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TEXTINATION NEWSLINE 08-25-2015

FA S H I O N D I S C O U N T E R S A N D DE S I G N E R S A R E E X P A N D I N G I N PO L A N D SALES OF CLOTHING STAGNATING / ONLINE TRADE IS GROWING

Warsaw (gtai) - Both cheap mass-produced goods as well as individual design report growth on the Polish clothing market. Especially larger companies are increasing their sales. KiK, Pepco and TXM are opening more stores, but also the chain LK Designer Shops opens new stores. Domestic designers strive abroad. They are benefiting from both public funding but even more from the increasing online trading.

Discount stores are spreading in Poland in the area of clothing too. The cost-efficient mass production puts the revenues and margins of the suppliers in general under pressure. According to Euromonitor International the total value of the sales of clothing is expected to decline in 2015 in real terms by 0.2% to about PLN 20 billion (PLN; approximately EUR 4.8 billion, 1 EURO = 4.1655 Zloty, as of August 5th 2015. Sales of clothing (in PLN mio, fixed prices)

2013 2014 2015 *)

19,791.9 19,977.3 19,929.6

*) Forecast Source: Euromonitor International

Cheap discounters like KiK, Pepco or TXM open new branches. They no longer limit themselves to district cities as before, but also strive in the large agglomerations. In June 2015 the first store of the German chain KiK opened in the Gallery Renova in Warsaw, the 79th KiK branch in Poland. The chain is planning further retail locations at places where it is not yet represented.

The South African discount chain Pepco stated in June 2015, it would operate in Poland 576 shops and constantly open up more. From here it strives to expand to other countries in the region too - such as Romania and Hungary. The by at the stock exchange listed clothing company Redan controlled discount chain TXM (formerly Textile Market) operated end of May 2015 already 321 own stores. Also the with traditional menswear established company Bytom (http://www.bytom.com.pl) is expanding its retail base. By the end of 2015 its sales area will count 9,400 square meters in about 90 stores. The revenues of companies for textiles, clothing and footwear with at least ten employees are developing dynamically. After the Central Statistical Office GUS had counted for 2014 an increase of 17.2% in fixed prices compared to 2013, it published now an increase of 12.9 % for the 1st half of 2015.

© Wilhelmine Wulff / pixelio.de

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Established manufacturers expand Another well-known clothing manufacturer, Monnari (http://www.monnari.com.pl), is about to increase its sales area from 21,200 square meters in 2014 by the end of 2015 to approximately 25,000 square meters. According to own announcements Monnari is interested to take over other clothing companies and brands. According to forecasts by Bloomberg Monnari can increase its revenue in 2015 to PLN 207 mio (2014: PLN 175 mio), but the net profit will slightly decrease to PLN 30.1 mio). (2014: 30.2 million PLN). Weaker than expected the turnover of the largest clothing manufacturer LPP (http://www.lppsa.com) and the major shoe chain CCC are developing. Both companies operate more in the segment of cheap mass-produced goods. Due to the slow demand from the Russian Federation and Ukraine LPP started already in May 2015 with its sell-off. The company operates in Central and Eastern Europe (CEE) and is also well represented with six stores of its brand "Reserved" in Germany. Recently it opened stores in Egypt and Qatar. In the first seven months of 2015 the sales of LPP increased in comparison to last year by 7% to PLN 2.74 billion. CCC generated from January to July 2015 a turnover of PLN 1.20 billion (+ 20%). The retail floor space has grown even more since the beginning of the year by about 23%. The CCC management expects in 2015 an increase in its gross profit by 33% to PLN 300 mio. The shoe chain also opened branches in German-speaking countries. Mid-2015 it operated 35 stores in Germany and 24 in Austria.

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According to Euromonitor Polish adults are expected to spend about EUR 318 per capita in 2015 for clothing and footwear. Although this corresponds to only one third of the spending in Germany (EUR 947), it exceeds the figures in the neighboring Czech Republic (EUR199). The consumers find a wide range among both foreign and domestic brands on the market. As support funding the Polish textile and clothing sector receives amounting to PLN 200 mio from the EU. These are granted under the Innotextile program from 2014-2020 for researchand development activities. Also small and medium-sized enterprises should be supported to increase their competitiveness. More individual creations In Poland there are many talented fashion designers, for whom the road to abroad should be paved. After fashion shows, for example in Berlin, debut presentations of young Polish designers followed in July 2015 on the international fashion fair The Gallery and the GDS (Global Destination for Shoes & Accessories) fair. This took place in Dusseldorf under the motto "Ready to Wear Polish Brands, Hush Warsaw at the Gallery and at GDS". Hush Warsaw is a fashion trade show in Warsaw (http://www.hushwarsaw.com).

In individual fashion engaged is the designer Lidia Kalita, who had previously founded the brand for women's wear Simple Creative Products. At the beginning of 2014 she created together with her husband the LK Designer Shops. In this fashion chain, to which at the end of 2016 already 24 showrooms should be included, they offer clothing in the premium segment in small series. In summer of 2015 LK Designer Shops S.A. operates five own stores, two on a franchising basis,

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two with multiple brands and one as online business. The company debuted in May 2015 on the alternative platform New Connect at the Warsaw Stock Exchange. The brand Simple Creative Products now belongs to Gino Rossi (http://www.gino-rossi.com) from Slupsk (Stolp), which manufactures shoes and leather accessories and is represented in Germany too. The German online portal Zalando offers products of Gino Rossi. Via the Internet already collections of over 200 Polish fashion designers are available in Europe, where Germany is an important target market. The portal Showroom.pl (http://www.showroom.pl) sells collections of domestic fashion designers only.

According to the analysis of "e-commerce Polska 2015" from PayPal and the platform Sklepy24.pl the number of online stores for clothing and footwear should decline slightly in Poland with 2.0% to 1,426. Thus a consolidation will occur after the strong growth in the previous years. Number of online shops with clothing and footwear

2010 2011 2012 2013 2014 2015 *) 943 1,124 1,278 1,403 1,455 1,426

*) Forecast Source: Badanie eHandel Polska 2015 by Pay Pal and Sklepy24.pl

Source: Beatrice Repetzki, Germany Trade & Invest www.gtai.deTranslation: Textination-Team