LPP S.A.

My name is Magda Kopaczewska, and I represent the Investor Relations unit in LPP. Together with me, I have Marcin Bojko, CFO and Board member at LPP.

Good evening.

Together, we would like to invite you to our result presentation. During the presentation, we will summarize Q2.

We will discuss our financial results for Q2 and also tell you about our outlook and also give you a short update on the third quarter. Traditionally, towards the end, we will move on to a Q&A session.

We estimate that the entire meeting will last about an hour. Now I give the floor to Marcin and I will be back with you at Q&A.

Thank you. So moving on to the presentation proper.

In the second quarter, the like-for-like sales in stores grew by nearly 2%, we had a greater appetite, but we should bear this in mind that the second quarter was when we entered with the coldest May in history, that changes our perspective a bit. So all in all, we are satisfied that this dynamic was positive, especially in Reserved brand.

These were double-digit like-for-likes. In terms of e-com sales, PLN 1.4 billion was generated in the second quarter, 16% of increase in constant currencies.

Again, those of you who know our goals in midterm, our ambitions would be around 20%, 25%. But in this channel, again, this difficult market had its impact.

With a lower traffic in the net, we decided to optimize the cost of performance marketing, so buying likes or clicks in the net. So we did not maybe support the dynamics of sales, but you will see that it actually worked really well in terms of profitability, been systematically implemented our strategy that we announced in spring.

So Sinsay brand as a driving force in the group, nearly 300 open stores in all the brands, including 253 in Sinsay brand itself. So this is the very driving force of the group, and as communicated in April, we are entering new markets, mostly Eastern ones and those of Central Asia.

and officially or, let's say, formally, Uzbekistan has witnessed debut in our portfolio already in August, so in Q3, but the preparations have been going on. We have a store, and we are planning to add another 20 stores in this country.

In terms of our revenue, it grew at the pace of 17%, PLN 5.6 billion in revenue in Polish zloty generated in Q2. We are very happy about the EBITDA growth, the operational growth plus appreciation.

Now with our pace of development, this appreciation is pretty big. We are opening stores dynamically.

When we add that to the operating profit, we can see that the EBITDA grew at the same pace as the revenue. So that's the direction we would like to keep on moving in this year and in the coming years.

When we have a look at EBIT or net profit or operating profit, all of them were higher than last year. And now looking at the details of implementing of our strategy of development with Sinsay brand as a driving force, 253 new stores were added in Q2.

And when we compare these openings with the previous year of 2024, we see that the increase is over 2.5x. So this acceleration of ours is very visible.

Last year, we built up resources to be able to open up more stores, and this is what we've been doing, but also making sure that they are profitable, of course. At the end of Q2, we had nearly 3,200 stores and total floor space grew by 23% year-on-year, most of it abroad.

And here, we are betting on the new openings in Central, Eastern and Southern Europe. In terms of our financial results, 17% growth in group revenues, over PLN 5.5 billion generated in Q2.

And as mentioned at the beginning, our appetites were greater. The store sales grew by 19% and the Internet by 14.5%.

The plans -- the target plans were higher. But when we look at it through the angle of the hard first Q2, these numbers in the end of the day appear to be good.

And certainly, they're very good when we move on to the slides focusing on profitability. Gross margin in the second quarter was at a stable level, much like in the previous 2 quarters, so 54%.

Now looking at the drop and giving a broader context to it, naturally, with the development of Sinsay brand, gross margin is going to fall down because this is design and value segment with lower margins, and in this drop around 1.6 percentage points, that's the greatest share of the Sinsay brand in the entirety of our offer. And the remaining context is active managing of gross margin.

What does that mean? Those of us who are with us regularly might remember that in June, a quarter ago, we announced that the plan for this year was 1,500 openings, but we bet on quality.

We don't want to dilute profitability, and we parked the so-called mini concept for further analysis. So that translates into the reduction of the number of openings.

But what it involved from the operational point of view is that in 2025, we entered with a greater stock for the new openings, greater stocks that means that we had greater volume of apparel to be sold. And in order not to stay with this stock in the Sinsay brand, our sales team actively managed this balance between the volume sold and the percentage margin.

We've been operating at a lower margin recently. But at the end of the day, 54%, stable level, so much higher than still back in 2023, somewhat lower than last year, but we are moving on to the second half of the year with more arguments that we are going to talk about as the presentation progresses.

So again, a good quarter. We did what was there to be done.

