Fashion giant LPP makes contingency plans for coronavirus
With China battling the deadly coronavirus, Polish-listed fashion company LPP is preparing contingency plans to cope with protracted clothing deliveries from there.
As coronavirus spreads in China, claiming lives and wreaking havoc on the economy, Polish companies are adjusting. Polish airline LOT has suspended flights to Beijing whilst Poczta Polska is no longer accepting parcels bound for China.
Among the companies affected is Gdańsk-based LPP, the fashion giant behind high-street clothing brands such as Reserved, Cropp, House, Mohito and Sinsay. Listed on the Warsaw Stock Exchange since 2001, and touting 1,700 stores in its portfolio, the firm manufactures approximately one-third of its products in China, before retailing them in over 20 countries in Europe, Asia and the Middle East.
For the Polish company, the coronavirus outbreak could lead to logistic and delivery delays. Furthermore, there is also a risk of delays in production, the company’s CFO Przemysław Lutkiewicz said at a press conference last week.
With the winter season coming to an end, over 60% of LPP’s spring-summer collection has already arrived for collection to its depots whilst other pieces are on their way. Just 15% of the company’s imports from China have not been shipped yet, according to Lutkiewicz.
Having waited for holidays linked to Chinese New Year to end, the company will now observe whether the virus will significantly obstruct the movement of workers.
At the same time, it will also consider alternative production locations in case of a protracted delay in deliveries from China.
“We are talking to factories that we cooperate with, for example in Turkey or in Asian countries such as Bangladesh or Vietnam,” said Lutkiewicz. “We know there are free capacities there and we could place orders.”
There might also be scope to produce more in Europe, where around 10% of the company’s production is currently located.
“In Europe, similarly to Poland, there is a lack of appropriate sewing workshops, but I think there is still some room to increase production to around 15%,” said Lutkiewicz.