthy financially sound organization, is systematically improving profitability. So in a year or two, the 300 -- well, the situation has been dynamic in the last couple of years. The only constant is change. So we will be telling you -- updating you on the numbers. This is our best knowledge at the moment, and we are happy that the bottom line, the profit level is not changing. And what we declared, and what we said at the end of last year, we maintained to deliver.

Next question is about the turnover. What is the turnover expected for marketplace in Sinsay? I think it's too early. Let's start the project in the second half of August. We will see how it goes, how the ramp-up goes. And the new customers that we acquire. And then I think in September, we have a conference in December. We have another conference. We will share the first effect with you then. But what we'll be repeating will start slowly with good quality in mind. So that the merchants and the offer that reaches the Sinsay marketplace is a natural synergy and has the complementary effect and complementary nature, where there no [indiscernible] toys or cat or dog food, pet food or cosmetics. This is what we are targeting, but this will not be tires or tools. It has to align with the Sinsay vision. The Sinsay concept and have a positive incremental overall effect.

And last question, there are many today but we'll answer all the questions after the conference, but the last conference is about dividend. You mentioned dividend in the next years. Will there be a new official dividend policy or maybe it already exists? And you -- could you comment on it?

No, we are working on the new dividend policy. It will be presented and accepted during the shareholder meeting in July, but do not expect any surprises. And this was the last question in the Q&A session.

Thank you for your questions and for your presence. The next meeting is scheduled for the mid-September at the beginning of autumn. So let me do wish us and you the fewest weather anomalies and have a good holiday relaxation and come back safely to us in September and see you in 3 months at the results conference for the first half of this year. Thank you, and see you.

[Audio Gap]

to summarize Q4 of 2025, but also the entire year 2025. We'll also talk about our development strategy that we had a chance to present to you exactly a year ago. We will explain where we are in terms of the implementation of the strategy and how it translates into our results. This is what our meeting will be about. Of course, the entire conference today will end with a Q&A session. And since we are holding this meeting in a hybrid mode as we also have online participants. The entire session is going to be divided into 2 parts so that all of you stand the same chance to ask your question.

I will tell you more about details of the Q&A session. But for now, an important piece of announcement for our online participants. [Operator Instructions] There is yet another piece of housekeeping since there is Marek Piechocki and Marcin Piechocki who very much care about proceeding. There is a kind request for those of you who are present here in the room [Operator Instructions]

Now the time has come to present our speakers, Marek Piechocki, Chairman of the Board; Marcin Bojko, Deputy Chairman for Financial; Marcin Piechocki, Deputy Chairman of the Board; and Mikolaj Wezdecki, Deputy Chairman. We also have Magdalena Kopaczewska, Investor Relations Director. And the meeting will be moderated for -- she will moderate the Q&A session for you to the session prop. I know that most of you have been following our business activity throughout 2025, but I guess, it will do no harm to remind you of the most important events of that period. Let's see a short video together.

[Presentation]

6 new markets, over 1,000 new open stores, sixfold growth of our robotic fleet and new logistics facilities plus new markets where our operations were launched. So quite a lot. How has all that translated on to the results. This is what you are going to hear from Marek Piechocki, Chairman of the Board.

Good morning, ladies and gentlemen, and welcome. We are very happy about how successful 2025 was when we step back and think towards what this year brought about, it wasn't the easiest one for us or for the financial markets, at least for us, it started from the Liberation Day, which probably wasn't pleasant for you as investors or for us as the managing party because that raises a lot of uncertainty that is mid-tier. It affected us only -- I'm talking about the warehouses in Romania which were burned. This is quite a challenge that our teams, our logistics and IT teams handled really smoothly. Practically speaking, the customers have not even noticed that the supplies from Romania were redirected to Poland, and it did not affect them at all.

It didn't have any major impact on our financial results. But among all these difficult moments, when you take a look at the results, where we opened over 1,000 stores. which is not easy. You need to explore over 1,500 locations in order to be able to approve of the choices and open over 1,000 stores. Think of how many architectural teams, how many teams responsible for construction of those stores participated in this endeavor.

This is a massive challenge and we increased the number of stores from 2,700 to 3,700. In order to do that well, you need commitment and efforts of many managers, the entire organization and numerous employees in the LPP Group. For us, that was the highest growth we've experienced. On top of that, if you add 6 markets with nearly 60 million consumers, you need to realize that, well, it sounds so easy, 6 new markets when you see it written down. But again, you need to make decisions on whether you have your own accounting or you decide to outsource it to begin with, you need to find a country manager, leasing teams.

So the easy sounding 6 new markets actually mark a lot of efforts. It's been the first time that we opened so many new markets over a single year. To this, again, we have PLN 6 billion in investments, out of which PLN 1.3 billion was invested in logistics, automation and robotics. Then again, let me emphasize that it takes tens of engineers, people launching these systems who approve them who consider whether this or that system should be selected for that to be most suitable. Again, that's a considerable challenge. And I'm really proud of the entire organization, not just of the Board, but of all the managers and LPP, of the people who contributed to that, not only the managers because we really had a lot of work.

These and others that contribute to building our future, we were able to manage it smoothly, which is reflected in the results that you've probably seen. But that's our force and that's not easy. E-commerce grew by nearly 20%. It rarely happens in European markets that somebody grows by PLN 6.4 billion in revenue in e-commerce. That's a lot. Now consider this. We do all that preserving substantial financial stability, 1.1. That's our net debt to EBITDA after 2 years of working on the financing consortium banking, we do have financing. You know well that before the banks give loans, they scrutinize the applying institution organization really closely. And it's been the first time in my record, I'm probably one of the oldest people in this room that we had oversubscription banks, and a consortium wanted to give us PLN 20 billion, we went for PLN 13.5 billion, rarely does it happen that you need to introduce a limitation on how much of a loan you take from this or that bank. So that's another source of our satisfaction.

Now within this financial force, we wish to propose a dividend per share in 2026 of PLN 900, which is 36% more year-on-year. We want to offer you this during the general assembly, we are very happy that we are able to share our profit with you. All that has been done with a lot of attention paid to decreasing the pace of the growth of our costs. We made certain we spend every penny really carefully considering twice whether the spendings are necessary. That is what gives us a 20% of growth, but around 35.6 percentage growth of EBITDA, EBIT or the net of growth net profit. That's what makes me proud as an organization.

On the one hand, we were able to develop and grow really dynamically, keep investing into further years of development that lie ahead. And at the same time, we did that reasonably enough for the profit to allow us further investments and sharing of the profit with our shareholders. Now how did we make it in our greatest engine. This is what you are going to learn about from Marcin Piechocki.

Good morning, ladies and gentlemen. Ladies and gentlemen, 2025 was a record year for us, not only in terms of revenue or profit but also in terms of the scale of opening of new stores. We set ambitious goals, but over 900 stores in 12 months is 60% more than last year. That's a result that we are really very proud of. There were weeks in which we opened over 50 stores. And on a single Saturday, we broke the record and we opened over 25 stores just on a single day. There are people standing behind these digits.

Today, in Sinsay, we manage the network of nearly 2,500 stores, and we do that on 25 markets. But what do we do that for, in order to reach out with even further to be even closer to the customer at their hands reached physically, but also in the virtual reality. The numbers itself and the volume is not satisfying enough, we care for the quality. So for the profitability of our net average EBITDA on the stores and the net is 30% and 98% of the stores have a positive EBITDA contribution. These are not standard numbers in our industry.

This is the model that works. And we scale up the format that is profitable at the level of the stores. The other strong pillar that we rely on is e-commerce. And even today, in the value, value for money segment, presence in this channel is not obvious. Competitors still have certain doubts about that. But we reached PLN 32 million of total downloads of our application, which we are particularly proud of. And we did that plus 45 years year-on-year compared to a very strong basis. When we compare ourselves to Chinese retailers present only online, we have nothing to be ashamed of. Our application today is more popular than in Shein or Zalando. And for us, what matters is Sinsay's share -- Sinsay's application share in sales. That means that our customers love our application and they are really loyal to it and to us.

I'm an engineer, an atomic engineer and I've been observing technical trends with curiosity, but also taking a pragmatic approach. Every time I hear about different technologies. I ask myself a question whether a given solution really contributes real value to our business. And if the answer is positive, then we simply go for it. In LPP, for example, AI is used today in designing. We are proud that our graphic designers use AI when designing prints such as solve. We use it in logistics and back office and sales and other areas.

This is a nice example where we create virtual photo sessions. This is the technical photo on a technical model on the left-hand side. It doesn't -- we don't need to send a person to a luxury yacht to the Mediterranean sea. We can use AI to get what you can see on the right-hand side, so again, you don't need to be Sherlock Holmes to guess that the right-hand side photos is better, but the one on the left-hand side actually cuts costs. As for virtual sessions, we generate automatic images of details, buttons, pockets, fabrics or we limit the participation of small children in the sessions because it is not a very flexible solution.

As for the virtual assistant creating style and suggestions for the customers who, for example, know what occasion they're looking apparel for but they don't know what to go for, ready outfits suggested by means of in this set. We also have a virtual trial in the Sinsay app for women collection, but we are broadening it, adding new groups. The customer uploads her photo and she can see the product on herself. So we will see -- we are using AI. We will keep using it as it is really supportive to our business and we do that either to limit cost or to increase the sales.

This is not the end of what we are doing. We are also using advanced technology in the logistics. We have 3 warehousing gosh in Romania and yamshaka. As Monika said, in '25, we've increased our fleet 6 times, they help us optimally arrange our goods. And at the end, the orders are fulfilled much faster with lower costs. We have significant tool to support the expansion of the store chain based on in machines. These managers are facilitating because they select a location, they assess the sales for a particular location, they analyze the demographics competition. They do not replace people, but the manager is facilitated with taking a better decision.

We are operating in 7 countries. And the last one, the last technological element I want to mention is a contact center, 35 languages. We can scale servicing, and we don't need to develop our teams. Ladies and gentlemen, for many years, we consistently talk about being fashion tag, and this is what we focus on for the future.

Now I pass the floor to Marcin. He's going to present financial results.

Thank you. Good morning, one more time. Marek was talking about the final results, very attractive PR results. Marcin talked about technology and various solutions. So now we talk about money. It's a pleasant topic to talk to. Let's focus on like-for-like store sales, those that are with us for 12 months. The dynamics of like-for-likes is not including the AT picture. In '25, it was a stabilization market in Sinsay and in other brands. How do we understand it.

In Reserved, the second largest brand, it was a very positive normalization process. In '24, it was a bit of experimentation with our apparel. In the second half of '24, we've learned the lesson with improved results. And in '25 and the first quarter is a continuation of this positive standard. Normalization in Sinsay, our largest brand these days was dropping a bit. When you look at 24%, 20%, 11% and then 1.5%. So it was a very demanding base. So this normalization was following, as you can see here on the slide, minus 1% in Sinsay, over 5% in other brands.

When you look at it from 2-year average, Sinsay, this is still 4.1% increase and 3.3% in other brands. So let's look at it this way. So season to season and quarter-to-quarter, it can show a different picture. We had some challenges in Sinsay. So the dynamics is definitely much different from what we can see. But in Reserved, you saw what we can do and what teams are capable of. When we look at our stores and new stores opened and e-commerce, in the first quarter, we grew by 16%, so double-digit increase. We are very happy about it. But yet, again, in the fourth quarter, it was a certain May related season. May was very cold. So the dynamic was low. The fourth quarter started not really very good. The first -- the beginning of November, was difficult. The clients were waiting for Black Friday. Then in the second half, it was better till Christmas. It was relatively warm. E-commerce dropped a bit before New Year's Eve, the temperature dropped again. And after Christmas, then in January, it was really, really very cold.

So the traffic in the stores dropped, but then e-commerce went up by 30%. So this is what we could see. We were operating with the margins. So we sold out our Winter collection with good margin. So this trend continued in February. So the fourth quarter was as it was and let's look at the entire year, 19% of growth, in 21 in constant currencies. So we are very happy about such results.

Moving on towards PLN. We have the gross margin. What I said is we managed with the margin. We've managed the margin very well in the last quarter of '24. The winter helped us with selling out our winter collection. Those of you who are with us on a regular basis, you remember that we started with the larger stock in Sinsay. Our appetite was much larger. We had to work with that. So we take turnover into consideration that resulted in a lower margin in Sinsay, but we secured this good, our margin, 365. So you can see that in numbers. In the third quarter, and in the fourth does a seasonal drop in our margin.

Third quarter is always the best as for the sales and margin, but it's still plus 2 points year-on-year for a very good result. And then costs. After revenue and margin, the cost, this is the third leverage affecting the result in our sector. We don't have Swavik with us today. We are here representing the entire management board. The costs, this is what we control. We are very happy about it. So the ball is in our corner here. As in '24, we were building the scale to open new stores. It's not easy to open 1,000 new stores. We had to build capabilities to do it in logistics and in our design teams. And you could see that in costs.