Certainly, more arguments are appearing already right now, and the third operational business leverage that we have an impact on our operational costs. We are particularly happy about this area because 2024 was the year of building up our capabilities towards accelerated growth.

When we look at the bar chart, the cost of meter were around PLN 300, PLN 320 per square meter, but services in the first quarter, these costs visibly decreased and this is this efficiency that we are aiming at rigorously approaching the control of costs, and where have we managed to reach the greatest potential of cost efficiencies, mostly where we built the hinterland that we needed in order to deliver the pipeline openings. So we've got leasing, we've got investment teams and the performance marketing we've mentioned.

Last year, in the second quarter, we spent around 10% for advertisement in the Internet related to the revenue generated in the Internet. but then it dropped to just 8%, which is a visible saving.

And the situation of the consumer returned to the normal level in the second half of June and in July, we defroze the spendings, but they remain at more or less the same level now. And the third area that contributed to the decrease of cost is logistics.

Here, the greatest work was done. Last year, we launched a new warehouse in Romania, a new one in Bucharest.

We had many onetime costs. These processes had to standardize, normalize this curve of learning, acquired the proper shape, and now we can already enjoy these efficiency.

What we can see in CapEx, what we communicated within strategy this year and next year are the years of considerable investments in logistics, logistics, not only in terms of expanding our warehouse capacity, but also robotic solutions that will translate into those great savings in OpEx. In the second quarter, in our results, we had 2 events, single onetime events, and we will discuss them one by one.

Looking at the left-hand side of the slide, warehouse fire in Romania. That was one location in our operational systems in our operations.

We divided into 2 parts, DC and a smaller part, FC, so the one for handling Internet orders. And the final amount that we lost in the remaining operational losses is PLN 351 million, including PLN 293 million working assets, that's what we lost in terms of the actual apparel.

But the rest is the warehouse with its equipment with its fitting, including the robotic solutions, unfortunately. This is what we owned, and so that's the value of the losses.

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

Starting from the end of June, we work in a suboptimal level. A lot of orders related with Romania, of course, transported from Poland, which increases the cost of distribution or the cost of renting out additional floor area.

This is also part of business interruption. We have 9 months to sort it all out.

So we monitor additional costs as we go, and we notify the insurer. Once this period is over, the time will come to sum it all up and also to settle the accounts within our insurance policy.

So that's the first event. And in our results, we also have another one.

And this is related with the update of the balance receivables after disposal of Russian business. And here, just to remind you the context in May 2022, we divested the business in Russia.

And the transition period was envisaged 4 years. We shortened it to 2 years.

So at the end of January, that period was closed. The Russian investor took over what was there to be taken over and our balance notes at nearly PLN 300 million for the sales of stores in Russia and nearly PLN 600 million was receivables for the stock loss -- stock sold there within the transitory period as envisaged in the contracts.

So taking at it from the point of view of the first half of the year, in the first quarter, we didn't see any payments coming. So that was a delay versus the schedule.

But starting from July, we can see weekly payments coming in a fixed amount every week, by today we've been receiving them regularly, but that's slower than forecasted at the end of the previous year. So on analyzing it all with the Russian company because this company is a debtor, so when we made a realistic approach to the possibility of them paying back, the schedule that was supposed to close in mid-2026 was prolonged until mid-2029.

Now the PLN 30 million that we can see in the first bullet on the right-hand side, this is the result of it and calculating the value of money in time. So that's what was written off.

So this amount in the balance sheet will be lower, but this is something that, of course, burdens our results in the second quarter, and now extrapolating these flows a bit, again, we took a cautious approach to the other stream of payments, namely those for the shares in the company or for the stores sold, and again, here, just to remind you, in December 2023, we got the first installment in December 2024, we got the second one. Now in December this year and the following year, we were supposed to get the third and the fourth one, the last one, $47.5 million each.

But seeing what delays we have in this particular stream of payment for what was sold. Again, we decided to be cautious about it and again, prolong the repayment schedule concerning this part.

And again, the same discount approach means that we see negative PLN 35 million burdening us this year. We don't know whether this will materialize.

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

So margin and OpEx, again, the results of the second quarter positive EBIT nearly, you can see it on the left-hand side, and EBIT was around PLN 700 million net, nearly PLN 0.5 billion. The profit grew year-on-year in those categories.

