Hi. Welcome. Magda Kopaczewska, Investor Relations, LPP, and Przemysław Lutkiewicz, Vice President of the Management Board. Welcome to our conference for financial results for the first quarter, where we will be discussing what were the key corporate events since the last meeting we had. We will also tell you about our financial results and our plans. At the end, of course, as usual, we invite you to ask questions. We will start with key corporate events, and Przemek, you will take the floor and discuss, Russia and Ukraine situations, and I will come back with, telling you about trends. Okay, let's start with key corporate events for the first quarter. Let me just remind you that these are, February, March, and April months. The good news is that we are resuming our business operations in Ukraine.
We reopened in April our online store there with the reservation that it only operates as a courier company that indicates where they can reach with parcels. These are mostly collection pickup points and not local addresses. We have to have it by way of prepayment. We also resumed the store operations located in western Ukraine because we have to look after the safety of our customers and our employees. We keep reopening stores with shortened working hours and only people who are volunteering to work, work there. Taking into account that the supplies there and deliveries were from the February month; we decided to resume right now all the deliveries to the operating stores with the new summer collections.
From June on, the first transports with collections for the summer are going there, and we are still helping Ukraine. Our company devoted PLN 20 million to this assistance, both in Poland and in Ukraine. It concerns in-kind assistance and financial assistance. In this peak of exodus of people from Ukraine, in Poland, under the auspices of Umbrella, we had 250 people, both employees and their families, that we were taking care of, and we're still taking care of them. A war in Ukraine means difficult business decisions. We decided to sell the Russian subsidiary. As you remember, in March we closed all our stores in that country. In April, we made a decision to sell the subsidiary, and in May, that was concluded and sold. It was a tough decision.
We decided also that our trademarks and logos cannot exist in that country anymore. The contract mostly contains the statement that the new investor will not be able to use our logos after the sale is effected and they have been changed. You will get to know the details of the transactions in the coming months once we have everything calculated properly and we are able to share this information. Taking into account the talks with auditor, how to put this transaction in our books, then we will share more details. Let's have a look at the map. It has changed considerably. As you can see, there is no Russia included in the stores. At the end of last year, it was over 2,200 stores in our portfolio.
Now, after excluding the Russian stores, we have 1,717 as the number of stores at the end of the quarter. Almost 1,000 in Poland, 500 in Europe. You will also find here what we call other regions. This is the category of the countries with previous CIS countries and Middle East countries. They are encompassed in this category. A considerable change. In the other regions, we marked that as of today, about half of the stores are open, and this is because in Ukraine, where we have or had 159 stores, now we have 60 operational ones. We are trying in the coming days or weeks to open new stores. 10 or 20 will be added to the open operations.
The opening of stores in Ukraine resulted from the appeal of local authorities that wanted to resume kind of normality there so that people could come to work, so that local authorities have taxes, influences, and financial incomes. We joined the group of companies who start to reopen their businesses in Ukraine. When it comes to logistics improvements, the fact that we are developing on other markets, this also means further investment in logistics. Logistics infrastructure, as we informed you during last meetings, this is mostly new warehouse in Brześć Kujawski, which now is in full production capacity. We have 700 employees there, and we are able, from that warehouse, to send goods to 1,000 stores simultaneously. 40 million pieces of goods is the storage capacity.
It's as if one Polish citizen put one item there. Huge logistics space, and this is dedicated to traditional stores. Let's not forget, of course, about e-commerce. We started the construction of a new warehouse in Jasionka near Rzeszów. Also, a big one on almost 70,000 square meters, similarly to the previous one. Also, state-of-the-art technology with photovoltaic panels are installed there and some ecological solutions also implemented. We are also planning, and we want to open this warehouse by the end of this year, and it will service mostly e-commerce, not only in Poland, but also Southern Europe, Czech Republic, Slovakia, Hungary, and also of course, the Ukrainian market. Now, moving on, or actually staying with the topic of online sales, Magda will discuss the development of Sinsay brand on the new markets.
We are developing our Sinsay brand online, which is our advantage in this segment of value for money. At the end of April, we launched online stores of Sinsay on new markets, which means Greece, Spain and Italy. We can boast here that throughout the month of functioning, the first full month of functioning, which is May, the 3 e-stores in those countries, PLN 6 million revenues were generated. We also launched an app for this brand, and this is the answer, response to the increase in the interest of customers to purchase their clothing via mobile devices. From the level of Sinsay app, the users may create the shopping list, may check availability in stores.
