Mogul Who Built a $1.1 Billion Fortune Still Bikes to Work
(Bloomberg) -- Marek Piechocki helped build a billion-dollar fortune, but the Polish tycoon isn’t letting it change his ways.
The co-founder of LPP S.A., the country’s largest fashion retailer, shuns the limelight, even avoiding having his photograph taken, and still rides to work by bicycle rather than limousine.
That’s even as his family foundation has accumulated about $1.1 billion in wealth, according to the Bloomberg Billionaires Index. LPP’s stock has more than doubled since November as investors value the company’s e-commerce capabilities even as the pandemic hit sales at bricks-and-mortar stores.
Piechocki, 60, insists on not being called a billionaire, according to a company spokeswoman. He argues the wealth is no longer his. In 2018 he transferred his shares to the foundation, which counts himself, multiple family members and others as beneficiaries. The foundation is barred from selling LPP shares.
The ownership model ensures “the company won’t be sold” anytime soon, said Slawomir Loboda, LPP’s deputy chief executive officer. For employees, it’s “great news,” he said.
Piechocki started the business in 1991 with Jerzy Lubianiec as Poland was transforming into a market economy. Initially it imported Turkish sweaters. Today, LPP has more than 1,800 stores in 25 countries, according to its latest annual report. Its brands, which include Reserved, Mohito and Cropp, are often priced lower than western competitors.
The businessman, who declined to be interviewed for this story, isn’t a typical fashion mogul. He avoids catwalk shows and business and celebrity events. At LPP’s headquarters in Gdansk, he doesn’t have a separate office, preferring to sit in free desks among the designer teams.
Asked in 2019 why he’s so focused on protecting his privacy, he said he doesn’t want anyone to raise prices for records that he buys at flea markets in Gdansk.
In November, Piechocki’s foundation bought additional shares from Lubianiec’s foundation. The Semper Simul Foundation associated with Piechocki now holds about 29% of the company’s shares and about 60% of its voting rights. The foundation has 16 people registered as beneficiaries, some of them not from the family.
LPP isn’t the only Polish firm whose shares have surged during the pandemic, helping to create wealth for their shareholders. Tomasz Biernacki’s net worth climbed to a record in January as demand for staples pushed up sales of supermarket chain Dino Polska SA. Also that month, Rafal Brzoska became the nation’s newest billionaire as his postal-locker operator rose in the e-commerce boom.
LPP faced difficulties during the 2010s when a fire ravaged its Bangladesh subcontractor and some collections were poorly received. That caused the company to lose customers.
“We had been too engaged in expansion, and we couldn’t see that the collection we wanted to sell was simply awful,” Piechocki said in 2017.
In response, Piechocki cut dividends and used profits to raise wages for designers and hire more of them. He also invested in areas including e-commerce and gave staff more autonomy.
Loboda said those steps proved important during the pandemic.
“With the sudden closing of stores that held more than 90% of our apparel, we needed to rebuild our logistics fast to make our stock available for online sales,” he said. “Without our earlier bet on employees’ know-how and their empowerment, it would not have been possible.”
LPP more than doubled its e-commerce revenue in the fiscal year that ended in January compared with the previous fiscal year. Still, it posted a net loss for the 12-month period of about 190 million zloty ($50 million).
The company plans to accelerate the growth of store space by 25% this fiscal year compared with an earlier estimate of 20% as more malls reopen and sales rebound, Chief Financial Officer Przemyslaw Lutkiewicz said Thursday in a conference call after the firm reported first-quarter earnings. In May, LPP proposed a record dividend to compensate shareholders for skipping the payout last year. LPP shares rose 6.8% to a record high in Warsaw trading.
“LPP has a targeted omnichannel strategy, which is superior to other store-based retailers,” said Tatiana Lisitsina, a retail analyst at Bloomberg Intelligence in London. “Its online growth is fueled by its agile supply chain.”
Piechocki’s earlier ambition to expand in western countries remains largely unfulfilled. The company has 19 stores in Germany and one in London, according to its most recent annual report. But in recent years it has focused on eastern Europe. Its three biggest sources of revenue are Poland, Russia and Ukraine, according to the report.
For one analyst, there’s nothing wrong with prioritizing those countries.
“These are profitable markets,” said Konrad Grygo, an analyst at Erste Group Bank SA in Warsaw. There’s “no need to enter western Europe only for the sake of being there.”
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