And in '25, we focused on efficiency. And the numbers speak for themselves, the biggest cost group these are stores with the sale growing 19%. The costs in total grew by 70%. Then logistics, only 14%, that was the growth, so slower than the revenue. And the biggest important -- the biggest impact came from investment. This is what Marcin was talking about. And back office, 11% of growth twice slower than the revenue. And this is the direction we want to continue apart from logistics, where we can see the technological impact in logistics, back office and marketing. This is hard work. And the cost of stores, we don't have like one big initiative that can limit the cost.

This is just hard work of the entire organization and all of the teams that are measuring it, streamlining the processes, spending -- distributing the parcels online. So bringing that closer to the cash point or closer to the try-on section to optimize the processes. So this is what we are doing actually in the stores. When we are going to combine these 3 leverages, the sales, margin and costs at the end of the fourth quarter, we have significant growth.

I will focus on the numbers below the columns here, 3 percentage points for EBITDA for EBIT, almost 3% and net profit also 3%. This is what we focus on. Are we going to deliver year-over-year? I'm looking at Marek. This is our goal. Of course, challenges are ahead of us, but we want to deliver everything. What you see here, this is what Marek was talking already about. We did a significant leap. We can see that it might be difficult to repeat, but this is our goal. This is what we want to achieve. And from the strategic point of view, long-term strategy, we want to be consistent in improving profitability, whether these are 3 percentage points or 1.3 percentage points, this is our goal. This is what we want to achieve in the future.

So this is the financial part. And it's not a boring part, but we also have operational KPIs. This slide is not giving you information attractively, I like these investments. But at the very beginning, we said that we perhaps had 2 large stock we need to order collections in advance. And as you can see, at the end of the fourth quarter, or at the end of the first one, that was PLN 4.8 billion. And here, we have a similar amount. So we grew 25% in our network, and we have the same volume of stock. It was over -- we had too much of the inventory, this is also what we've communicated that 2 to 3 quarters unnecessary to manage that.

Marek was talking about our flexibility and after especially our fire in Romania. And our work with over inventories. And here, we have 1,500 as per the stores. Is this an optimum. Is this a long-term average? I believe that 1.6, 1.7, that would be more comfortable for us. We can see that in some departments, we had too much of the stock. So this is another slide we are very proud of from 5 to 2 to 4.6. This translates into the working capital. So we still have resources as for our liabilities. Marek was talking about our record financing with reverse factoring, so we can focus on the purchase of collections, quality collections. So this flow and liquidity is good, and this translates into our comfort and record investments to PLN 3.2 billion in 2025. I believe in Q&A, we will refer back to it.

PLN 3 billion went to logistics. This was a record year. And in profits for every level. Every other year is going to be a record breaking. In CapEx, this was a record year, and it will not be repeated soon. PLN 2.6 billion, that is the money that we are going to keep for future investments. So we've built the volume in investments. Now we will focus on robotization and the CapEx is going to be much lower.

And what makes me very happy. I'm not sure if the other members of the Board are equally happy, but I'm happy as the financial -- as a CFO, I'm happy that we grow fast in a profitable way, and we grow safely. That is what makes me proud at one net to EBITDA shows that we can get indebted even more, but we do not have such plans because taking the war in Ukraine or we called it out a conservative approach to management makes sense. Gentlemen know it well that we can defend ourselves amidst all these crises. So on average, against the backdrop of the industry, we handled it pretty well, and we wish to continue. We have cash in store, we can invest, and we will do that reasonably.

That was the summary of 2025. So we grew well in sales in a profitable way. And now we are entering 2026 with a nice foundation. We had a good start, a good entry into the year. How about the present year in detail because that's the end of March, so 2 months into this year, nearly and traditional trading update, sales and growth. These are 2 most important things. February in terms of sales and let me make it clear, target in a demanding way. The numbers speak for themselves. In total, we grew only by 10%. Online was even smaller year-to-year and the likes were negative. And now when we take a look at the first part of the table, it is not an impressive result, but you need to take my word and believe that from the margin point of view, February was maybe not extraordinary, but it was really enormously profitable.

There was a very strong month with very low temperatures. In Q4, we were ahead of our stock from autumn and winter and in February, we continued on that. We didn't have to introduce sales bargain. So that is something that helped us work against now the mass, and that explains our sales at the end of February when the temperatures grew, the likes returned to their norm. They are still rebalancing. We still have Easter ahead and we introduce further intakes of our collection. So the plus 18 is decent level, but you can also see online last year, maybe I did not mention that, talking about the cost, our cost in '25 in terms of the value of money were at the same level as in 2024.

So the share of performance marketing in '24 was 9%, in '25, 8%. So that improved our profitability, but it also shows that we have a lot of space. So if we want to reach for new customers, we are likely to do so. Mikolaj is with us who is not -- there are quarterly meetings, but he's responsible for our e-commerce. So we know that we do enjoy this comfortable situation. We have a good tool in financing big CapEx as we have space as far as costs are concerned and we can unfreeze it. But we can see that we are heading in the right direction. And the other part that is growth comparable year-to-year, 120 new stores in the first quarter, around 115, Sinsay are the other ones are new brands. And in the first quarter, around 350, somewhat lower than in the previous year, but Sinsay will be comparable in as far as other brands, we are planning a lower number of openings.

Now looking at the overall targets, we showed you this guidance in December last year already when we talked about the third quarter, and it actually remained unchanged largely, and that's good because it means that our guidance was set right, apart from gross profit margin. I talked to some of you when we talked about our guidance with a strong dollar we contracted for the first half of the year. Our margin guidance margin of 54 to 54.5 is not conservative actually. And yes, we waited for the beginning of the season. We saw how the collection was selling. This margin also takes into account the market havoc resulting from the war in Iran. So you can see that the dollar grew to 370. And this guidance takes that into account. So for us, it's also, I guess, it's positive news. This dilution of margin well is not to be expected for the year despite the challenging circumstances. And this natural increase of gross margin cascades downwards.

So also EBITDA margin and net profit margin go 1 percentage point up. So I guess that's a positive piece of news for us. We do what we should be doing, working in our like-for-likes, but the first half of the year given how well safeguarded, we are -- is very promising in terms of the margin. And now summarizing 2025, it was a year of dynamic profit growth, but also double-digit growth in sales. We helped this process by means of a cost discipline. This is what we have in our hands, and that's our long-term trend. We've been working with office teams on efficiency, everybody has their KPIs. As Marcin showed, we use AI, not only manufacturing, but we also try to rely on it in back office, be it legal team or finance team. And I agree with Marcin, we take a pragmatic approach. This is not the one and only answer and tapping our potential.

Now we are going to show 38% of cost to revenue unless we do set sales. But we want to systematically improve moving on because at the end of the day, the growth in costs is slower than sales, fully translate onto also the value for shareholders. So we wish to have more years like 2025 to come in the future.

But looking at the broader perspective, I give the floor back to Marek, I guess he will be the best person to show us what it looks like. And I'm going to stay here with you on stage.

I want to show you some long-term prospects now. But before I move on to that, yes, I'll return to the results that Marcin showed you, those concerning the first quarter. I guess it's been the first time in our record. As the winter -- well, for the first time for 10 or more years, it was the first time that temperatures that we noted fell below minus 11% and 15%, and they were not just a single time occurrence but they lasted for 2 or 3 weeks, and we really experienced low temperatures over this winter. That is something that made it somewhat harder to get more customers to the stores because obviously, they were more eager to move to the online channel. But it was for the first time that customers unfortunately were forced to buy because when a mother with a child comes into the store, and she wishes to buy gloves and maybe she has to buy gloves, it doesn't matter to her that a discount is by 10%, 20% or 50%.

And in January and February, we had bargains, pretty big ones because when spring comes, hardly anybody wishes to buy the A/W collection. But as Marcin mentioned, in February, our financial results, the internal one, which we keep tracking the profit was much higher than last year. And that was caused not by us having negative LFLs, but the margin was by 8 percentage points higher. And of course, this is something that spreads into March and so on. But I just want to draw your attention that negative LFLs were offset by the higher difference concerning the margin, and that resulted from the fact that we didn't have so many discounts, and we sold many pieces at a lower bargain than necessary because all the customers were forced to buy, who want to buy a winter jacket and gloves in February or March, well, this year, the weather made our customers go for these choices.

And I would like to share a reflection or a curve here with you a diagram that concerns our share prices over the last 10 years. We don't want to go further back to the beginnings of our being listed, but those 10 years is probably a perspectives that can tell you something about how the company has been operating. And I'm particularly proud, maybe not so much of the shape of this diagram. We, as a family, also invest and we also put our money from the dividends into certain investments, hoping for the biggest possible return on investments. But when we look at these returns, pay attention to the fact that the total shareholder return on CAGR for the last 10 years was 15%, then it doesn't seem to be a bad figure.

You as investors, you are all here in order to listen about how the company keeps developing, what the company is doing, where it is investing, where it wishes to be present, what operational activities it has. So from quarter-to-quarter, you have certain doubts whether we will deliver or not, LFLs this way, that way, what kind of future lies ahead. But 10 years is a lot of quarters. That's 40 quarters. And when you try to draw an average from that? Well, I can tell you that as an investor, I would wish -- these investments that my children implement also brought such a return. I'm not going to mention the period of 3 or 4 years because those figures 24 or 28 are striking. But still, when you look at a longer-term I believe it's not bad and those who have faith in us, of course, among our investors, we have also those who've been with us ever since our beginning, they've bought our shares for PLN 40.

There are such investors among us. But this prospect of this perspective of 10 years is not a bad one. It proves that it was worthwhile. Stick to LPP, those who had faith in us also as difficult times. For example, when the war in Ukraine broke out or when we were accused of things that we were not guilty of. You know what I'm talking about. I'm talking about Hindenburg, the infamous Hindenburg. And I think that those who stay with us do not regret it. And I believe that there is still a bright future ahead and further years of dynamic growth. And we hope to keep you satisfied with those growth because we are here to multiply the capital. Thank you very much.

Ladies and gentlemen, the time has come for us to listen to what you have to say. So let us move on to our Q&A session. I would like to invite Hoskin to join us here on stage. And I will tell you how we are going to go through the session.

First, we will hear out the questions from those of you who are here in the room. If you wish to ask a question, please raise your hand, and please wait until somebody from my team approaches you with a microphone. We thank you very much that because we have some of the participants listening to us online. And it is only via the microphone that we can provide this signal for the online transmission. And please introduce yourself and tell us which organization you represent. In the second part, Magdalena Kopaczewska will read out the questions posed via chats and which probably are still being posed. And this way, and we will make sure that both the groups will have the same amount of time for your questions to be addressed.

And now we would eagerly take the first question from the floor.

[ Svesick ], broker. I would like to ask you what happens in the markets where you buy. So China, Bangladesh, Pakistan, what can we expect? What can we expect of markets that you sell to in the light of those 2 worlds. I mean the southern markets, first and foremost, how about the demand? And what's the greatest challenge when you look at your competitors as well?

Okay. In terms of the situation concerning our purchases, we are in touch with our players at all times. In terms of China, they announced 1%, 2% of increases. That's the beginning of our discussion, but that's the scale. Given what happens with oil, slightly higher 1-digit rises will concern polyester products. But again, we are at the beginning of the talks. And that's just the feedback straight from the market that I'm sharing with you now. So that's in terms of what we buy. This is also an element. And another element of purchases, supply times, delivery times are not affected, maybe slightly India, Pakistan, but we are talking about 2 to 4 days that doesn't really affect the accessibility. We do not use aviation.

So that's 0.8 percentage in our mix. The airborne transport grew twofold, but it is of no impact on us. Everything that is a derivative of oil, so the cost of transportation. This is something that we will have to struggle against. But the sourcing itself really or is there any drastic pieces of information. What was the other part of the question, Sylwia, if you could remind me.

The remaining markets are the southern markets.

Well, no, again, following the weak February, actually, everything else rebounced, including Ukraine. Maybe Romania is lagging behind, slightly looking at the March likes versus the February ones. But across the board, so to speak, older markets really rising. And as for the competitors, that was the last part of your question, maybe Marek and Marcin can support me, how about competitors looking at Chinese platforms or the sales in brick-and-mortar.

So in the stores, where we cannot see any fundamental changes. I believe that everybody in the market is approaching Central Europe cautiously, be it Slovakia, Czech or Hungary. I guess that -- well, we've talked about that already that we are more selective of our locations. We wouldn't like to exclude our investments already now or slow them down, but this is the third, fourth quarter where there is a macroeconomic slowdown. We did not open any store out of 3 or 4 that would meet our expectations. They are still profitable, but below our target. So up here, probably we would be slowing down, but there is no fundamental competition impact -- competitors impact. Next question now.

Let me congratulate you on the results. Well, globally, a few companies at this point can boast such a performance. So close to you. As for the question. Well, certainly, if you could tell us about robotics because you've made certain investments into that, you had a record year in terms of your spending on robotization. To what extent are these activities visible, how have they translated into your cost efficiency? And where are you? How advanced are you in introducing robotics. That's my first question, but maybe I'll ask -- okay, I'll wait for you to answer before I ask some other questions.

