The owner of Reserved, Sinsay, Cropp, and Mohito stores is accused of simulating an exit from the Russian market

The Polish company LPP, which owns the stores Reserved, Sinsay, Cropp, and Mohito, simulated an exit from the Russian market, according to a report by the American research company Hindenburg Research.

Russia was the largest international market for LPP, accounting for approximately 19.2% of revenue from 553 stores until February 2022. As recently as November 2023, former Russian president and close ally of Vladimir Putin, Dmitry Medvedev, labelled Poland a “dangerous enemy” and insinuated that it could be a candidate for invasion. 

On April 28^th, 2022, LPP announced plans to distance itself from Russia by divesting its Russia division. A deal progressed rapidly: Weeks later, on May 19^th, 2022, it announced it had concluded negotiations with an unnamed buyer, finalizing a sale on June 30^th, 2022.

Despite saying it lost ~20% of revenues from divesting its Russian operations, LPPs total revenue still remarkably grew 13% overall in FY 2022/23. Reported revenue across markets excluding Russia was up 40.5% year-on-year.

"We believe LPP was able to post these remarkable results because its divestment of its Russia business has been a complete sham," wrote Hindenburg.

In May 2022, the owners of Sinsay and Cropp announced the sale of the Russian division to the Chinese consortium Re Trading for $382 million. The buyer was the Dubai-based company Far East Services, registered a day before the sales agreement, and reportedly has no connections to China, according to Hindenburg.

Hindenburg sent undercover buyers to Far East Services stores in Moscow and St. Petersburg and found that almost all clothing had identical designs to LPP's fall/winter collections in online catalogs in Poland for December 2023.

Hindenburg suggests that product deliveries could have been made through Kazakhstan. LPP supplied goods worth approximately $755 million to its Kazakh subsidiary in 2023, although Kazakhstan only accounts for 1% of LPP's physical stores.

Following the Hindenburg Research report, LPP shares fell by 35%. The company labeled the report as a disinformation attack. "Such activity may be an attempt to influence the company," LPP stated.