Now when you look at the margin, so the clouds below the bars, you can see that despite those one-off events, the margins, practically speaking, are only slightly lower than last year, and in the scale of the entire half year, the season spring/summer, we closed with even better dynamics. EBITDA, EBIT and net profit grew by double digits and over PLN 1.2 billion EBITDA for the first half is a very nice result, comparable profitability levels.

Now we are entering the second half of the year with greater optimism, believing that things will only look up. This is all as for the financial results.

Let's look at the secured inventory. As I mentioned, with the margin, our inventory is going to grow with the development of the network.

These values at the end of the second quarter, we can see PLN 5.2 billion. It is going to grow, but we as the management of the company, we want these values regarding the inventories not to grow that much, and here in this short-term period, 1,800 and 1,900, this is the goal.

I believe that we need 2 or 3 quarters. So in '26, we should be able to control the inventory.

The structure here is high quality. It is dedicated for the new stores being opened.

So we are going to manage the inventory so that in the short perspective, we can go back to our short-term optimal solutions. Investment expenditure over PLN 1.2 billion.

So these are simple figures. We've been showing you already together with our development based on the new stores of Sinsay.

The expenditure is the highest almost PLN 380 million in the second quarter. As I mentioned, this year and the next year involves investments in logistics, PLN 0.5 billion, that was the first year in terms of investments and the new warehouse capacity, 20%.

So over 1/5, these are new solutions regarding robotics, providing us the optimization of OpEx. The cost of one piece in the warehouse in Brzesc dropped to 2.5x.

This solution in the second quarter was not fully operational from September. We have full capacities over there.

So we believe that the yield is going to be much, much better. Our investment is also perceived with safe debt level.

So the leverage here 1.3. This is a very good result.

This is all about the financial aspects. This is the end of September.

So we should look at what is happening in this season. The beginning of the third quarter, this is back-to-school period.

So you can see here, so that was a strong back-to-school period. When we look at these blue boxes, the increase in omnichannel, so in stationary shops, this is 35% from mid-August until the first week of September, in online 40%, offline 33%.

So this was the period of lower sales. So our dynamics was twice as good.

So we are going back to good results. The weather in recent years was different.

This year, however, it was a totally different season. So this back-to-school period was clearly visible in our results.

When we look at the outlook for the third quarter, from the 1st August till the end of September, we can see 22% year-on-year increase in sales, positive response as for the autumn/winter connection in all the brands, Reserved, Cropp, House, Mohito. As for the development from 200 to 200 new stores, this is what we plan for the third quarter '25 and good information at the end of October, dividend payment at the end of April, that was the first part over PLN 600 million, and the second part is going to be paid out at the end of the third quarter.

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

So these are our goals, and these are the results. As for the sales, we are in the lower range of our dynamics.

Looking from the perspective of the second quarter, we are happy at the end of the day. When we look at the seasons and the second season is much stronger.

We have 50% of sales generated in the second season. So we are happy about our goal.

After the first half of the year, when we had some challenges ahead of us, the margin, EBITDA and net margin are at the top levels according to our guidance. So we enter the second half of the year.

We had back-to-school period. Now as Black week, this is a strong retail sales and Christmas.

So the period for generating good margin is ahead of us. So we will have a few, but we are happy about the goals that we want to achieve.

So when we hear one more time with you at the end of the -- around December, so I believe before Christmas, we will be able to sum up the results from the second -- from the third quarter and we will be able to give you the results and increase the guidance. This is all as for the financial results.

So we can move on quickly to Q&A.

First question refers to a margin and what is the margin that the company expects in the third quarter? What are the current margins that we are selling products right now?

And how about the low rate of exchange dollar to zloty and how this is going to affect the third quarter?

Thank you for the question. It's a very good one.

Yes, macro is helping us. The collections in the first quarter that was PLN 4 in terms of rates of exchange, then we will have 3.7.

So it's still some potential ahead of us. We will see what this is going to be.

We haven't updated our guidance. We need to observe the situation.

With gross margin or with inventories, we need to actively manage our margin in Sinsay brand to manage the inventories. We cannot just stay with -- leave that for the next quarters.

So we still have time to manage the stock, and I believe that after the third quarter, we will have more information in Sinsay brand, so the majority of our business, we will not consume. So probably we will just need to touch upon this exchange rate.

The level 53%, 54% in gross margin. So what are the grounds for it?

Yes, we agree that there is some upside here. But with macro that is favorable for us, we want to see how this is going to work with the discounts with such significant inventories that we have.