I returned from Romania yesterday from the distribution center that we recreated after it burned down. And further robots were installed there that support us. This is where we expect greatest savings. In terms of the percentage drop of -- versus sales because we simply think of what percentage of costs we have versus sales, and this is where we see the greatest advantage already last year, you can say, in the third and fourth quarter, we could see how we profited the automized center in Bydgoszcz with robots was launched midyear and it brought its result towards the one in Q3.

Beginning Q4, the one in Romania, what we can say that at this point, the one that I saw launched its operations in October, they have the so-called wrap-up period. So the period when they're getting to a complete efficiency, and we can see that owing to the solutions introduced, we can enjoy nearly by 50% greater shippings. They call it throughput. So how many pieces are actually they passed through them per 1 hour. So it's around 75. So that means that we have considerable reductions of employment costs so we have the same level of employment at the same time, increasing the pace in the number of units shipped.

So you'll see we will have an Investors Day that we will invite many of you -- most mystically everybody that is with us here, we want you to pay a visit to Bydgoszcz, where everything is highly automated and robotized with high share of AI activity. And you'll see the progress in the savings that we owe to it. These are one of the greatest sources of savings that we can generate as a company. Because actually, in the stores, certain level has to be preserved. We try -- well, having self-checkouts. So in Sinsay, for example, this solution, 75% of transactions, card transactions are handled by customers themselves using those checkout. But the logistics actually offers us much more in terms of the possibilities in e-commerce, that's the cost of 20% versus sales. And this is where there is a lot of scope, it can go down from 20 to 15, well, this is what we are hoping for. But this is only owing to even more advanced robotic solutions introduced, and we've been investing into that.

By the end of this year, we are going to open up another warehouse that will be even more automized than those that we've opened so far. The pace of introducing robotics into e-commerce is so enormous that what we were thrilled by and what we have in Bydgoszcz believing it to be outstanding. It is, but it is crazy. Anyhow, another distribution center, one that we will open this year will be even more phenomenal because instead of a pile of small robots that you can see operating. And well, you need to just be careful not -- for them not to get into a traffic -- notice and collide. Now we will have robots actually climbing up on themselves on the shelves to put the stocks on the shelves. And this is what we'll keep investing in, and you are asking us whether we see the benefits and profits, we can see them already because what has happened in Q4 is not just savings based on catching down on marketing costs, logistics has a considerable share in it.

In this one point of efficiency that you saw in Marcin's slide, there is a huge share of logistics. And we believe that in consecutive quarters, the profit benefits will be even greater. Those automized centers we launched towards the end of Q3, beginning of Q4, this year, they are only beginning to climb up to this level of efficiency that we wish them to arrive at. I would like to add, we are keeping our promises when we had a call last week. We've analyzed the situation, how this affects the situation after the war. So I promised that regarding logistics, Marek was talking about business. So as for this year, we've been implementing everything. So this is still a ramp-up period. So this is shifting to 0.3. This is affecting our OpEx. Maybe a bit more and the rest of that, these are our efficiencies in costs in back office 0305. This is what we want to achieve.

And giving you a scale a little bit. In e-commerce, the logistics costs, this is 20%, Zalando is publishing this benchmark, they have 23%. With us, this is a lower level. So just adding to that in terms of figures.

The second question, can you classify the impact of Middle East war on your gross margin assumption, it looks nice and reflects what the consensus was forecasting. But what were the assumption and what is the impact of the conflict in the Middle East regarding gross margin? And regarding guidance, what is the assumption in likes in Sinsay, I believe this like should reflect the price because in autumn, we should have in increasing prices. Is that correct? Am I understanding that correctly.

So yes, the guidance of gross margin is including the impact, yes. The first quarter, we had the margin that was much better. When we add February to that, we had a significant reserve. As for the dollar, the currency of the dollar. That was 7,378 , dollar is not going to reach 4.5 or 5. In this, we haven't seen such a forecast. So we approach that more pragmatically, 3.7, 3.8. And our logistics did a really good job. So with freight cost, we entered the new year. That was a lower cost. Now the increase is not really affecting, but the situation is really dynamic.

So yesterday, we received information from the logistics that the pressure is there, they can feel it. So whether this is going to be 25, we had a call from trigon or maybe a bit more if this is even twice as much. In gross margin, we can still see that the margin is growing year-over-year. So this is reaching a similar level. So it's a comfortable situation for us.

And now the second part of the question, Sinsay, what are the parameters and -- when -- what have you changed in Sinsay compared to last year? Because you said that there were some drawbacks related to the collection. So what has changed?

So I will go back to LFLs. So this is 0 plus, a very conservative assumption. So we hope that it's going to improve. That was minus 1.5. So I hope it's going to be much, much better. February was very challenging. March is better. So let's wait for Easter and warmer season. What I can say, yes, last year, the base was definitely stronger. Now it's lower. So the goal, Marcin was talking about is not going too easy to reach as for our operation on site, we don't always win. And this is what I can say, the collections that we had last year were not so great. I believe that they are going to be better this year.

We talked about also inventories. We talked about home department. Now it's still significant increase in the margin. So we start the sales, not so great, but we have this buffer zone with our margin. So I believe that we will have room to maneuver. As for the prices, the segment we are operating is very sensitive related to the price. So we need to be very cautious in our approach. We don't want to change the prices. And what it looks like in autumn, we will see. So we are still fighting in the beginning. The situation is as follows. In Sinsay, we have higher surplus in margin than in other -- in Reserved and other brands. So if we say in Reserved, the margin is 3 percentage points higher than last year. In Sinsay, this is 5x or 6x. So the prices are too high, so we are going to decrease prices in Sinsay to revive the sales. And we have room for that. So it's more comfortable for us to do that. You also wanted to ask a question.

Matos Bargin from entity. How the revised assumptions regarding 2 are supported. What is supporting these figures and new stores being opened. What is the most significant challenge for '27. And to Mikolaj regarding e-commerce. What is the impact that in such a challenging environment, you have 20% of dynamics without any elements affecting the margin. So when we look at the omnichannel and when we look at the e-commerce platform, either there are problems with the margin or the dynamics is relatively low because we focus on profitability? And can you talk about Sinsay about the structure of the offer? Do you add apparel or more home section or maybe does that depend on the market? How is that evolving?

Okay. So I will start. Thank you for the question. You need to realize that we focus on growing not the fastest, maybe around 20% or 19% is good, but to grow profitably. What Marcin was talking about was if we have the demand that is slower or lower than like in February. We don't want to push that and spend money, but we focus on profitability to be as best -- as good as possible. What is the leverage as for our growth.

I will talk about 3 aspects. First of all, there is a success today regarding investments in logistics. What Marek was talking about logistics. This is not always cost saving, automation, robotization, but shortened lead times in e-commerce, the logistics is the core in the organization, pumping the blood into all our vessels in the network. So for us, it's more important to shorter lead time for the client. And thanks to robotization, we are not only saving money, but we are also shortening the lead time to the client. So that was the first element that happened last year.

Then a broader offer, especially in Sinsay, Marcin is going to talk about as well. We decided to establish a dedicated team for Sinsay products for home department. And as consumers, you can see that this offer of dedicated products for Sinsay in e-commerce increased last year significantly, and we are going to continue this tendency to focus on the offer of -- from -- in e-commerce to be much larger than in stores. So this is a leverage to improve sales, we don't have any barriers for e-commerce like warehouses for stores. But the efficiency we are talking about is much, much better. And the third aspect and omnichannel, this is another leverage.

So we have we are better than Zalando or other channels. Clients can collect their products from -- with a package. So this is a bit of a synergy. So the client knows that there is a stationery store and then collecting packages from e-commerce or they go to our stores in our retail park, they learn about Sinsay and they start interested -- they start being interested in our brands. So omnichannel means that our efficiency in marketing cost is much better. I want to repeat, our goal is not the pace of growth, but effective growth related to efficiency. It's not the situation. It's not a post-COVID situation. We focus on profitability.

As for the offer, in stores, this is home department, but I wouldn't omit kids or men. So this is not what we are very famous for. We reach not obvious locations. So this is something new. This is a novelty, kids and men department. As for the Internet, home is priority. We have a team established for home department. They are developing the offer. It's not so easy. We look at Temu and Shein, what they offer what this can be sexy for our clients? And we want to introduce that in our offer. And you were also asking about some differences about the structure.

So home, you were saying that it was 50%, I believe. So well, 50%, this is too much. I think with 500, 700 home, 50%, that could be too much. So around 20%, I would say, with good turnover. So when we look at our competition, we can see they are very effective. We are still fighting, but we are not giving up. We need to dress every day, and we need many, many things at home on a daily basis. So that's true.

Bernand Krasuski, I refer back to the Middle East and the war, our H&M provided a rather negative guidance. With you, the sun is shining. But is your guidance and your perspective for this year making the situation better still were contrary to the situation with dollar, with the war in the Middle East. So are you going -- are customers going to jump from more expensive to less expensive products, you survived the previous crisis, like the COVID one. Now the situation is a bit different. We don't have new clients from Ukraine, for example. So how the situation is going to evolve from your experience, your analysis of the market. Are we going to have significant differences between different countries where we operate in or all the consumers are going to react to the crisis the same way. You are operating on a smaller scale in the Middle East. Are there any plans to close stores over there or not.

I was thinking about these topics, the topics, the questions. Your question is related to the war in the Middle East, in Iran and many turmoil on the market. So my personal understanding that the world has changed since COVID. And now the turmoil is on a regular basis. We have 2019 COVID, 22nd war in Ukraine. And every certain period, we have Liberation Day. So every 2 years, something is happening, some turmoil on the markets. And as an organization, we managed to deal with that quite well in a situation when 20% of the stores disappeared in Russia. This is what we faced, and we managed with COVID where all stores were closed suddenly. The war in Iran somewhere on the sidelines. It's still -- Suez Canal was closed, and they travel differently, there are different routes that were adjusted.

So the war in Iran not affecting us at this point. If oil goes up, this is a smaller amount in transport cost. And the cost of oil is going to increase not only for us but also for our competitors, for all of us. And our brands like Sinsay, they will benefit from that, if not already. I look at it from this perspective. We try to be very competitive price-wise and very attractive in terms of what we offer to our clients. And this is our competitive advantage. This is the strength of our organization that we are -- we know how to adjust to the changing environment. We know how to effectively manage not only on the product, but also on the level of costs or, let's say, a year ago, when I was meeting investors, you were worried that we have too much of inventory, too much stock in our warehouses, what is going to happen with that? Maybe LPP is going to share the fate of e-commerce or other companies, Polish companies that also have problems with the stock.

So in a difficult situation, we know how to manage that, how to deal with that. We had ups and downs. We were hit from right hand from left, and we are still recovering from such situations. So the war in Iran is not really affecting us, I would say bluntly, this is -- I'm not trying to use an explanation or an excuse that the war in Iran, so our results are worse. No, this is not happening.

Ladies and gentlemen, the time flies. We will take the last question here from the floor and we'll move on to the question posed by our online participants.

A question about the long-term future. I wanted to ask you about what happens in the segment of the smallest Sinsay. At a certain point, you shared information with us that you focus on medium and big Sinsays thinking about your prospects of growth in the future, we know that in terms of the development of the network, it's best to have all formats of stores because that opens up a lot of opportunities for development. How about the work in progress on the efficiency of the smallest Sinsay stores.

Right? It's great to have all the formats, but it's also great to be profitable. And we paused in June last year, and we keep on working on the project. It's an ongoing process. In October, we launched its full swing. So we have those 2 groups of pilot stores or test stores, if you wish, we compare ourselves to them. And our diagnosis that we have too little of the fashion apparel department, mostly ladies, seems to be holding water. This is work in progress. The collection was what it was, particularly in A/W in '25. But we can see regularly, and we go through this at the Board meetings with our design team, there is an update in sales per square meter between 6% and 8%. And in order to comfortably say that all the projects and that was quite a pool over 400 stores were frozen last year in order to unfroze them and add them to the pipeline of opening.

Well, we don't have this comfort yet. We had a small sample. It's been too short a time, it shouldn't be 6%, 8%, but closer to 14, 16, then we would be comfortable enough to put them back to the Board of development. We are working on that part. So we've been talking about development and profitability. And this is what we care for I guess you would like to refer to the question that was posed from this part of the room. As for the future, what constitutes the greatest challenge when we look forward. Well, we will be looking at profitability. Our target for this year is somewhat higher than last year in terms of the opening. But we can see that Slovakia is what it is. We haven't thrown that out of our pipeline. Czech, also lagging behind. We are looking at those countries. We will not be afraid at a certain point cut of what has to be got off should the need arise, but we don't see that need yet. Of course, that would not be cutting of plenty but pausing a while. But in the end, we want to be profitable.

We closed '24 with EBITDA of PLN 1.4 billion, '27, we would like to double the EBITDA and arrived at PLN 8 billion, following '25, our EBITDA grew by 31%. Now to get to the PLN 8 billion, that would be 20%, 22% a year in '26 and '27. And then that will mean that we've reached our target. That's what we're focusing on. And whether the path leads to 1,000 stores and certain profitability of 700 and higher profitability, in the end, profit is what matters. Yes, that's what I wanted to say as Marcin rightly draw your attention to regardless of the components we are going to rely on, still the ultimate target and the ultimate value is not growth for growth's sake, but it's going to be a growth in profit and an even faster growth than in sales. So we need to have that on mind at all times.

