He built a fortune of $ 1.1 billion but still commutes to work by bike
The co-founder of LPP SA, the country’s largest fashion retailer, shuns the limelight, even avoiding being photographed, and always commutes to work by bike rather than by limousine.
It was even then that his family foundation accumulated an estimated $ 1.1 billion in wealth, according to the Bloomberg Billionaires Index. LPP’s stock has more than doubled since November as investors appreciate the company’s e-commerce capabilities even as the pandemic hit physical store sales.
Piechocki, 60, insists not to be called a billionaire, according to a spokesperson for the company. He maintains that the wealth is no longer his. In 2018, he transferred his shares to the foundation, which has himself, several family members and others as beneficiaries. The foundation is prohibited from selling LPP shares.
The ownership model ensures that “the business will not be sold anytime soon,” said Slawomir Loboda, deputy managing director of LPP. For employees, this is “great news,” he said.
Piechocki started the business in 1991 with Jerzy Lubianiec as Poland transformed into a market economy. Initially, she imported Turkish sweaters. Today, LPP has more than 1,800 stores in 25 countries, according to its latest annual report. Its brands, which include Reserved, Mohito and Cropp, are often less expensive than its Western competitors.
The businessman, who declined to be interviewed for this story, is no typical fashion mogul. He avoids parades and business and celebrity events. At the LPP headquarters in Gdansk, he does not have a separate office, preferring to sit in free desks among the designer teams.
When asked in 2019 why he was so focused on protecting his privacy, he said he didn’t want anyone to raise the prices of the records he buys at Gdansk flea markets.
In November, the Piechocki foundation bought additional shares from the Lubianiec foundation. The Semper Simul Foundation associated with Piechocki now owns around 29% of the company’s shares and around 60% of its voting rights. The foundation has 16 people registered as beneficiaries, some of whom are not family.
LPP is not the only Polish company whose shares have jumped during the pandemic, helping to create wealth for their shareholders. Tomasz Biernacki’s net worth hit a record high in January, as demand for basic commodities drove sales at supermarket chain Dino Polska SA. Also that month, Rafal Brzoska became the country’s newest billionaire as his PO Box operator surged in the e-commerce boom.
LPP encountered difficulties in the 2010s when a fire ravaged its Bangladeshi subcontractor and certain collections were poorly received. This caused the company to lose customers.
“We were too committed to expansion and couldn’t see that the collection we wanted to sell was just awful,” Piechocki said in 2017.
In response, Piechocki cut dividends and used the profits to raise designer salaries and hire more. It has also invested in areas such as e-commerce and empowered staff.
Loboda said these measures have proven to be important during the pandemic.
“With the brutal closure of the stores that held more than 90% of our clothing, we had to quickly rebuild our logistics to make our stock available for sale online,” he said. “Without our earlier bet on employee know-how and empowerment, this would not have been possible.”
LPP more than doubled its e-commerce revenues in the fiscal year ended in January compared to the previous fiscal year. Still, he posted a net loss for the 12-month period of around 190 million zloty ($ 50 million).
The company expects earnings to rebound this year, CFO Przemyslaw Lutkiewicz said in April. In May, LPP proposed a record dividend to compensate shareholders for skipping the payment last year.
“LPP has a focused omnichannel strategy that is superior to other in-store retailers,” said Tatiana Lisitsina, retail analyst at Bloomberg Intelligence in London. “Its online growth is fueled by its agile supply chain. “
Piechocki’s earlier ambition to expand into Western countries remains largely unfulfilled. The company has 19 stores in Germany and one in London, according to its latest annual report. But in recent years it has focused on Eastern Europe. Its three biggest sources of income are Poland, Russia and Ukraine, according to the report.
For an analyst, there is nothing wrong with prioritizing these countries.
“These are profitable markets,” said Konrad Grygo, analyst at Erste Group Bank SA in Warsaw. There is “no need to enter Western Europe just for the sake of being there”.
This story was posted from an agency feed with no text editing.
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