Yes, I agree when you look at it from the summary point of view, there is more optimism in there, but let's wait and we will see that. In the meantime, we will have a lot of meetings.

We communicate with the market. So if we can see the results and the situation going as per our forecast, then it is going to be good.

In August, we also -- higher margin in August. In September, it continues.

It's a bit higher even in September, but let's wait. So please be patient until the end of -- until December.

Then third quarter like-for-likes, what were the like-for-likes at the beginning of the third quarter?

So it was closer to 10% or 3% to 4% -- 3% to 4%. I think the highest, it was House and Reserved, very high, around 20%.

But here, I would also give you a broader context for that as for likes, 3%, 4%, it is not really impressive. We want 5% or 7%.

But when you look at 2-year like-for-likes then we can see this is really 11%. So Sinsay brand last year generated really high like-for-like sales.

Now it is stabilizing. I know that with every conference, I keep repeating that, but this is a very good content not to look at it from the perspective of only short-term period, but a longer perspective.

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

The worst-case scenario, sorry.

So maximum write-off would be worse, but we haven't seen any indications definitely that the repayments are slower. But please believe me that as the management of the company and as a company, we take care about the interest of our stakeholders.

So we analyze the situation, and we exchange data with the Russian company. So we've been waiting until the last day.

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

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

Also Russian receivables, another question. What was the expected as for the third repayment in December?

$47.5 million. Now we move on to the question about e-commerce platform.

Are you working on the new e-commerce platform? If yes, when do you plan to launch it?

Yes, there was a lot of press information, and we had a lot of questions regarding this topic. Yes, looking at the strength of e-commerce, 14.5% as for the dynamic growth.

This number is lower than what we expected. When we look at online players and broader market and the competition, 14.5% that was twice quicker development as others, and we did much better, and e-commerce is strong.

As for Sinsay brand, our driving force, the apps are the most frequently downloaded apps. So we can see that this platform you are asking about is a natural following step.

We analyze everything, but for now, this is too early. When we have more information, we will go back to this topic definitely.

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

What is the value of that?

As for the property, so PLN 351 million, the advance would be 10%. It should be there at the end of October.

We are passing documentation to the insurer to make it reliable in terms of our documentation. So it's like 10,000 of documents, invoicing documents.

So I believe that this year, it's going to be there. As for business interruption, we assess here.

So I wouldn't like to give you an exact figure. Just business interruption includes additional logistics costs.

So we assess that would be PLN 10 million monthly, the additional costs. As for the lost margin, this is the lost margin that was PLN 293 million.

This is what you have in the slide as for the losses in current assets. We've been preparing a margin we would generate on these assets.

We would probably negotiate with the insurer. But when we look at it, in the second quarter, that was 54%, maybe from the discount, 45%, that would be the margin.

So this is more or less the scale we are talking about.

Another question regarding the opening of new stores. How many are you going to open to?

200, 250 in the third quarter, 400, 450 in the fourth quarter Sinsay and 20 to 40 new stores of Reserve Cropp, House, Mohito.

Another question regarding CapEx. What are the investment expenditures planned for next year?

Well, our investment expenditure is somewhat boring. First, we'll go for the development of the stores.

When December, we have guidance for this year. We will also present the update for the years to come, then it will be easy to calculate it.

So if, say, average CapEx for Sinsay is EUR 450 per -- and for R,C,M,H, its EUR 8. So everybody will be able to calculate on the basis of the number of stores, what it was, this is a simple derivative of the number of openings, and the second biggest amount is logistics, and as I mentioned, this year, PLN 1 billion plus something and next year, seeing what yield we have owing to the robotic solutions adopted, that can be a similar amount, closer to PLN 1 billion, maybe somewhat maybe PLN 1.0 billion, but we will see and a more accurate scale will be offered to you when we meet you next time.

Two questions concerning a consumer. What is the condition of the consumer now to our mind?

And secondly, how do we assess the customer in Central and Eastern Europe, is the demand on the rise? How about price sensitivity compared to the previous quarters?

Maybe starting from Poland because, again, we got retail consumption data, 3-plus percent. The index we agree with when we look at our likes, I believe that after the weekend, we will also publish the materials that we collected during different conferences.

We carried out an interesting analysis on the dynamics of retail consumption following our likes. So we are going to share that with you, and looking at this access to statistical and macroeconomic data is what you have on a daily basis.