If I was to say what's changed in our minds largely over the last 12 months? It is that profitability matters most than anything else, whether it is an Oxford Street store, the rent is over, it will not bring profit. We will close it. If any other store will get to the end of its lifetime. The agreement is over. We'll close it. So the focus now is only in sustaining, preserving, not the prestigious but only profitable stores. So again, profitability, profitability, profitability, that's key. When profitability is high, when the profit rises faster than the revenues, only then, I'm also happy about it because the situation is sound. It's not just pumping up the sales. And in this respect, it doesn't matter. Whether it is mini, maxi or nano in terms of form, what doesn't perform the way that makes them contributing to the increasing growth and profitability. Unfortunately, it will have to be the things that we will resign from.

Let us hear out the questions that we got from our online participants now.

The first question concerns the liability. the receivables, you write-off from Russia. Does the Board see any chance to gets at least some of those liabilities in '26. And how will you book what is left?

Well, let us start with mentioning that we have not lost hope. But on the other hand side, what we -- our hopes were high in the past. Now those hopes are much lower. And well, it's better to simply envisage the weakest, the darkest scenario. We hold for a long time that may be the situation would improve, that we would get back what we should be given back. But what do we focus on -- or the worst possible scenario that we will not have to worry on how to book anything. I would wish them to give back what they owe as much as possible. But we cannot only see any realistic potential for those homes to come into fruition.

In 2025, PLN 342 million of losses were noted and analogous amount of claims in Romania. How about the business interaction costs and do you expect any income of cash in '26 in terms of -- what do you expect from the insurance?

Well, for the time being to begin with, we are at the stage that we want to get back what we lost. We got back around 60% or 70%, PLN 210 million is already back onto our accounts, you can realize that with insurance, the situation is well, beautiful when you need to pay the insurance, but when you want to claim your damages, it's not so beautiful. But we got 210 out of 340. So things are going in the right direction. When we've received the full amount back, we will also claim the part coming from business interruption.

We've calculated it all well. We created a team back when the loss was suffered. So Coboda who's not here led the team that we created, we hired fire fighting organizations and so on so as to have the full documentation proving that we were not guilty of what happened. And we are sure to receive this core amount, how much we will get back from business interruption. Well, what am I supposed to say? Again, that will be something that will be counted as a plus amount. But let's get the full of the core amount. The business interruption period and with the end of March. So then we will start talking about that.

The Board showed that AR algorithms support designing collections and optimizing of prices. Can you already evaluate the impact of these stores on to the level of sales in regular prices. And is AI responsible for fewer promotional marketing activities in the last part of the year.

Well, let me respond for pricing. It is the case that we are only starting to use AI for pricing purposes. What we started off as a certain algorithm that now defines prices for different markets. So we call it international pricing project, that's a tentative name of it. And the price that results from the algorithm calculating differences across different markets is what we've used. So yes, we did rely on, we did use AI. It's hard to talk about the effects really because that was the new season, the first time the new prices came into life. So it's been bought 1.5 months of the new season. We are now summing up the outcomes of the projects, so we still need a while to be able to answer.

Further questions concern the Sinsay brand, the first place in terms of activation of applications against the backdrop of the competitors, but Temu was not part of the list of competitors you've mentioned on the slide. Why?

Temu was not there because it didn't have that many downloads of the situation as it might appear. It was an external source that we used for checking it, and it didn't have as many downloads last year as other competitors. Temu is not the fashion category, and we focus on the fashion category, and Temu simply belongs to some other categories like general merchandise precisely. So we also didn't have a Allegro there, right? Okay. What share of those who activate application. The applications are active customers of Sinsay's online stores. Active customers of online stores. Sorry, I'm trying to understand the question. Could you repeat it?

What share of people who activated the application are active customers of Sinsay online store.

Okay. Now I get it. So out of all the downloads of the application, around 80% are really the clients, customers that have been active customers of Sinsay online stores. So most of those who download the application had been in touch with our online stores or off-line channel.

Would you calculate in -- as to the incomes of Sinsay and other brands? And is it -- which of those constituted growing share.

Yes, what we do is we shuffle the policy calculating what we get from returns in the past, returns were free of charge. Now competitors turned it into a standard that it is not free of charge anymore. So yes, those charges are calculated as part of our income. That's quite a detailed question. So I guess I can point at this general direction. Yes, it is also part of what I mentioned at the beginning. The post COVID time increase mattered most for growth. Now the entire market migrated towards focusing on profitability. And paid returns is something that is not just what we do, it is also a part of the practices of our competitors.

Now in terms of the revenues from logistics and from the returns, that's a few percentage points that we calculate to our sales revenue and to our margin. Having such a big network of off-line stores and offering free returns there, we decided that a number of customers will simply come to our off-line stores and visit in an off-line store is also is oftentimes an opportunity to -- for the customers to buy something.

Which countries are considered now to be the most prospective ones. Which performed worse than expected.

Listen, we, on the one hand side, when we look at the 6 new markets, it is too early to say anything about them. When we look at the markets that have been with us or where we have been present for a longer time, we can say, okay, we are not happy about the performance of Slovakia or this region. But it doesn't mean that those temporary difficulties of the region will make us leave the region. We believe that, well, in the past, for example, Greece was lagging behind Europe, now it is a flourishing country. So we need to take a long-term approach rather than make decisions on this spur moment just based on 2 or 3 quarters of weaker performance of a given region.

How does the company select locations for the new openings? Does AI make decisions on demographic and economic data of a given region, for example. How about the 30,000 towns, do they have the potential for 2 or 3 Sinsay stores?

I can tell you -- well, I mentioned that spot, the tool that we are using for leasing managers, what uses is more machine learning. It's not that it takes -- makes decisions on its own. It just supports leasing managers and making decisions. It helps to estimate the sales and to choose location. As for the 30,000 towns and 2, 3 Sinsays, well, it depends. There is right-forward answer to this question, case by case is how we make decisions when preparing the location estimates. For every location, we -- and we see what potential we have in have in cost -- for example, we have 2 stores, it's 30,000 inhabitants. Both the stores are profitable. It works -- and let me just add that what she said about Spot.

Well, Spot is a tool that reduces the number of revenues decisions of errors concerning the selection of locations. If in this tool, you write any address, you can estimate 90% certainty what the result of a given location would be. We use a few sources of data, those concerning telcos, for example, so create the heat maps. We see how the clients move about a given location. And yes, we then identify locations, but also we use data from Mastercard, so we know exactly what sales are let's say, that we have a retail park, we know what potential revenues we might get from a given retail park.

So again, it's a machine learning tool that helps us in making decisions. But in the end, it is a human that needs to make it. Well, that's not surprising. Most of us use ChatGPT and Gemini on everyday basis, and these tools do not make decisions for you.

We've reached the final question and is dedicated to Mike husky. I addressed Mike husky. You mentioned potential increases in prices of polyester. Would it make sense to invest in plastic waste processing plant.

Yes, we've been persuaded into investing into, for example, bringing more manufacturing plants and other sorts of facilities. That's not what we know about. We are knowledgeable in e-commerce and how to create collections, how to offer them to our clients. So we do not get into industry. We are not going to make any investments of an industrial nature, we invest in people's growth and then in technologies supporting us in all that.

Ladies and gentlemen, thank you very much for all the questions that you posed. We hope that we've managed to answer them and provide you the necessary information. Thank you very much for getting involved in our conference, for accepting our invitation. Another meeting during which we will tell you about the results this time of Q1 of the present year is going to be held soon because in June. But since this is the last meeting prior to Easter, please accept our wishes of healthy peaceful Easter. Thank you very much for today. And all those of you who are here in the floor, we invite to continue the talks over lunch that is held in 2 places right in front of the room and for year end at the reception desk area. Thank you very much for attention. See you at our next meeting. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

I'm Monika Wszeborowska. Welcome, everybody, wholeheartedly to the results presentation conference. Marcin Bojko, Deputy Chair of the Board and Chief Financial Officer of the Group; and Magdalena Kopaczewska, Director of Investor Relations are going to be your host today.

Ladies and gentlemen, our meeting today is going to be devoted to summing up the results of the LPP Group for the third quarter of the current year, in our case, that means August, September and October. And it is what we will start with.

Throughout the conference, we will also tell you about our plans for the nearest future and more long distant plans, and we will complete the meeting with a Q&A session. You have a chat box at your disposal. You can see that chat box on your screen. It's going to stay active and is obvious to you should you want to pose a question. If you still have any questions to clarify after the meeting has come to an end, please get in touch with our Investor Relations department, [email protected] and the media are invited to contact [email protected]. Our meeting today will last more or less an hour. So we will try to wrap everything up by 7:00 p.m. and stick to this time framework.

Let's move on to summing up the results, financial results for the third quarter of the present year. Yes, without further delay, since we have a lot of material to cover, let us move on to summing up Q3 2025. The most important pieces of information, like-for-like stores, that is those that have been in our network over 12 months, 4.3% of growth in like-for-likes. In a moment, we will see the details, but it is a very nice result.

The stores that have been with us for a long time is not the only part of our business. We've been growing systemically. You've noticed that maybe recently that 232 stores opened, including 200 in Sinsay brand, but we also keep on growing in the other pillar of ours that is e-commerce sales, PLN 1.7 billion in sales, increased by 22% year-on-year in constant currencies. So great dynamics.

And what always comes as a good piece of knowledge is the payment of the second tranche of the dividends, PLN 330 per share, so over PLN 1.2 billion paid dividends. Recently, the percentage of the dividend is around 4%. These are our plans.

So this piece of information is always very positive, one that we eagerly share with you. These are our operational results. As for financial results, here, we have 4 main indicators. Sales in the first -- third quarter, PLN 6.1 billion, 22% dynamics; EBITDA, PLN 1.7 billion; EBIT, PLN 1.2 billion; and net profit, PLN 800 million. Big nice numbers in Q3. They are really lifting our spirits.

When we look at the comparison, EBITDA is 48% of growth year-on-year, EBIT 61% and net profit 39% of growth year-on-year. So increases over the dynamics of sales, which, of course, means greater profitability as we will see in greater detail on the slides to come. The business results that you've seen in the previous slide nicely translate also on to the financial results.

And to begin with, maybe there is one more important disclaimer to share. The results that we've been looking at in terms of profit are those that have been adjusted, which means that they are purely business like results. Everybody that is with us here today go over our cyclical reports. Two weeks ago, we published one.

The decision of the Board having analyzed the market situation was to write off around PLN 800 million from the result. And the write-off resulted from the situation of the Russian company of the Russian investor who in 2022 took over the business after this investment, and we informed you about that in September. We talked about it at an extent, but the situation is dynamic and after new information that we described in the current report, we had to reevaluate the situation, and that is what it led to in terms of business decisions.

Just to remind you, the write-off is a noncash one. So it does not mean any cash outflows from the company. The situation of the company is really comfortable. And I believe that this is something that is reflected in the results we are presenting today. We have enough resources to develop to invest, including into logistic-related CapEx. And as we have commented, that is also, of course, stem from the current analysis of the situation, but we see no reasons to change anything in the dividend policy either. We simply keep on focusing on pure business and the results that you see presented in this slide and in the slides to come focus purely on business.

2025 is also an acceleration of our growth. And traditionally, we show you the status, 232 stores opened in Q3, nearly twofold acceleration, over 30, 32 stores in [ Sinsay ], Reserved, Cropp, House and Mohito and the third quarter, over 2,000 in Sinsay. In the third quarter, we complete with a network that altogether has nearly 3,500 stores.

Now moving on to the details of financial results. We are going to look at particular indices in greater detail, the comparable sales like-for-likes. This is what we started at the beginning with the 4.3% generated over the last quarter; in a broader context, 7.5% in third quarter of the last year. So the basis was high in the period that you can see presented in the slide that was the highest one. So the base was demanding. That is why we talk about 4.3% as something positive and something that we are actually happy about.

Now let's take the results and comparable like-for-likes, and we add new sales. Then we can see that in the third quarter, the increase in sales reached 22%, 22% offline and nearly 21% in e-commerce. But after the 9 months, the entire business grows by 20%. An additional piece of information is that there is an increase of foreign exchange rates that was minus 1% and 5%. So if we purify the results by that macro impact, it would be higher by 1.5 percentage points. That's our first leverage. The other one is gross profit margin.

After the last Q&A session that we had in September, during that session, we signaled that there is the mathematically logical potential for increasing the margin because the second half of the year is clearly better. We've contracted the collection at a more favorable exchange rate. And back then, we could already signal that. Now I'm happy that nothing went wrong, and we can see that everything went according to our plan, and we can report nice high margin.