Also what is really cool, they can directly share the products in social media or to their friends, which is immensely popular among the customers of the younger generations, the Gen Z customers. Let's discuss the fashion trends now. Coming back to the offices and also coming back to business meetings and social meetings caused that after two years of pandemic, we missed our formal clothing. Formal, but in a different edition than pre-COVID situations. This is mostly about the feminine collection. Gray suits and white shirts not necessarily right now. These have been put aside. What we see right now, this is like dopamine dressing trends, so formal clothing, but in very vivid, bright colors.
These trends, when the rebound of demand has been observed, we have seen this in the results of Mohito and the Reserved brands. What is also very interesting is that in those two brands, we observe the trends at the same time. In the past, it happened that if one brand was doing better, at the same time, the other one was kind of a little bit worse. This time, the situation is different, and we are immensely happy about that. Now, to contrast from trends, let's discuss the numbers. Thank you. The figures now, financial results for the first quarter. First, I need to make a short introduction because this topic is a difficult one. It's difficult to compare apples to apples, but let me try to distinguish.
Last year, the first quarter was under the pandemic topic and lockdowns. The first quarter of this year, 2022, started very well, but the outbreak of war came in Ukraine, so this was the reason for our turbulence and some problems that we had at the end of February and beginning of March. Lower sentiment, consumer sentiment, so slowdown of sales was observed. Mid-March, this was a rebound of demand, but we had to close our stores first in Ukraine and then in Russia. Again, we have to say that it's very difficult to compare these two periods. On this slide, you can see on the left-hand side the empty theater look of the lockdown situation divided by months and countries. The first quarter of last year, as you can see, was strongly affected by COVID and lockdown situation.
A lot of stores were closed. On the right, however, you can see that this is empty, which is good news. There were no pandemic-related lockdowns, but the Ukrainian and Russian markets these were closed. Another topic related to the change of our financial statements. The decision to sell the Russian subsidiary at the end of the first quarter caused that we had to change the classification of certain items in our statements. The results of the Russian subsidiary was shown in one line as profit on the assets held for sale. Because this changed for the first quarter of this year, we also had to change the previous statements of the first quarter of the previous year that we showed you last year. We have the two ways here.
In some part of the presentation, this is according to the previous old information with Russia. We also have this statements for the first quarter of last year, calculated according to today's standard without Russia, so as to compare data better. It will be very difficult to talk about this, but I will try to make it as simple as possible. Summing up the first quarter. We have 1,760 stores at the end of the quarter, minus 3.5% in floor space. It's without the Russian stores. It's difficult to talk about like-for-like because we are comparing to the pandemic situation, but over 50% LFLs means that customers willingly returned to the stores, which will be also shown in further slides. Traditional stores record better sales.
Online, we have 32 countries. We have almost PLN 1 billion revenues. We are present in 38 countries with our stores. Take a look here on the left-hand side, you can see group revenues. On the one hand, we have the historic values from the first quarter of 2020 until the fourth quarter of 2021. These are the same ones that we showed you during our previous presentations. The reference will be to the corrected values. What is important is what you can see on the right-hand side. You can see the dynamics in the last column. As you can see, the Sinsay brand had over 60% increase in sales. The first quarter of this year without Russia, first quarter in the previous table before restatement with Russia.
You can compare this and see the dynamic growth of Sinsay both in traditional stores and e-commerce. A very strong, only, almost 50% increase in Mohito brand. This is what Magda has just said, returning to the formal clothing and formal more elegant fashion. Mohito brand, which suffered for the last two years, is recording good results this year, and this trend is also observed in the second quarter. Reserved was doing well, but losing the Eastern markets affected the sales and results. We have also Cropp and House. Cropp, very popular in Russia and Ukraine. Losing these Eastern markets is a huge problem and probably will constitute a challenge to make up for that in other markets. This market is not so popular in the e-commerce sector.
