February 4, 2020 / 11:28 AM / 13 days ago

UPDATE 1-Poland's LPP sees risks of cornonavirus delaying deliveries from China

(Adds details, background)

WARSAW, Feb 4 (Reuters) - Polish fashion retailer LPP sees risks its Chinese-made products won’t be delivered on time due to the coronavirus outbreak and is in talks with factories in Turkey and Vietnam to move production there if needed, the company’s deputy head said.

The coronavirus was first identified in the Chinese city of Wuhan in December and has now killed more than 400 people and infected more than 20,000 nationwide.

“Naturally we do see risks, especially those related to delivery delays, although for now this is not a huge risk,” LPP Deputy Head Przemyslaw Lutkiewicz said on Tuesday.

One third of LPP’s products are made in China, where manufacturing costs are lower.

“We are talking to factories in Turkey, Bangladesh or Vietnam. We know that there are free production capacities there, and this is our plan B if delays from China persist,” Lutkiewicz said.

LPP, which has a presence in 39 countries, said on Monday its gross margin fell to 58.7% in the fourth quarter of 2019 from 59.3% a year earlier due to milder winter in December, which saw it sell more light jackets than thick coats.

“We’ve been changing our collections. We have more and more of the so called transitional collection, which means we don’t have warm fur coats or thick jackets, because they really sell less well,” Lutkiewicz said.

Last month Poland’s biggest shoe retailer CCC said that a succession of mild winters blamed on global warming had prompted it to shift its focus to year-round sports shoes and away from traditional winter boots.

LPP also plans to open more shops in smaller towns, saying that in larger ones consumers were more aware of the effect of the fashion industry on the environment and buying less.

“We see a world of two speeds. One is in big cities and a drive not to completely fill the wardrobes... perhaps more expensive products but less of them. But we see smaller towns too, where people still consider the price and continue to buy a lot of clothes,” Lutkiewicz said. (Reporting by Alicja Ptak; Writing by Agnieszka Barteczko; Editing by Louise Heavens, Kirsten Donovan)

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