And again, as was the case with like-for-likes on the scale that you can see here, the highest margin in the last period is to be seen. Zloty was very strong in recent years, and that's something that is also favorable. So sales, gross margin and the third leverage that is SG&A cost. And in this context, we are most happy about this particular leverage. Everything is in our hands.

At the end of last year, we commented that we are building the scale, the cost, the dynamics, they were higher. Some of the locations, logistical locations only opened themselves and they only learned how to be efficient. But starting with Q1 this year, the costs behave the way we wish them to. We are efficient in the so-called back office. We have mastered the development rules there. We know that the teams that we have are sufficiently efficient and we can grow with them.

But 2 greatest leverages standing behind the drop of cost is, of course, logistics and marketing apart from the offline stores, when we think about the broadly understood logics, this is the biggest group. And owing to our investments in this area, we can optimize the cost.

And then the other part is performance marketing. And here, giving you precise digits, we spent not even 8% in relation to the profit from the e-commerce channel compared to 9% last year. So this 1 percentage point is quite a leverage.

And all in all, when we put these 3 components together, what we get is a really nice dynamic in profit growth. We saw nice numbers at the beginning. We are very happy about those growth because probably at this point last year, there was a lot of uncertainty. Of course, we believe in our strategy that's well thought over. And now we are bearing fruits of the hard work that we carried out over the last months.

The increase in profitability of around 5% at the EBITDA or EBIT level. These are really great results in the third quarter. In terms of net profit, it's around 2.5%. But again, giving you a broader context, this year, we've accelerated with investments quite much.

We used the existing banking limits that we have quite extensively, put it again as informed towards the end of November, a big success of the entire organization and of the team involved in the project made it possible for us to close the complex refinancing structure for our debt so we can enjoy financial stability for the next 3 to 5 years, depending on the area of financing and ever since then, so ever since Q4 and in consecutive periods, those financial costs are going to be even more optimized.

So everything is heading in a really nice direction. And the 9 months with each quarter, we were kept accelerating, also show that when you look at the dynamics on average plus/minus 30% of increase at any level, reminding you that sales after 9 months grew by 20%, then automatically, that translates into the increases in profitability at any level.

Now we can smoothly go to the operational indices inventory. The image is really great. The last bar that you can see is below the second quarter, particularly the line that shows you the value of our inventory per square meter. It dropped quite significantly. Here during the first half of the year, where we entered the first half with higher inventory levels, you might remember that in June, we reduced our guidance.

With this stock, we've been working pretty actively. What was supposed to delay was delayed in terms of supplies and then we lowered the purchase budgets for consecutive periods in order to make some space for this inventory. So this is the result that we got to.

We still have some more goods coming before the end of the year. But I don't think that we will get anywhere near 2,000. I remember what I said in September when we commented on behalf of the company. Still in the first quarter, maybe in the first half, we'll be working in this inventory that we are shifting from those periods. You can see, especially in the Sinsay brand, this margin was under slight pressure. But we can see looking at Q3 that in terms of business challenge, we can really generate nice results.

Inventories, of course, are related to the working capital. This is quite borrowing slide. We've been able for some time now to generate a negative level and new financing gives us additionally more comfort in terms of reverse factoring investing. So yet another area, as Warren Buffett said, banking should be like that. And we are happy to have this boring comfort, so to speak.

Now in terms of logistics, it is marked by high CapEx. Our CapEx is foreseeable on the blue bars looking from -- looking bottom up. These are expenditure for stores. So just to remind you, EUR 450 per square meter in Sinsay brand and EUR 800 in other brands is the average.

And in terms of logistics, this is the medium part. This is the area that we sped up on already last year, over PLN 1 billion spent this year, but we will see on the slides that still next year, we'll be spending. We are spending a lot, but less than this year is going to be spent. But as we saw in the OpEx part, these are high-quality investments, and they really allow us to generate nice savings this operational level.

And what makes us happy is that our growth is dynamic and fast, but all that is carried out with safe debt level. The first and second quarter, slightly high, but then 1.3 debt to EBITDA that was really comfortable, now it's 1.1. So the situation is really safe. And I guess that the commentary is not really necessary here. So that was the summary of the third quarter and the 9 months, but it is December already, so in Q4.

We can now observe what is happening on the market. So over to Magda.

Thank you. Before we move on to our plans and goals for 2025 and '26, a few words about the fourth quarter. In November, we have Black Friday and Black Week. So we can say this is the season for discounts in stores. Today, it's not that the clients are not that enthusiastic, but the spending these days are much higher than on weekends before and after the Black Week. We started on the 26th of November, so on Wednesday, and that ended on the 1st of December, so during Cyber Monday.

In conclusion, we can say that we are very happy about the Black Week and this season, 32% in omnichannel. This is the increase, 40% online and 25% offline.

Looking at the fourth quarter from the 1st November to 9th December, we can say that the fourth quarter began a bit below our expectations. But from the second weekend in Poland, the sales improved. Most probably this was affected by strong October, where most of the clients did their shopping over there as for the autumn apparel. And then the clients are waiting for the Christmas season. So this shows -- this is presented here in the slide.

As for the -- when we look at the fourth quarter, we look at it positively because the trade in December might be supported by the calendar-related effect. Christmas Eve is going to be a day off. We also have working Sundays, and the data shows that the average Sunday, these are higher sales than on a Christmas Eve.

In conclusion, regarding the fourth quarter, I would like to say that we plan to open 350 to 400 new stores of all our brands, the majority related to Sinsay. And now we can move on to detailed plans as for 2025 and '26. Thank you.

When we look at 9 months of -- a very good 9 months, and we add on top of that, the prospects rather optimistic presented by Magda, we can see improving dynamics. We can confirm what we signaled in Q&A in September. So the market situation and the results that we saw at that time were delivered in the third quarter. So we have now a few weeks of this year, and we can improve our guidance. So the new expectations for this year at least PLN 23 billion of sales in both channels, 20% increase in offline and offline, it does not change compared to the previous information, significantly increased gross profit margin from 54% to 55%. OpEx related to sales, so 40.5% to 41%. That is the SG&A of sales. So whether this is EBITDA or net profit, naturally, this is increasing compared to our expectations.

CapEx, a small reduction. This is more cash that stays with the company. This results only from a smaller number of stores open and net debt rather comfortable PLN 1.1 million. So such updated guidance for '25 is our new grounds for our goals for -- our targets for '26.

The financial year is going to be reported in the second half of March, but we want to provide you the knowledge during this meeting. So here, we have '25 in the first column, so the higher forecast for this year. And from that, we move on to '26. What do we expect? At least PLN 28 billion of sales, over 20%, maybe 25% in offline even as for the increase in '26. After the third and fourth quarter, we can see that the gross profit margin is dropping a bit. This results from the natural participation of Sinsay. We know that this profit margin is a bit lower. With more development, it's going to be more diluted.

As for SG&A of sales and CapEx give us still room to generate this positive result, so around 40%, 41%. And when we see the EBITDA, similar results as this year. And '22, '23, this is the EBITDA margin. CapEx, a bit smaller compared to this year. This results from lower spending on logistics. This year, we had accumulation in '26, we are going to spend for robotization, and this is only one investment, one warehouse in Bucharest. Debt net and the floor space increase comparable. So nothing is happening. This is really very positive borrowing situation. So that was the conclusion.

As for the 9 months from spring, we have this 3-year strategy, a short-term strategy in our company. We provide reports and we provide where we are up to '27. So after the strong acceleration, we have some observations. We continue with our strategy, but some things needed to be adjusted.

So the direction does not change. So this is our direction. Sinsay is the growth engine for LPP. The development is going to involve opening of new stores in smaller towns, maybe not so many locations here in heritage brands with brands that have significant ambitious goals, single-digit like-for-likes to cover the inflation. And of course, the top target growth with focus on profitability.

In June, we showed you the update of the information, why Sinsay is this drive engine, why we focus on Sinsay, why this is working. We can see that after 9 months of results, when we look at operational details and financial details, the offline store, 30% of EBITDA here. We know that we have some challenges as for managing the stock. So even with standard issue here, we can generate significant EBITDA.

Historically speaking, whether this is '24, '25, you can see the share of profitable stores. This is much better. When we add more details on the left, you can see a draft profitability per store size. So the mini, these are the smaller ones. You remember in June, this format was stopped for a moment. So this -- the tests are happening. We have first conclusions. It is very promising, but we want to make sure that when we go back to this plan, these stores are going to be profitable, and we will have good know-how, how to do that, what is happening, what is the offer for the customers. So until we have certainty, we freeze this idea.

We can see that other store sites are very profitable and the biggest ones even much, much better. This translates into a very good payback period, 16 months. This is one month lower than before when we compare the year with significant challenges in Eastern Europe, 12 or 13 months, this is a good result. So we are very happy about where we are with Sinsay into -- going into the future.

I believe that from your perspective, a good important information. So the updated plan for the launch of new stores. So we planned 1,000. We can see that the fourth quarter is going to be the more intense. Some are going to be shifted to the next year. In some regions, we observed a certain slowdown in Slovakia, in Czech and Hungary. These are the regions we don't see a significant interest in such stores on the market. These regions are rather cautious in their approach. So we stop for a moment. The mini format, as I mentioned, until we have hard data and conclusions and certainty, we don't do that. We have a significant group. We have information coming to us. So when we have certainty, we will go back to that very quickly, but we need to be sure.

And in the East Ukraine, we had a significant challenge related to the quality of data. So we entered 15,000, 20,000 towns, and then it turned out that this town was much, much smaller. So we decided that we are not going to enter towns below -- around 30,000. So when we take all these elements into consideration, it means that we take care of the profitability and the updated forecast for the future results from that. So we focus on a higher margin.

And in '26 and '27, we can see the potential for slow gradual acceleration. The development of offline, not only Sinsay, but our heritage brands, they also have -- they also are ambitious in like-for-likes. But e-commerce, we also want to have 20%, 20% plus as for growth. And we have significant leverage. So new markets, Central Asia, our mobile app, this is also working very well, 80% in online through an app in Sinsay, and we broaden our offer in nongovernment segment. In the following months, this is going to be a very intensive work for us as for optimization of our offer, but we can see that the sales is good. We still need to work on the margin, but we had a lot of the tasks, and we are going to move on into these aspects. So that is all regarding to sales.

The allocation of capital, again, a positive note going bottom up, PLN 1.6 billion, simple number of openings times, CapEx envisaged and the medium one, these are the expenditure on logistics. We could see the leverage in this area is particularly clear and visible, that's a clear return on investment. So next year, PLN 700 million, and we are continuing robotization in main locations and completing one center in Bucharest in terms of a building. And 2027 will be the continuation of equipping warehouses and adding robotic solutions. We are still thinking about one more location in terms of e-commerce, but this is still under the analysis of PLN 500 million in 2 years' time. This is the upper number that we are to expect.

Now if we sum it all up, then 2027, that is the last year that we are running to now our 3-year perspective, we are reducing top line a bit. So this growth in terms of revenue, so minimum PLN 33 billion in 2027, [ PLN 1.7 billion ], that's the growth factor versus 2024. Now 2 consecutive lines of gross margin and OpEx, we are improving the quality here clearly, and we see that this operational leverage is working, increase of EBITDA is at the level of 1.8 versus 2024. So that's an improvement in profitability between 21.5% and 22.5%. So systematic growth of revenue, this is what we expect. And of course, that also means that we need to think about increasing dividends equally. We are a dividend company, as I mentioned, and it has been the case for some years now. The dividend yield is on the rise, and we do not have any reason to modify this trajectory.

Then I believe that well, we started with this positive tone, and I guess we can end also on a similar note. So great results after 9 months updated strategy, but we are remaining on the same trajectory. We know where we are heading. We simply are approaching it in a slightly different way. The prospects of growth and dividend sharing with our stakeholders, of course, does not change.

So I guess we can swiftly move on to our Q&A session now.

Let us start then. Question number one concerns insurance related to the fire in Romania. And there is a request to define insurance liabilities. What value do we have here in the balance sheet? How much was already given by the insurer and in which quarter was it put into the books?

The main numbers and the main events in the second quarter, PLN 351 million of the write-off was the loss that we suffered concerning our assets and goods because we rented out the building itself, but the equipment was ours. And we also had the auditor made it possible for us to book it, and that was the second quarter. Now the current update around 2 weeks ago, we got an advanced payment that was precisely PLN 20 million.

Yesterday or the day before yesterday, that's the latest piece of information. We got informed that further PLN 200 million would get into our account owing to this loss concerning the liquidation, the financial part of it. So we need to understand that from the formal side, these are thousands and thousands of documents that we need to deliver, but our accountants teams work on that regularly, and we can see that it is heading in the right direction. So these are the amounts that are going to be booked in Q4, and we keep on working systematically on that. So further amounts will get into our account.

The other part, business interruption insurance, so the loss of margin and additional operational costs. This period expires after 9 months. So it will be only in spring and at the end of March when we will start summing it up and talk about the payments. So no earlier than probably in Q2, Q3 that we can expect any income from that side.

Now inventories quarter-to-quarter dropped by over PLN 400 million. Could you explain that?