Once I thought that it's the young people who buy mostly online, but apparently, we have more sales, better sales in traditional stores. Women and children clothing, this is the most popular in online. Sinsay is like a special case, a new value for money segment. Sinsay has been recording good results everywhere. Take a look at the middle column. We have PLN 1.2 billion in the first quarter. This is more than Reserved's result. We have PLN 1 billion, almost PLN 100 million. This is the first time in history where Sinsay exceeded Reserved's results. It seems that in the quarters to come, the increases will also be observed. Let's move now to e-commerce. On the left-hand side, you can see the sales results as we reported previously.
For previous periods with Russia, comparing the first quarter of this year. This is flat sales year-on-year, almost PLN 1 billion online. You can see this clearly in the right-hand side. The green part is a bit much more smaller than previous periods. We're glad that still even our domestic Polish market records 6% increases online and very dynamic European markets. Apart from Poland, all the other countries in Europe, 20%, over 20% year-on-year increase there. 1/3 of the whole revenues is the online sales. As you said, Magda, the most is generated by mobile devices. The apps are gaining in popularity, therefore. We can add that most of our customers are women who are very willing to buy online and offline. Now divided by regions.
Take a look here. A considerable change on this slide because it was usually a very big graph with CIS. We combined now CIS with Middle East, and we have the new category that we call Other Regions. A considerable drop here, minus 73%. However, we are glad that in Poland and other European countries, we have considerable increases. Almost 100% in Europe, 60% in Poland, and we're glad that these markets are doing well. On the right, you can see the floor space. In Poland and Europe, we are able to increase commercial floor space.
This is mostly related to Sinsay store openings, but also House and Cropp. The challenge for this year is making up for the gap caused by the lack of stores in Russia, so that other brands and other countries make up for that gap that we observe now when we took out Russia. Right now, 50%. Poland is 45%. In the quarter before Poland was below the 40% of the whole revenue. It's worth mentioning, I believe, that when we cannot sell in Russia and only have limited sale opportunities in Ukraine, the three key countries apart from Poland are Romania, Czech Republic, and Germany. It is on these markets where we will focus our operations. We're also thinking of the Southern European markets. Let's move on to gross margin.
53% lower than last year. This is a result of several factors. First of all, inflation. Producers buying products in Asia. This has been getting more and more expensive. Higher dollar. This also affects the situation, but the surpluses of stocks that we have caused by the closure of Eastern markets. The goods that were dedicated to Ukraine and Russia, they had to be redirected to Poland and other markets. I must say that no big sell-offs were organized. We did it like delicately and followed the situation that we had in COVID. Trying to shift the collections from spring to autumn. Not to sell off all the surplus in one or two months, but to have smart management of the collections to work out the margins in the coming quarters as well.
You can see that in the graph on the right-hand side, we do have the surpluses, but you can see that PLN 2,500 per square meters, we have not recorded such results before. Well, ladies and gentlemen, at this point where we have to do something with the surplus goods that we have, that were devoted to the Eastern markets, maybe in the coming two, three quarters, we will face higher than normal inventory. Part of the collection that was dedicated to spring, we reclassify this for autumn collections, and we will try to have smart management of promotion in June. A week before we started the sale period for the very reason of getting rid of the surpluses, at least some parts.
Good news is that we are managing the stocks better. We are trying to sell them at full prices. On foreign markets, we in other currencies in Poland, we have been gaining good results. Other currencies help us to improve the profit margins. On the other hand, we had to raise prices in the first half of the year, 8% increase. Of course, apart from Sinsay, because that was a considerably lower increase, but other markets raised their prices by 8%. We get asked whether we can observe right now that the demand is shifting towards the cheaper goods. What Magda said, no, it's not observed right now, but it seems that spring and summer is a good period to sell very colorful collections.
Thanking all the ladies for purchasing our products and our collections. We see considerable interest in more expensive collections, so Reserved collection or Mohito collections. These are higher price point collections, and they are selling well. The lowest price point at Sinsay brand, they have been selling well always, but we can see the upwards trend. This is a kind of polarization of the trend. On the one hand, we have the cheapest ones, and on the other hand, we have the most expensive styles for Mohito or Reserved. This is possibly the psychological factor coming in place here. We have good weather, spring, summer time. We have social events, weddings. So this all helps. Before the beginning of the summer holidays, we will maintain these trends.
