LPP.WALPP.WA
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Monika Wszeborowska: 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 for Investor Relations are going to be your hosts today.
Unknown Executive: Ladies and gentlemen, our meeting today is going to be devoted to summing up the results of the LPP S.A. 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 it's 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, lpp.investor.relations@lpp.com and the media are invited to contact media@lpp.com. Our meeting today will last more or less an hour. So we will try to have wrapped everything up by 7 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 2026. 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 going 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 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 profits, 39% growth year-on-year, so increases over the dynamics of sales, which, of course, means greater profitability, as we will see in greater detail in 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 and go over our cyclical reports to 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 result is 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 -- in extension but the situation is dynamic and after new information that we described in the [indiscernible] 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 outlooks 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. 2026 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 [indiscernible] reserve house Mohito. And the third quarter, over 2,000 [indiscernible]. In the third quarter, we completed 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-like. 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, and let's take the results in 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% off-line and nearly 21% in e-commerce. But up to the 9 months, the entire business' growth bias 20%. An additional piece of information is that there is an increase of net foreign exchange rates that was minus 1% and 5%. So if we purify the results by the macro impact, that would have 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 a 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 and the scale that you can see here, the highest margin in the last period is to be seen. [indiscernible] 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 costs. And in this context, so 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 this scales, the cause, the dynamics that were higher, some of the locations, logistical locations only open themselves and they only learn 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 two greatest leverages standing behind the drop of cost is, of course, logistics and marketing apart from the off-line stores when we think about the broadly understood [indiscernible], this is the biggest group and owing to our investments in this area, we can optimize the cost. And the other part is performance marketing and here, giving you precise digits. This is -- 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 three components together, what we get 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 is well thought over and now we are bearing fruit 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 is 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 of 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 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 images [ read 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 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 that was delayed in terms of suppliers. 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 2000. 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 a quite boring 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 inviting. So yet another area as Warren Buffet said that 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 for [indiscernible], the blue bar is 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 spend this year, but we will see on the slides that still next year, we'll be spending. We are spending a lot, but less then 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, well, 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.
Magdalena Kopaczewska: Thank you. Before we move on to our plans and goals for 2026 and '27, 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 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 first 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 online and 25% off-line. Looking at the fourth quarter, from the first November to ninth 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 the 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 2026 and '27.
Unknown Executive: 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 off-line and off-line, 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%. And that is the SG&A of sales. So whether this is EBITDA or net profit, naturally, this is increasing compared to our expectations. CapEx, 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 billion. So such updated guidance for '26 is our new ground for our goals for our targets for '27. 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 '26 in the first column. So the higher forecast for this year. And from that, we move on to '27. What do we expect? at least PLN 28 billion of sales, over 20%, maybe 25% in offline even as for the increase in '27 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 2017. We are going to spend for robotization and this is only one investment, one warehouse in [indiscernible] debt net and the floor space increased 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 '28. So after this 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 off-line store, 30% of EBITDA here. We know that we have some challenges as for managing the stock. So even with a standard issue here, we can generate significant EBITDA. Historically speaking, whether this is '25, '26, you can see the share of profitable stores. This is much better. When we add more details, on the left, you can see a graph, 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 wanted 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 sizes 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, [ 20 -- 12 ] or 13 months. This is a good result. So we are very happy about where we are with Sinsay 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 -- though 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 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 the higher margin. And in '27 and '28, we can see the potential for slow gradual acceleration. The development of off-line, not only Sinsay but our heritage brands, they also have -- 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 broadened our offer in non-government 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, a simple number of openings, times, CapEx and visits, and the [ medium one ], these are the expenditure on logistics. We could see the leverage in this area is particularly clear and visible. There'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 [indiscernible] in terms of a building and 2028 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 [indiscernible] in two years' time, this is the upper number that we expect. Now if we sum it all up in 2028, that is the last year that we are running to a, now, 3-year perspective, we are reducing top line a bit. So this growth in terms of revenue, so minimum PLN 33 billion in 2028, [ 1.7 ]. That's the growth factor versus 2025. Now [indiscernible] consecutive so gross margin and OpEx, we are improving quality here, clearly, and we see that this operation leverage is working increase of EBITDA at the level of 1.8 versus 2025. So that's 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 not 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. And I believe that what 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 recently 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.