Well, yes. As I've mentioned, we simply had too much in terms of goods. And once again, 1,500 stores, the initial plan, we will see that we will open 910, talking about Sinsay. So we entered it with a great stock. So this drop after the first quarter when the likes was positive, we would still be testing what the reason was. We didn't put the break to hold so much. But then as we saw months passing, we -- it became clear that we need to do something about it. And the results offered themselves in quarter 3. So there is no mysterious knowledge. It's simply hard work of our teams here, those that deliver their goods and our designers SS '26, so the spring and summer season that we are entering slowly, we will have a greater share of the goods that were ordered beforehand. But we can see that in the first half of the year, we will be -- we'll get it over and done with. It's just a standard business challenge that we are managing as we go.

Still on the inventories and the stocks, it's about the optimum level of inventories for another year. So what would be the level we would like to keep it at? Between PLN 1,700 and PLN 1,800 per square meter.

Can you see any chance to benefit -- to increase, improve LFL in Sinsay? What would contribute to that?

It is a very good question and again, a broader context. When we look at a slide from our presentation with like-for-likes, we will see that, of course, our appetites were greater, but it is the market. Our teams do their utmost and we always offer the best possible collections, but the client voted with their decisions. We have our conclusions. We are entering the SS season with our homework done and lessons learned.

And 2023 was another period when we had a lot of inventories and the margins were what they were, the like-for-likes were what they were. Reserved is a different brand. The first half of the year was actually in the same situation, minus 5% on likes in the first quarter and similarly in the 7, we know how to do our homework. But number-wise, I would call for looking at 2024 in Sinsay, what quarterly dynamics we had 11%, even 12% in like-for-likes. So quite naturally, this is something that is, again, nearing the average and this biannual approach is not as pessimistic as this readout for the last quarter might suggest.

Let me maybe add on the structure of likes for Sinsay. The women collections have very good likes and a different group has lower likes. There are questions concerning competitors and whether women collection in Sinsay has poor likes. Well, that's not the case.

And since we talk about competitors, how do you evaluate the risk of aggressive strategy of Chinese platforms and their impact on LPP business? And how are you going to compete against these Chinese platforms?

I believe that our business model is the best response and reply to that competition. We are present in 2 channels, offline and online. The client always has a choice to come and see and they do not need to buy something they've never seen. So we bet on quality. We bet on safety, our application and security.

When you look at our application in the second but last quarter, our application was the top 1 in terms of the fashion category than it was in top 2. So those results are improving. We can see that the app is appreciated by the customers. We offer good and fast quickly delivered collections. So we can say that this is the reply to the competitors. And talking about the cost, this is the third biggest cost that is performance marketing. So that's advertising online. We spend less year-on-year versus the internal budget that we've planned, we spent even less. So we have quite a reserve here and a lot of tools to sustain this competitive spirit.

We always observe our competitors humbly. We treat it as something that makes us perform better. We can see that we have efficient tools that enable us to compete even now.

What do you expect when we talk about refinancing and savings?

And I can see that the margins, given our scale and this oversubscription that we've commented over 50%, the margins are much better than they were and versus even monitoring, say, the current reports of other players in the Polish market, those margins are attractive.

In terms of a precise estimate of what kind of saving it is, we will leave it to ourselves because all the consumption of it will simply be different. There are no 2 really comparable years. We can see that the Sinsay model is working, and there are flows as we expect. And what's most important is that in this new structure, we have this comfort of 3 years of current limits that we can flexibly prolong and keep this financing of investment. That's the prospect of 5 years to come. That gives us a lot of comfort that in our strategy, we can focus on the development of our business.

We are safe in terms of our assets. We can pay our dividends. And 21 financial institutions are interested. So that shows that the broadly understood financial market also believes in our model because these amounts in time, they show the scale of this commitment and hope in the development of us as the LPP Group.

How about the current situation in the German, U.K. and Ukrainian markets?

German and U.K. markets enjoy a very sound situation to put it briefly. The likes are improving, and that's obvious. Starting 2023, autumn, in the U.K., we added new stores. I'm talking about the Reserved brand in Great Britain in the U.K. They've been on the rise. EBIT is not positive there yet. But every quarter, every season is of a better. And starting from the beginning of the year, the likes are double digits.

Similar is the case in Germany, it's a great e-com market as well when a new Reserved store was opened in Oberhausen. We have 18 stores there altogether. I'm looking for confirmation, yes. So there are 18 stores there, and it's just the Reserved brand.

In e-commerce, of course, we offer other brands as well, again, high increases. Post-COVID, we negotiated favorable conditions. So last year, the German company celebrated their 10th anniversary, and we are very happy that last year, they proved to double-digit profitability, and it sticks to it.

And the third country you asked about was Ukraine, right? Yes. And it nicely relates to the question about likes because those who have been with us and follow our detailed data, again, I encourage you to keep a close eye on our Investor Relations website. And we keep developing the Ukrainian market. So it weighs a lot, particularly in Sinsay. And we're talking about certain normalization year-on-year, so very high like last year and now natural drop. So Ukraine is the biggest market with this normalization is really high.

After the war, there came a drop, then was the balance of -- that was very high, 40%, 50%. Now we have a double-digit minus there. So again, that's only natural. But when we look at the profitability, the Eastern markets are still most profitable markets in the group. That is why we systematically keep investing there. I mentioned the number of openings. We look at the profitability, we keep on learning. That was the first year of the acceleration of our growth, but we draw conclusions as we go.

June showed that we are not afraid to stop or to take a step backwards in order to take 2 steps ahead after. We are focusing on profitability. That's a natural process. So that's what it is like.

For some time, we can observe negative LFL regarding Sinsay. What is the diagnosis in your opinion in this situation? And what activities do you plan to improve the situation?

I believe a similar situation was already asked. So natural like-for-likes, natural grounds. We start from figures. But of course, the appetite is much, much higher. We learn from the past, new projects, new season, new hope, so we can do the best work, but the client is going to actually come to the store and buy. So we discussed that good like-for-likes are grounds for the new motivation program for our teams, but I don't think they need additional motivation. We want to provide best collections for our clients. So natural motivation is the main factor. This is what we believe we can do and the history shows we can.

Expansion, Uzbekistan, Kazakhstan, these are new markets with new stores you launched over there. Do you plan to open in new stores around Central Asia or perhaps other markets are also the topic?

Central Asia, yes, we opened almost all markets. In Moldova, we are also there. Sorry, the end of the year is very intensive as for the financial aspect. So we -- this was our debut in Moldavia. We -- this year was a record year as for the opening of stores in new markets. So as for the launch, this is all now we are building the scale in particular markets. So we do not plan to launch new stores and enter new markets. So this slowdown regarding Czech and Slovakia focuses our attention on this -- on the new markets. So we are going to look for the potential. So 950 Sinsay stores is going to be delivered.

In the fourth quarter, what impact do we have from higher winter temperatures on the sales?

We are looking at the calendar. We want to be fair and very transparent. So we are the last to look for excuses as for the temperature. I remember 2 times during my term of office when September was really difficult because they were really -- the temperatures were really high and the demand shifted into October, that was '24 and '23.

In May this year, it was the coldest May ever. So the first week of June was really difficult. And yes, these were the objective reasons for that. Now higher temperatures, yes, we -- as Magda presented, the dynamics are improving. That was a long weekend. The clients were probably waiting for the black week. So this is our diagnosis. So the trend is improving like-for-likes from negative are going to positive numbers from October, November to December. So let's not talk about temperatures now. We have still working Sundays, Christmas time and New Year's Eve. So let's wait for the final results.

What are the plans regarding the marketplace?

We've been analyzing all options regarding e-commerce. The app is working really well. Many clients are drawn by the Sinsay app. So this is 30% of business with e-commerce. So this is a really strong instrument in this marketplace is a natural step. But I believe that this is too early now to talk about it. We are going to analyze that. So once we have a precise information, we will go back during our regular quarterly meetings.

The marketing level, what was the marketing level regarding the guidelines for '26? That was 9%. When we look at guidance '26, '27, you believe operational effectiveness is going to improve.

In what areas do you plan the improvement and whether this is the result of opening new stores?

A very good question with a partial answer. Yes, this is affected by a larger percentage of Sinsay. So the gross margin is going to drop, but Sinsay is lower. As for the CapEx, it's not that expensive as other markets, it's improving our leverage. But the area where we can see a positive impact looking at the next 2 years, this is logistics. So more investment we can see after this sample in Bydgoszcz, our biggest e-commerce warehouse, 100,000 square meters. It is working perfectly on a larger scale. So the cost regarding to logistics, this is the second group of our cost. So that was a really small change that is generating a significant potential. So what is behind that?

Can you tell what was the guidance for '26 regarding the level of sales within the whole group, but also regarding the Sinsay brand?

We have ambitious targets, but in our model, these are single-digit or lower amounts within single-digit figures.

You decided not to enter towns smaller than 30,000 inhabitants. Do you believe this is related to the Polish market?

No, that was a comment regarding Ukraine from the logical point of view. So the data for smaller towns, well, the situation regarding the war is difficult. We have a doubtful quality regarding the data. So if we have a lower number of citizens in smaller towns, so we want to develop, but we want to be also profitable. So this is our cautious approach to that.

On a long-term basis, when we look at the logic. So when we -- do we want the company to grow 20% year-over-year? So don't we expect positive result from this operational leverage or perhaps Sinsay is less profitable than other brands. So maybe this is a side effect of this development.

Well, here, this is also a good question. We have our internal targets. We also have guidance. So this year taught us a lot. We are more humble. So that was a really safe level than we can deliver internally. Our appetite is much larger, of course. This leverage is at the level of one, so close to EBIT, so 0 plus, we would say. But we believe that it's going to be there. So we have these brackets we want to operate in. So the top or low level of the margin, we believe that with such approach, this margin will be noticeable, more noticeable. So within a 2-year perspective, we are going to report that on a regular basis. So we are -- you will then be able to update with more recent information.

Are you planning to have more write-offs regarding the Russian business?

No. This PLN 800 million in the backup, we also have information regarding that. So this is the total write-off. So as a company, we are going to fight with the Board as well. We are in close contact. We are going to fight back. But for now, to make it easier for us for a discussion, we want to focus on business these days. So we don't want to go back to it every quarter. So this is a total write-off.

What happens later on, that would be a plus result. So we just wanted to address this topic and talk about likes improvement, growth investments and new markets. What markets in your opinion, are the weakest after the third and fourth quarter?

I would like to repeat what I said before, Czech, Slovakia and Hungary and Ukraine as well. We can address -- assess that from the perspective of like-for-likes with least dynamics. Ukraine, of course, when the rates and the booming is increasing, then we also have drops in the sales.

Estonia, it's a small market. I also mentioned that before, we can see that in like-for-likes. The priority -- the governmental priority is to focus on the fiscal approach and the taxation. So this result -- this is the situation.

What about any potential attacks on your sites in Ukraine?

Well, we cannot predict that. We know the operational side. As for our stock, we don't have just one good location. We keep our stock in different locations. So we have a diversity in our approach. This is what we've changed after recent events.

Does the financing make it possible for takeovers or maybe you are planning to approach that differently?

Refinancing allows us to do much more. But for now, as for allocation of the capital, when we refer to CapEx, these are investment expenditure, logistics, Sinsay, new stores and the dividend paid to our shareholders. We don't have such M&A ideas. We can see that in '25, we have a lot of data. We need to be flexible in our reaction. So we need to do business.

Maybe another comment, we also have such topics or such offers regarding M&A. But as LPP, we are generating bigger profit over weekends. So this is not like the scale we would like to look for. We focus on our organic growth.

Another 2 questions refer to the prospects regarding Europe or Great Britain. Do you believe that Sinsay expansion over this market is possible? Or do you plan a significant growth, better growth of Reserved brand in these markets?

As for the first question, Sinsay in the West, no, not that we close are options for us, but we want to focus on the quality. We observe the market. We can see the history as Marek, our CEO, is looking, we draw conclusions. Other companies went there, did wrong and had to close business and went bankrupt. So the Sinsay model is designed to be effective regarding OpEx in the West. It's difficult to look for such cost-related effectiveness so that the workforce and lower CapEx. So we focus on Central Europe, Eastern Europe, Central Asia, Southern Europe. This is what we presented in the slide. So these are the regions that we really focus on with our activities. We can see that we have really good returns on investments, 12, 13, 16 months, so below our benchmark, much, much faster. And this is what we focus on.

So Sinsay and Western Europe, this is not the direction that we want to follow these days. As for Reserved and other brands, commenting much wider, as I said with the strategy, with a larger space, Reserved needs at least 1,600 meters. It's difficult to find in Western Europe, referring to question regarding Germany or U.K. So in U.K., we needed 10 years for this profitability. In Germany, we are still working on it.

So when there is a situation favorable for investment, we are going to go for it. But when we have a good location, we are going to consider that. So like the new opening in Oberhausen, this proves that. But whether this is the scale, well, right now, we don't see this potential regarding to the size of the stores. We focus on the growth of Reserved basically in online. You can see a significant potential.

What is the payback period from investment in robotization?