What we can offer is the like dynamics, and it is good to see what the correlation is, looking at the 3% to 4% of our likes, even in those brands that we call premium price, so those top shelf in terms of prices, these increases are pretty good, and that shows that the collection now was prepared in the right way. The power of the consumer is to be seen in these numbers.

And yes, we agree with the trend that results from the macro data. As for the regions, Southern Europe and Eastern Europe, Kazakhstan performed really well, even above average.

Central Europe, our understanding is Czech, Slovakia, Hungary, maybe Hungary is somewhat better, but Czech and Slovakia are below average, and the other markets revolve around the results that we gave you.

The question is, what is going on now in terms of the prices of products? Are the prices in your market on the rise?

Or are they dropping?

Well, we manage the prices actively also in relation to the exchange rates that we observed. We try to stick to the prices inference from higher shelves of Reserved, Cropp, House, Mohito.

Sinsay, owing to the fact that it belongs to the segment, it doesn't, and we need to, of course, take our competitors into account, particularly the online competitors. Using our model that is reliant on active CapEx and low OpEx, something that we've been looking at.

In spring, our strategy showed you that the locations are chosen, we can offer cost efficiency. So we make sure that the prices are as low as possible in Sinsay.

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

I believe that OpEx to sales, so this ratio of operational cost to sales, so we would expect a similar index here. We have these inefficiencies related to logistics.

In Q2, that was just a single month, but in Q3, that will be August, September and October, entering new season, we need to rent new warehousing stores. So those one-offs can be heavier, so to speak, but of course, this efficiency will be rolled further.

We had an efficient basis last year. So we are pretty optimistic that in the ESR expenses to sales ratio, these costs should be comparable to what we had.

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

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

So we see that we are finding our ways pretty well. We had to introduce certain optimizations like the one in June, but we are not afraid to make such decisions because it is after all quality and profitability of the entire business that we care about.

So by the end of the year, we've had -- we will have time to go through different strategies, and then we will give you the proper update.

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

Well, I hope it will come as a soothing piece of information. There is a lot of will.

The data that we were given and on the basis of which we elaborated the new schedules are really accurate and what the companies are debtors, so it's only natural, but there is a lot of will on the side of the Russian party, and of course, we care to resolve an issue very much as well. The conditions are demanding, right?

But when we look at it openly, honestly, the company was divested in May 2022. In the contract it was envisaged for 4 years.

As I mentioned, it was reduced by half, and this year we are in is the first year during which the company is working for its own purposes and account, and the model that we have in LPP is that the majority of major business fashion-related decisions are made in the sense here. So of course, not having these competencies that the company in Russia had to build on its own, and they opened up a new chapter, a new business.

They are learning how to make orders, how to file orders. We see that in their sales conditions.

In the first year, they were lacking in the potential in Russia. Internet platforms are to be since the company wants to enter this channel and without the support of LPP, but they did get in the transitory period because they had more certainty in their operations.

The working capital there well lost it dynamics somewhat, of course. Those who observe our results, well, you know that our payment period is 180-day plus for the goods.

So the company in Russia was able to benefit from these periods. But now being a new business, well, in the majority of cases, the payment periods were shortened by half.

In some of the markets, they need to make advanced payments. So these are some simple reasons for this more typical to this fledgling state of the development of the Russian company.

But we can see that there's a number of initiatives that they take. There is the financing from the banking institutions.

So we are moderately optimistic, but we'll keep observing and keep watch over what is happening there. But again, certainly, there is a lot of will there, but also there are clear business-related reasons for what the situation is.

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

No, the one-offs are those that we presented, but in our financial operations, there are two groups that pretty naturally grow. One is the interest from leasing because this is the way they were modeled.

So we rent all the new locations. So this IFRS part goes there, and that's natural that will grow with the volume of open stores, but the bigger group, the other bigger group that grew year-on-year in previous quarter in the present one and will keep on growing next one, financial costs.

Our development, as you see, our debt situation is pretty comfortable, very comfortable. But this accelerated expansion, we had PLN 3.2 billion of resources gathered that we've now been consuming, and we use more of the loans that we had for the last two years, actually, there was no need for us to use that, and that means that the financial costs are higher, but predicting what the next question might be, we are in the process of complex refinancing, comprehensive refinancing, and we will focus on the implementation of our strategy in the perspective of 3 to 5 years, and at the end of October, beginning of November, we will close this process.

