LPP SA ($LPP)

[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.]