Up to 2 years. And the last question, we answered that, but we want whether this write-off from Russia is going to affect the payment of the dividend. A very good question. Yes, we started with the dividend. So I believe this is the last question regarding Q&A. So we are going to complete with a dividend as well.

No, it is not going to affect the dividend. As we communicated, we have resources, but the Board's recommendation and the resolution is going to be adopted for the future. But business-wise, the write-off was a noncash write-off. So the reported profit was just adjusted by this write-off. You can go back to the backup. And clear net profit is going to be grounds for the payment of dividends. The dividend was on 70% of net profit. Nothing changes here. So this is the level. We have resources. We have really comfortable situation, 1.1 leverage, a very good level. So to reiterate about it, no, it is not going to affect the dividend payout, sharing the profits with you. After 9 months, this prospect is really good.

On this optimistic note, that we are closing our meeting. Since this is the last conference this year, on behalf of the entire LPP Group, we would like to wish you, first and foremost, a healthy jolly Merry Christmas. May this season be the period of relief from our everyday struggles. And for next year, we wish you all the best and making your dreams and targets come true, both in your private and business lives.

Thank you very much for today, and see you at another result conference that we are planning for spring. Thank you very much. Goodbye.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Welcome, everybody. My name is Magda Kopaczewska, and I represent Investor Relations unit in LPP. Marcin Bojko, CFO and Board member of LPP is here with me [Audio Gap] So all in all, we are satisfied that the dynamics was positive, particularly in the reserved brand. These were 2-digit like-for-likes. In terms of e-com sales, we generated PLN 1.4 billion in the second quarter [Audio Gap] of growth in current -- constant currency, of course, we were planning 22%. But in this channel, again, this difficult market show its face [Audio Gap] with lower traffic in the net, we decided to optimize the performance marketing costs. So the purchases of likes or clicks in the net. So maybe we did not [Audio Gap] optimize the performance marketing costs. So the purchases of likes or clicks in the net.

So maybe we did not [Audio Gap] optimize the performance marketing costs. So the purchases of likes or clicks in the net. So maybe we did not [Audio Gap] dynamic of sales, but we will see that [Audio Gap] certainly, they are very good when we move on to the slides focusing on profitability.

So gross margin in the second quarter was at a stable level, much like in the previous 2 quarters, so 54%. Now looking at the drop and giving a broader context to it, naturally with the development of Sinsay brand, gross margin is going to fall down because this is design and value segment with lower margins, and in this drop around 0.6 percentage point, that's the greatest share of the Sinsay brand in the entirety of our offer, and the remaining context is active managing of gross margin.

What does that mean? Those of us who are with us regularly might remember that in June, a quarter ago, we announced that the plan for this year was 1,500 openings, but we bet on quality. We don't want to dilute profitability, and we parked the so-called mini concept for further analysis. That translates into the reduction of the number of openings. But what it involves from the operational point of view is that in 2025, we entered with a greater stock for the new openings, greater stock so that means that we had greater volume of apparel to be sold, and in order not to stay with this stock in the Sinsay brand, our sales team actively managed this balance between the volume sold and the percentage margin. We've been operating at a lower margin recently. But at the end of the day, 54%, stable level, so much higher than still back in 2023, somewhat lower than last year, but we are moving on to the second half of the year with more arguments that we are going to talk about as the presentation progresses.

So again, a good quarter. We did what was there to be done. Certainly, more arguments are appearing already right now. And the third operational business leverage that we have, an impact on our operational costs. We are particularly happy about this area because 2024 was the year of building up our capabilities towards accelerated growth. When we look at the bar chart, the cost of were around PLN 300, PLN 320 per square meter but ever since the first quarter, these costs visibly decreased. And this is this efficiency that we are aiming at rigorously approaching the control of costs. And where have we managed to reach the greatest potential of cost efficiencies, mostly we built the hinterland that we needed in order to deliver the pipeline openings. So we've got leasing, we've got investment teams and the performance marketing we've mentioned. Last year in the second quarter, we spent around 10% for advertisement in the Internet related to the revenue generated in the Internet, but then it dropped to just 8%, which is a visible saving.

And the situation of the consumer returned to the normal level in the second half of June and in July, we defroze the spendings, but they remain at more or less the same level now. And the third area that contributed to the decrease of cost is logistics. Here, the greatest work was done. Last year, we launched a new warehouse in Romania, a new one in Bydgoszcz. We had many onetime costs. These processes had to standardize and normalize this curve of learning acquired the proper shape. And now we can already enjoy these efficiency.

What we can see in CapEx, what we communicated with the strategy this year and next year are the years of considerable investments in logistics, logistics, not only in terms of expanding our warehouse capacity, but also robotic solutions that will translate into those great savings in OpEx. In the second quarter, in our results, we had two events, single onetime events, and we will discuss them one by one.

Looking at the left-hand side of the slide, warehouse fire in Romania. There was one location in our operational systems in our operations. We divided into 2 parts: DC and a smaller part, FC, so the one for handling Internet orders. And the final amount that we lost in the remaining operational losses is PLN 351 million, including PLN 293 million working assets. So that's what we lost in terms of the actual apparel. But the rest is the warehouse with its equipment with this fitting, including the robotic solutions, unfortunately.

This is what we owned, and so that's the value of the losses. But recently, we got from the main coinsurer a decision about accepting responsibility for this event and positive recommendation of the advanced payment payout, so on this basis, it was clear to us that in remaining operation revenue, we should budget a similar amount. So in PLN, the impact of this event is neutral, and this is something that closes this part concerning our assets. But to give you a broader comment, the other part of our insurance covered the so-called business interruption, and in this area, we are going to now assess the margin lost on the stock loss, and you can see the bullet above showing the value of it plus additional costs.

Starting from the end of June, we work in a suboptimal level. A lot of orders related with Romania, of course, transported from Poland, which increases the cost of distribution, or the cost of renting out additional floor area. This is also part of business interruption. We have 9 months to sort it all out. So we monitor additional costs as we go. And we notify the insurer. Once this period is over, the time will come to sum it all up and also to settle the accounts within our insurance policy. So that's the first event.

And in our results, we also have another one. And this is related with the update of the balance receivables after disposal of Russian business. And here, just to remind you the context in May 2022, we divested the business in Russia. And the transition period was envisaged 4 years, we shortened it to 2 years. So at the end of January, that period was closed. The Russian investor took over what was there to be taken over. And our balance notes it nearly PLN 300 million for the sales of stores in Russia and nearly PLN 600 million was the receivables for the stock loss stock sold there within the transitory period as envisaged in the contracts. So taking at it from the point of view of the first half of the year, in the first quarter, we didn't see any payments coming. So that was a delay versus the schedule.

But starting from July, we can see weekly payments coming in a fixed amount every week by today. We've been receiving them regularly, but that's slower than forecasted at the end of the previous year. So on analyzing it all with the Russian company because this company is a debtor, so when we made a realistic approach to the possibility of them paying back, the schedule that was supposed to close in mid-2026 was prolonged until mid-2029. Now the PLN 30 million that we can see in the first bullet on the right-hand side, this is the result of it and calculating the value of money in time. So that's what was written off. So this amount in the balance sheet will be lower, but this is something that, of course, burdens our result in the second quarter.

And now extrapolating these flows a bit. Again, we took a cautious approach to the other stream of payments, namely those for the shares in the company or for the stores sold. And again, here, just to remind you, in December 2023, we got the first installment in December 2024, we got the second one. Now in December this year and the following year, we were supposed to get the third and the fourth one, the last one, $47.5 million each. But seeing what delays we have in this particular stream of payment for what was sold. Again, we decided to be cautious about that and again, prolong the repayment schedule concerning this part. And again, the same discount approach means that we see negative PLN 35 million burdening us this year. We don't know whether this will materialize.

As I said, by the end of December, there is the deadline for this payment to come in, but we want our report to be conservative and reflect as transparently as possible what happens in the business. So summing up all the components of this basic business that we have impact on. So margin and OPEC, again, the results of the second quarter look positive.

EBIT nearly you can see it on the left-hand side and EBIT was around PLN 700 million net, nearly PLN 0.5 billion the profit grew year-on-year in those categories. Now when you look at the margin, so the clouds below the bars, you can see that despite those one-off events, the margins, practically speaking, are only slightly lower than last year. And in the scale of the entire half of the year, the season spring/summer, we closed with even better dynamics. EBITDA, EBIT and net profit grew by double digits and over PLN 1.2 billion EBITDA for the first half is a very nice result, comparable profitability levels. Now we are entering the second half of the year with greater optimism, believing that things will only look up.

This is all for the financial results. Let's look at the secured inventory. As I mentioned, with the margin, our inventory is going to grow with the development of the network. These values at the end of the second quarter, we can see PLN 5.2 billion. It is going to grow, but we as the management of the company, we want these values regarding the inventories not to grow that much. And here in this short-term period, 1,800 and 1,900, this is the goal. I believe that we need 2 or 3 quarters. So in '26, we should be able to control the inventory.

The structure here is high quality. It is dedicated for the new stores being opened. So we are going to manage the inventory so that in the short perspective, we can go back to our short-term optimal solutions. Investment expenditure, over PLN 1.2 billion. So these are simple figures we've been showing you already together with our development based on the new stores of Sinsay. The expenditure is the highest, almost PLN 380 million in the second quarter.

As I mentioned, this year and the next year involves investments in logistics, PLN 0.5 billion. That was the first year in terms of investments and the new warehouse capacity, 20%. So over 1/5, these are new solutions regarding robotics, providing us the optimization of OpEx. The cost of one piece in the warehouse in Bydgoszcz dropped to 2.5x. This solution in the second quarter was not fully operational from September. We have full capacities over there. So we believe that the yield is going to be much, much better.

Our investment is also perceived with safe debt level. So the leverage here, 1.3. This is a very good result. This is all about the financial aspects. This is the end of September. So we should look at what is happening in this season. The beginning of the third quarter, this is back-to-school period. So you can see here, so that was a strong back-to-school period.

When we look at these blue boxes, the increase in omnichannel. So in stationary shops, this is 35% from mid-August until the first week of September, in online 40%, offline 33%. So this was the period of lower sales. So our dynamics was twice as good. So we are going back to good results. The weather in recent years was different, this year, however, it was a totally different season. So this back-to-school period was clearly visible in our results. When we look at the outlook for the third quarter, from the 1st August till the end of September, we can see 22% year-on-year increase in sales, positive response as for the autumn/winter connection in all the brands, Reserved, Cropp, House, Mohito.

As for the development from 200 to 200 new stores, this is what we plan for the third quarter '25 and good information at the end of October, dividend payment at the end of April, that was the first part over PLN 600 million. And the second part is going to be paid out at the end of the third quarter.

Now the targets for '25, summing up the quarters. We can see in this middle column, the first half of the year actuals. Looking at the top PLN 10.5 billion, these are sales from core business, an increase in offline, plus 90% and online 20%. So these are our goals, and these are the results. As for the sales, we are in the lower range of our dynamics.

Looking from the perspective of the second quarter, we are happy at the end of the day. When we look at the seasons and the second season is much stronger. We have 50% of sales generated in the second season. So we are happy about our goal. After the first half of the year, when we had some challenges ahead of us, the margin, EBITDA and net margin are at the top levels according to our guidance. So we enter the second half of the year. We had back-to-school period. Now as Black week, this is a strong retail sales and Christmas. So the periods for generating good margin is ahead of us.

So we will have a few, but we are happy about the goals that we want to achieve. So when we hear one more time with you at the end of the -- around December, so I believe before Christmas, we will be able to sum up the results from the second -- from the third quarter, and we will be able to give you the results and increase the guidance. This is all as for the financial results. So we can move on quickly to Q&A.

First question refers to a margin? And what is the margin that the company expects in the third quarter? What are the current margins that we are selling products right now? And how about the low rate of exchange dollar to zloty and how this is going to affect the third quarter?

Thank you for the question. It's a very good one. Yes, macro is helping us. The collections in the first quarter that was PLN 4 in terms of rates of exchange, then we will have 3.7. So it's still some potential ahead of us. We will see what this is going to be. We haven't updated our guidance. We need to observe the situation with gross margin or with inventories, we need to actively manage our margin in Sinsay brand to manage the inventories.

We cannot just stay with -- leave that for the next quarters. So we still have time to manage the stock. And I believe that after the third quarter, we will have more information in Sinsay brand, so the majority of our business, we will not consume. So probably we will just need to touch upon this exchange rate.

The level 53, 54 in gross margin. So what are the grounds for it? Yes, we agree that there is some upside here. But with macro that is favorable for us, we want to see how this is going to work with the discounts with such significant inventories that we have. Yes, I agree when you look at it from the summary point of view, there is more optimism in there, but let's wait and we will see that. In the meantime, we will have a lot of meetings. We communicate with the market. So if we can see the results and the situation going as per our forecast, then it is going to be good.

