Polish clothing manufacturer LPP faked its exit from the Russian market
Gdansk, Poland (Svidomi) — The American research company Hindenburg Research has published a report that the Polish company LPP falsified data on its exit from the Russian market. The company owns Reserved, Cropp, House, Mohito and Sinsay clothing brands.
According to Hindenburg, in 2022-2023, the company's profits grew by 13%. LPP itself said that after the start of the full-scale invasion, it lost 20% of its revenue, including due to the withdrawal from the Russian market.
On May 19, 2022, the company announced that it was leaving the Russian market, and on June 30, it completed the sale of its Russian assets to a company with the OAS called Far East Services. Hindenburg claims that Far East Services was registered only one day before LPP announced that it had reached an agreement to sell its Russian subsidiary.
As part of its investigation, Hindenburg sent "mystery shoppers" to the "former" LPP stores, now owned by Far East Services, in Moscow and St Petersburg. Almost all the clothes had designs and colours identical to those of the autumn/winter collections in the online catalogues of LPP brands in Poland. This means that LPP products are still entering Russia at least 18 months after the announced divestment. The Russian internal product codes exactly matched the product codes in the Polish LPP catalogue.
LPP uses two shell corporations — Singapore-based Asia Fashion Import Export and Turkish Fashion Group Tekstil — to supply products to Russia. Asia Fashion Import Export was founded on the day Russia invaded Ukraine. Fashion Group Tekstil was an inactive Turkish company until it was acquired by an LPP employee seven months after Russia invaded Ukraine and then transferred complete control to Far East Services.
LPP also supplied its Kazakh subsidiary with about $755 million worth of goods in 2023, even though Kazakhstan accounts for only 1% of LPP's physical stores.
LPP represents its clothing brands in Europe, Asia, and Africa.