Unknown Executive: Let us start then, question number 1 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? Which quarter was it put into the books? So the main numbers and the main events in the second quarter, PLN 351 million. So 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 audit term it is 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 EUR 200 million would get into our account owing to this loss concerning the liquidation and the financial part of it. So you 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 we'll 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 in 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'll open 910 talking about Sinsay so we entered it with a great stock. So this drop after the first quarter when the bikes 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 is the simply hard work of our teams and here, those that deliver the goods and our designers [indiscernible] '27. So the spring and summer season that we are entering slowly, we'll 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 [indiscernible] 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 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 [ December ], we know how to do our homework. But number-wise, I would call for -- looking at 2024 and since what quarterly dynamics, we had 11 even 12% in like-for-likes. So what naturally this is something that is 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 like, 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 I replied to that competition. We are present in two channels, offline and online. The client always has a choice to come and see and they do not need to buy something we'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. That's advertising online. We spend, nevertheless, year-on-year, and thus the internal budget that we planned, we spend 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't say that the margins, given our scale and the oversubscription that we've commented over 50%. And 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 well, the consumption of it will simply be different. There are no two really comparable years. We can see that the Sinsay model is working, and there are the 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 CapEx that is financing of investment, that's them, a prospect of 5 years to come. That gives us a lot of comfort that in our strategy, we can focus on the development of the business, we are safe in terms of our assets, we can pay out dividends. And 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 LPP Group. How about the current situation in the German, U.K. and Ukrainian market? German and U.K. markets enjoy a very sound situation to put it briefly. The likes are improving. That's obvious. Starting in 2023 autumn in the U.K., we added to new stores. I'm talking about the reserve 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 reserve 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 there is a brand. In e-commerce, of course, we offer other brands as well, again, high increases post covered we negotiated favorable conditions. So last year, the German company celebrated their tenth anniversary, and we are very happy that last year, they proved to double digital profitability, and it sticks to it. And the third country 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 Investors Relations website. 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 drops. So Ukraine is the biggest market with this normalization is really high. After the water, 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 two steps ahead after. We are focusing on profitability. That's a natural process. So that's what it is like. From 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 learned from the past new project, 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 ground 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 on 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 Moldavia, 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 loan 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 market. 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 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 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 Sinsay apps. So this is 30% of business with e-commerce. So this is a really strong instruments 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 '27, that was 9%. When we look at guidance, '27, '28, 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? 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 it's lower -- as for the CapEx, it's not that expensive as other markets, it's improving our leverage. But here we have the area where we can see positive impact looking at the next two years, this is logistics. So more investment, we can see after this sample in bids our biggest e-commerce warehouse, 100,000 square meters. It is working perfectly on the largest case. 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 '27 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 doubtful quality regarding the data. So if we have a lower number of citizens in smaller terms, 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 results 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 that we can deliver Internally, our appetite is much larger, of course. This leverage is at the level of one so close to EBIT, so zero 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, I 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 the regular basis. So you will then be able to update with more recent information. Do we have -- 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 results. So we just wanted to address this topic and talk about likes, improvement, growth investments in 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, Czechoslovakia and Hungary and Ukraine as well. We can assess that from the perspective of like-for-likes with leased dynamics. Ukraine, of course, when the rates and the bombing 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 [indiscernible] of the capital, when we referred to CapEx, these are investment expenditure logistics sense, new stores and the dividend paid to our shareholders. We don't have such M&A ideas. We can see that in '26, 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 two questions refer to the prospects regarding Europe or Great Britain. Do you believe that since the 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, Note that we close our 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 are -- draw conclusions. Other companies went there a bit wrong and had to close business and went bankrupt. So the Sense 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 since they -- 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. We 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 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 back up 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 of 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.
Unknown Executive: [indiscernible] on this optimistic note that we are closing meeting. This is the last conference this year. On behalf of the entire LPP Group, we would like to wish you first and foremost, a very healthy, jolly merry Christmas. May this season be the period of relief have from everyday struggles and for next year, we wish you all the best in 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 results conference that we are planning for spring. Thank you very much. Goodbye.