In August, we also higher margin in August. In September, it continues. It's a bit higher even in September. But let's wait. So please be patient until the end of -- until December. Then third quarter like-for-likes, what were the like-for-likes at the beginning of the third quarter? So it was closer to 10% or 3% to 4% -- 3% to 4%. I think the highest, it was House and Reserved, very high, around 20%. But here, I would also give you a broader context for that as for likes. 3%, 4%, it is not really impressive. We want 5% or 7%. But when you look at 2-year like-for-likes then we can see this is really 11%.

So Sinsay brand last year generated really, now it is stabilizing. I know that with every conference, I keep repeating that, but this is a very good content not to look at it from the perspective of only short-term period, but a longer perspective.

Another question refers to a comment regarding the write-offs and receivables from the agents. What is the best case scenario here? The worst-case scenario, sorry.

So maximum write-off would be worse, but we haven't seen any indications. Definitely, the repayments are slower. But please believe me that as the management of the company and as the company, we take care about the interest of our stakeholders. So we analyze the situation, and we exchange data with the Russian company. So we've been waiting until the last day.

As for the impact and figures, writing off almost PLN 1 billion, 900 million from the balance sheet seems easy, but can affect a motivation in recovering these resources. So in the interest of our shareholders, it would be best to do it this way, as I presented.

It seems that this repayment for the goods is very conservative, and I wouldn't expect in the nearest future any additional changes, but as I mentioned, as for the repayments for the shares, we look at it and we decided for the cautious approach. We will see what the situation is going to look like in December, and this is the best information that we can provide today, and also Russian receivables, another question. What was the expected as for the third repayment in December, $47.5 million.

Now we move on to the question about e-commerce platform. Are you working on the new e-commerce platform? If yes, when do you plan to launch it?

Yes, there was a lot of press information, and we had a lot of questions regarding this topic. Yes, looking at the strength of e-commerce, 14.5% as for the dynamic growth. This number is lower than what we expected. When we look at online players and broader market and the competition, 14+ 5, that was twice quicker development as others, and we did much better. And and e-commerce is strong. As for Sinsay brand, our driving force, the apps are the most frequently downloaded app.

So we can see that this platform you are asking about is a natural following step. We analyze everything. But for now, this is too early. When we have more information, we will go back to this topic definitely.

Another two questions refer to compensations regarding the warehouse fire in Romania. So when do you expect PLN 351 million and business interruption compensation for now? What is the value of that?

As for the property, so PLN 351 million, the advance would be 10%. It should be there at the end of October. We are passing a documentation to the insurer to make it reliable in terms of our documentation. So it's like 10,000 of documents, invoicing documents. So I believe that this year, it's going to be there. As for business interruption, we assess here, so I wouldn't like to give you an exact figure. Just business interruption includes additional logistics costs. So we assess that would be PLN 10 million monthly, the additional costs. As for the lost margin, this is the lost margin that was PLN 293 million. This is what you have in the slides as for the losses in current assets.

We've been preparing a margin we would generate on these assets. We would probably negotiate with the insurer. But when we look at it, in the second quarter, that was 54% maybe from the discount, 45%, that will be the margin. So this is more or less the scale we are talking about.

Another question regarding the opening of new stores. How many are you going to open until. 200, 250 in the third quarter, 400, 450 in the fourth quarter, Sinsay and 20 to 40 new stores of Reserved, Cropp, House Mohito. Another question regarding CapEx. What are the investment expenditures planned for next year?

Well, our investment expenditure is somewhat boring. First, we'll go for the development of the stores. So in December, we have the fixed guidance for this year. We will also present the update for the years to come, then it will be easy to calculate it. So if, say, average CapEx for Sinsay is EUR 450 per RCM is 8. So everybody will be able to calculate on the basis of the number of stores, what -- this is a simple derivative of the number of openings. And the second biggest amount is logistics. And as I mentioned, this year, PLN 1 billion plus something and next year, seeing what yield we have owing to the robotic solutions adopted, that can be a similar amount, closer to PLN 1 billion, maybe somewhat less, maybe 1.0, but we will see and a more accurate scale will be offered to you when we meet you next time.

Two questions concerning a consumer. What is the condition of the consumer now to our mind? And secondly, how do we assess the customer in Central and Eastern Europe? Is the demand on the rise? How about price sensitivity compared to the previous quarters?

Maybe starting from Poland because, again, we got retail consumption data, 3-plus percent. The index we agree with when we look at our likes. I believe that after the weekend, we will also publish the materials that we collected during different conferences. We carried out an interesting analysis on the dynamics of retail consumption following our likes. So we are going to share that with you. And looking at this access to statistical and macroeconomic data is what you have on a daily basis. What we can offer is the like dynamics. Then it is good to see what the correlation is, looking at the 3% to 4% of our likes even in those brands that we call premium price. So those top shelf in terms of prices, these increases are pretty good, and that shows that the collection was prepared in the right way.

The power of the consumer is to be seen in these numbers. And yes, we agree with the trend that results from the macro data. As for the regions, Southern Europe and Eastern Europe, Kazakhstan, performed really well, even above average. Central Europe [Audio Gap] our understanding is Czech, Slovakia, Hungary. Maybe Hungary [Audio Gap]

Somewhat better owing to the fact that it belongs to the segment, it does as well as possible in Sinsay. Operational costs first.

SG&A costs in the third quarter, should they be similar to the costs from Q2?

I believe that OpEx to sales, so this ratio of operational cost to sales, we would expect a similar index here. We have these inefficiencies related to logistics. In Q2, that was just a single month. But in Q3, that will be August, September and October, entering new season, we need to rent new warehousing stores. So those one-offs can be heavier, so to speak. But of course, this efficiency will be rolled further. We had an efficient basis last year. So we are pretty optimistic that in the ESR expenses to sales ratio, these costs should be comparable to what we had.

And the second question is about operational costs. Now looking in 2026. And the question is, what can the level of operational costs be next year?

I believe that what we will have reached this year, we will not want to, of course, talk about that before we are sure what the guidance is for this year because that will set the tone for the coming years. But the guidance resulted from our cautious approach. We are in the first year of this fast [Audio Gap] such dynamic and expansion.

So we see that we are finding our ways through it pretty well. We had to introduce certain optimizations like the one in June, but we are not afraid to make such decisions because it is after all quality and profitability of the entire business that we care about. So by the end of the year, we've had -- we will have time to go through different strategies, and then we will give you the proper update.

Further questions concern the repayments of Russian receivables. That's a question. Can you see the lack of possibility, lack of willingness for these repayments to progress?

Well, I hope it will come as a soothing piece of information. There is a lot of will. The data that we were given and on the basis of which we elaborated the new schedules are really accurate and well, the companies are debtors, so it's only natural.

But there is a lot of will on the side of the Russian party and of course, [Audio Gap] to resolve an issue very much as we have. And this year we are in is the first year during which the company is working for its own purposes and account. And the model that we have in LPP is that the majority of major business fashion-related decisions are made [Audio Gap] here. So of course, not having these competencies that the company in Russia had to build on its own, and they opened up a new chapter, new business. They are learning how to make orders, how to file orders.

We see that in their sales conditions of LPP that they did get in the transitory period, of course, they had more certainty in their operations. The working capital there, well, lost its dynamics somewhat, of course. Those who observe our results, well, you know that our payment period is 180-day plus for the goods. So the company in Russia was able to benefit from these periods. But now being a new business, well, in the majority of cases, the postponed payment periods were by half in some of the markets, they need to make there.

But again, certainly, there is a lot of will there, but also there are clear business-related reasons for what the situation is.

Are there any other one-off events in your financial business activity apart from the ones concerning Russia?

No, the one-offs are those that we presented. But in our financial operations, there are two groups, that pretty naturally grow. One is the interest from leasing because this is the way they were modeled. So we rent all the new locations. So this IFRS part goes there. And that's natural that will grow with the volume of open stores.

But the bigger group, the other bigger group that grew year-on-year in previous quarter in the present one and will keep on growing next one, our financial costs. Our development, as you see, our debt situation is pretty comfortable, very comfortable. But this accelerated expansion, we had PLN 3.2 billion of resources gathered that we've now been consuming, and we use more of the loans that we had. And for the last 2 years, actually, there was no need for us to use that. And that means that the financial costs are higher. But predicting what the next question might be.

We are amidst the process of complex refinancing, comprehensive refinancing, and we will focus on the implementation of our strategy in the perspective of 3 to 5 years. And at the end of October, beginning of November, we will close this process. So again, in Q4, the situation is going to improve.

Next question. It concerns likes in the third quarter still. And it is about whether the likes grow mostly owing to the number of transactions or owing to the prices.

I do not have this knowledge [Audio Gap].

Next question is about the warehouse in Romania. What is the plan as far as this warehouse goes? Are you going to rebuild that in the same location? Or do you have a different plan? And when again would the operations be relaunched?

This alternative is still being analyzed. We've been looking for a new location for our warehouse in Romania, whether it is going to be smaller or bigger, this is something that our logistics team has been working on, researching the market, but we were also originally planning to open another location in Romania, right next door in relation to the location that, unfortunately, we lost in the fire. That will be around 66 square meters and the full operation is planned for the beginning of November. So that's going to be helpful, particularly in terms of e-commerce.

And as for the decision on whether we are rebuilding or renting a new location, well, the analysis are going on. We have around 9 months, and we are trying to decide on the alternative in a shortest time as possible.

Another question about Romania about insurance policy. In the business interruption insurance, is there a franchise so that the company covers the first few weeks or months, and it is only the consecutive period that is covered by the insurance? If so, how long is the franchise period?

It was a very short one, days, not weeks or months, a matter of days, really.

Another question refers to investments in logistics and e-commerce and AI-based solutions. Are you investing in AI?

Yes, we are investing in new solutions on a regular basis, whether contact center, we talked about many times before. This was the most clear area for investment, and in back office and in preparing our collections. And in e-commerce, yes, in presenting our products in Sinsay brand, especially on our websites, we are developing, improving such solutions.

We are checking various new solutions in logistics. We have a system how to optimize our operations in the warehouses, how to provide stock for the stores based on AI. We also have one program based on AI in Poland, and we also have a program for our leasing managers looking for locations. This is what we talked with Magda on many occasions. Our development model is based on local teams present in particular countries that are looking for nonobvious locations.

Now they are supported with -- well, big data or AI solution, learning based on macro data and history, information about the traffic from -- traffic from mobile phones. You can -- the teams can check the locations. We are analyzing that, and we are rationally approaching that. I can recommend you the article. I believe it was in the Times where AI is reiterated in many aspects, and we focus on solutions that are bringing us measurable results. I can also recommend Sinsay app. When you go through that, you can look through the products, and you can see that the products that are presented against a certain background or with the help of models, this is what we apply AI solutions.

We shortened the time and costs, of course, related to organizing a photo shoot outside.

Another question refers to the competition. Do you see the increase in the scale of business when SHEIN is taxed, especially if we have smaller shipments?

Well, that would be a certain balance of the rules of the game. In May, the United States did that. So they limited di minimis parcels that was $800, so EUR 150. So when we look at the prices from the Chinese platforms, this is above it. So this was a similar situation with Uber. So the taxi corporations were against it. So this is a similar situation. So we believe that all will compete on the same conditions.

How many post post-PPA stores are operating in Russia? Are these all? Do we have such knowledge about it?

I think that most of these, I don't want to give you some false data. I don't have the exact numbers for you today.

A question about inventories. How many are in terms of surplus per square meter.

So when we look at 1,800 and we recalculate it from our square meters, so this is from more or less from 7% to 9%, I believe.

Now a question about a mini format. We talk about the Sinsay brand. What is the current assessment of this format and whether the project was abandoned in terms of Mini Sinsay?

No. We are looking at this concept. This was a great number of stores out of our pipeline. So we want to diagnose that correctly, how to increase sales in these locations. So we need, I believe, perhaps 8% of the increase from square meters and these locations will prove good results.

From the practical point of view, we were looking at this from the new season, still we were analyzing in August, and we've been testing that in September, and we are increasing trend versus price. So this first offer is a bit limited, towards the fashion-related products. So from the 1st October, the tests will be fully operational. So with our next meeting, we will be able to share with you some results from that.

Regarding Sinsay brand, as for categories, a woman, a child or home is distinctive in terms of the popularity among the consumers or transactions, especially back-to-school. In Sinsay Kids, we had significant increases. So this year-over-year purchases related to going back to school was up. But in total, I think business as usual, but the women, this is significant in terms of margin and number of products, and now home will be popular before Christmas because of the decorations.

Another question about refinancing. What is the expectation about refinancing related to the lower cost of financing our group.

I can't talk about specific figures, but giving you some context, we address all the needs. So supplier finance, so reverse factoring, current financing and current expenditure. The process is comprehensive. This is done with a number of banks, very competitive, and at the end of the day, for us, stabilization is crucial, from this model, we had these bilateral models, we shift into more consortium-based structure, stable for many years ahead of us, so up to 5 years.

As for our strategic development, these financial aspects are going to be secured very well, which ultimately will help us refinancing our expenditure. We will improve our cash flow and the payment of dividend will also be much smoother.

That was the last question. Thank you for these questions. We would like to thank you also for your participation. And we will hear each other in December at the conference.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]