Possibly until the summer it will be good, and then we'll see. High inflation at some point will probably cause that the customers will try to be more cautious about their household budgets, but this is yet to come. We are now enjoying the good sales results. Maybe then the customers will choose Sinsay brand. This is what we're counting on. Let's move on to cost. On the left-hand side, as usual, you can see the cost of own stores divided by three categories. What is still nice, as you can see, the green costs, the rental costs are decreasing. The Sinsay store openings, they are done on better terms right now than in huge shopping malls.
Retail parks in smaller towns, the Sinsay stores, they have lower rent costs. They will be affecting the average for the whole group. Now in the middle, you can see HR costs. These have been increasing and will probably be increasing still, comparing to the first quarter of last year, where the lockdowns were introduced and, a lot of people were not working, so these costs were much lower. Other costs, materials, services when we open new stores or when the stores operate. Biggest increase is of course energy costs, over 80% increase year-on-year as you can see. Considerable increases, but what I'm glad about, looking at the last four quarters, these represent similar values, 166 per sq m.
On the right-hand side, you can see considerable increase in SG&A costs, 340 PLN per sq m. We have to be careful here. This does not reflect entirely our situation, because on the one hand, we have the comprehensive cost divided by sq m, but e-commerce doesn't have any square meters to be measured against. These costs will be increasing there. Starting from this quarter, we are introducing new indicator percentage cost because we have varied costs here. 47% it was last year, quite considerable, and our goal is to go down to 40%-41% here. This year, without Easter markets, this will probably not be possible. It will be around 43%-44%.
We will be looking at this indicator and getting used to this new indicator rather than cost per square meter. Let's move on now to the next slide. More difficult chart this time. We have three columns with data and the last one with the change in percentage. On the left-hand side, you can see before restatement, so including Russia, and exactly the same shape as we showed you last year. The middle column shows the data for the first quarter of last year after restatement, so after excluding Russia. Getting this to the comparable state as for the first quarter of this year. We have PLN 3 billion revenues without Russian sales, so 67% increase year-on-year on the whole market without Russia.
The growth profit margin minus 1.3 percentage point because of the surplus goods, but also because the purchasing of goods is getting more and more expensive. SG&A costs, deducting that, without Russia, we have 36.1% . We see the EBIT at the level of PLN 190 million. Taking out any taxes and FX differences from the continued operations, almost PLN 100 million . We have also the additional line here for the first time in our financial statements. Net profit from assets held for sale, and this is the only line. This is one line showing the results of the Russian company held for sale, actually sold already. PLN 171 million profit.
Overall, net profit for the group in this, also with Russia for continued operation and Russian operations held for sale, we have PLN 268 million, much more than what we had the year before. Let's have a look at indebtedness level. We used to show you this net debt IAS 17 results, but because this IFRS 16 is the one that we adhere to now, we decided to change the presentation and show it according to the new values. Of course, in our investor materials, you will find exact delimitations of where we have this financial leasing data or any other data. If you want to get more detailed information in the previous way we did it, you can check this as well.
We also show you the cash minus the bonds and minus also, financial leasing according to, IFRS 16, and we have net debt presented here. We used to show you net cash. Financially speaking, the situation is still good at the company, but we're only changing our approach to net debt according to the new standard. Additionally, apart from in the net debt, we don't have PLN 1.3 billion that we have in the cash funds and deposits. The regulations, the accounting regulations do not allow us to include this cash. If we could, then it would be much lower. On the right-hand side, you can see our CapEx, PLN 263 million without Russia. Previously, you see this with Russia.
The increase is not considerable year-on-year, but you can see that the first quarter of each year is increased and mostly due to new stores. Summing up the first quarter of this year, what we can observe is still high sales dynamics, despite the situation of no Russian stores and the situation in Ukraine. This is a good prognosis for the future. We can see a good rebound in sales in traditional stores. We returned to the stores after the pandemic, almost PLN 1 billion e-commerce revenues. In comparing the first quarter of this year to the previous year, then it was easier to sell in e-commerce because we had lockdowns, but now it's more difficult. Nevertheless, good dynamics is observed.
I can share with you now that the online sales for May was higher by 30% year-on-year. It's still visible that e-commerce is getting great results. This is due to new markets, but also same-store sales dynamics, growth in e-commerce. When it comes to financial safety, liabilities exceed inventory still. The fifth point, disposal of Russian business. We will discuss this more in the next quarter, probably. Moving on to our outlook and plans. We are maintaining the targets that we showed in the previous quarter for 2022. We maintain the target of an increase of PLN 16 billion +13% year-on-year, despite the lack of Russian markets and the Ukrainian markets in one-third of its operations.