So again, in Q4, the situation is going to improve.

Next question. It concerns likes in the third quarter still.

And it is about whether the likes grow mostly owing to the number of transactions or owing to the prices.

I do not have this knowledge concerning Q3. So I'll gladly answer this question after the conference, and I'll be back to you with this answer.

Another question, the application-driven Sinsay sales is it going to be the reason for the allocation between the channels of supporting the sales.

A nice question to the point, but it is owing to the application that we roll out to all the biggest markets in Sinsay brand. It is owing to this application that we can spend less money on performance marketing.

What we will do with the money, this is something that we are making decisions on as we go, but the application gives us direct access to the consumer. We build loyalty.

We can remind them about sales bargains and so on, and we are building this relationship, which is crucial in this segment because the customer is more price-oriented than loyalty, brand loyalty oriented, and of course, we also see that our loyalty program, Sinsay Club has been performing really well. Owing to this, our clients collect different kinds of points that they can later exchange for discounts, and owing to that, they buy more.

So our data show that the customer -- the omnichannel customer buys 5x more than a single channel customer.

Next question is about the warehouse in Romania. What is the plan as far as this warehouse goes?

Are you going to rebuild that in the same location? Or do you have a different plan?

And when again would the operations be relaunched?

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

So that's going to be helpful, particularly in terms of e-commerce. And as for the decision on whether we are rebuilding or renting a new location, well, the analysis are going on.

We have around 9 months, and we are trying to decide on the alternative in a shortest time as possible.

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

If so, how long is the franchise period?

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

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

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

We are checking various new solutions in logistics. We have a system how to optimize our operations in the warehouses, how to provide stock for the stores based on AI.

We also have one program based on AI in Poland, and we also have a program for our leasing managers looking for locations. This is what we talked with Magda on many occasions.

Our development model is based on local teams present in particular countries that are looking for nonobvious locations. Now they are supported with -- well, big data or AI solution, learning based on macro data and history, information about the traffic, from -- traffic from mobile phones.

You can -- the teams can check the locations. We are analyzing that, and we are rationally approaching that.

I can recommend you the article. I believe what was in the Times where AI is reiterated in many aspects, and we focus on solutions that are bringing us measurable results.

I can also recommend Sinsay app. When you go through that, you can look through the products, and you can see that the products are presented against a certain background or with the help of models.

This is what we apply AI solutions. We shortened the time and costs, of course, related to organizing a photoshoot outside.

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

Well, that would be a certain balance of the rules of the game. In May, the United States did that.

So they limited de minimis parcels that was $800, so EUR 150. So when we look at the prices from the Chinese platforms, this is above it.

So this was a similar situation with Uber. So the taxi corporations were against it.

So this is a similar situation. So we believe that all will compete on the same conditions.

How many post LPP stores are operating in Russia? Are these all, do we have such knowledge about it?

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

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

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

Now a question about a mini format. We talk about the Sinsay brand.

What is the current assessment of this format and whether the project was abandoned in terms of mini Sinsay?

No. We are looking at this concept.

This was a great number of stores out of our pipeline. So we want to diagnose that correctly, how to increase sales in these locations.

So we need, I believe, perhaps 8% of the increase from square meters and these locations will prove good results. From the practical point of view, you are looking at this from the new season, still we were analyzing in August, and we've been testing that in September, and we are increasing trend versus price.

So this first offer is a bit limited towards the fashion-related products. So from the 1st October, the tests will be fully operational.

So with our next meeting, we will be able to share with you some results from that. Regarding Sinsay brand, as for categories, women, a child or home is distinctive in terms of their popularity among the consumers or transactions, especially back-to-school.

In Sinsay Kids, we had significant increases. So this year-over-year purchases related to going back to school was up.

But in total, I think business as usual, but the women, this is significant in terms of margin and number of products, and now home will be popular before Christmas because of the decorations.

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

I can't talk about specific figures, but giving you some context, we address all the needs, so supplier finance, so reverse factoring, current financing and current expenditure. The process is comprehensive.

This is done with a number of banks, very competitive, and at the end of the day, for us, stabilization is crucial. From this model, we had these bilateral models.

We shift into more consortium-based structure, stable for many years ahead of us. So up to 5 years.

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

That was the last question. Thank you for these questions.

We would like to thank you also for your participation, and we will hear each other in December. [Statements in English on this transcript were spoken by an interpreter present on the live call.]