What I told you about our development, we are planning to open over 400 new same store sales stores and other markets as well, so as to make up for the gap that is caused by the lack of Russian stores. The fall in floor space will not be considerable, only several %, but we will manage to make up for that with the new stores and new markets to fill the other markets and keep developing in our industry. PLN 5 billion online sales. This target has been maintained, and it was only PLN 4 billion last year. Inflation, higher dollar exchange, this margin will be lower than previous year. Operating profit and EBITDA will also be lower.
Today I'm more optimistic about our margins because the first quarter showed that the drops were not so dynamic, so considerable as we previously assumed. Our plans were more pessimistic, and we could translate this price increases into the client. We can see that the product mix is nicely helping us to maintain the margin at the level. It will be lower year-on-year, but not as strongly as we previously assumed. CapEx for this year, PLN 1 billion. Over 60 million for stores alone. What about our opportunities? First of all, we see the higher willingness of customers to buy clothes from the value for money segment, where Sinsay is positioned. When it comes to Sinsay, we talk about offline and online sales.
The development of Sinsay brand on new markets in Southern Europe, Greece, Italy, Spain, this is where we are planning to open the first Sinsay stores as also this year. Another opportunity is to translate the inflation on the cost side into the prices. We will be thinking about making the prices a bit higher. With such considerable inflation, we are forced to do that. The risks, still we have a lot of them. After the pandemic, we were hoping that calmer times will come, but the war in Ukraine changes a lot in our plans. We are unsure how the war will translate into the purchasing power of customers, increase of cost, inflation, and some limitations in trade.
This is a considerable risk, and we will see in the quarters to come how this is shown in the results. Maybe people will not buy more expensive clothes. Exchange rate in relation to other currencies as we are operating on markets where dollars and euros are used, we see that this is negatively affecting our profit margins. Let me remind you that in the longer perspective, 2 or 3, 4 years, our growth strategy is based on three pillars. First of all, Reserved in the online sector. On the one hand, we want to expand the offer of the available products. Some of them are already available only online. On the other hand side, we want to access new markets and increase the appetite to exist in the Western markets.
The app for Reserved brand, which will include other markets, not only Poland soon. We have Sinsay online, so app and entering new markets of the Southern Europe. This is a good prognosis for us. If Sinsay has been recording such good results online, the stationary stores should also generate good results. The third pillar is Sinsay in traditional stores. Let's not forget about omnichannel. Combining the two distribution channel, this has been very important to us. Let me just add, we mentioned that already that we are expanding the offer of Sinsay brand. This is not only fashion, but we also include homeware and various accessories and beauty products. That's right, Sinsay has been offering a pool of products only available online. Let me remind you about the dividend.
This has already been going on. We our general meeting actually decided that PLN 350 per share was agreed on. The first tranche was paid at the beginning of June. The second tranche will be paid on the 30th of August. One more important information about ecology. Let me give the floor to Magda. I'm pleased to inform that LPP, as the first Polish clothing company, joined SBTi, Science-Based Targets initiative, which is a scientific initiative that supports business in determining the way to decarbonize their operations. The first step of our company towards decarbonization was to have more detailed calculation comparing to the previous years, what is our carbon footprint in all three scopes and in all categories according to the guidelines of the GHG Protocol.
We completed this task this year, and we defined the areas which generate the most emissions. In our industry, this is the Scope 3, connected to supply chain production, distribution, usage, and utilization of clothing. Right now at LPP, we are at this stage of defining the decarbonization strategy. SBTI will help us to determine ambitious and realistic, at the same time, goals of reducing emissions in all those three scopes. What is important, these targets will be verified and scientifically assessed by SBTI, and this will happen already this year, which we'll be happy to inform you about. Let's move on now to the Q&A session. Thank you very much, ladies and gentlemen, for this part of the presentation. Let's see. We have a lot of questions already.
The first question: What is the form of the sales agreement for the Russia sale? How long will the process of the divestment be going on, and when will you receive the payments out of this contract? Well, we got several offers for the sale or actually buying this business from us, but these offers were not full offers. Somebody wanted to buy some parts of stores, and another investor wanted just to take the goods from that company. We decided to select the investor that would take the comprehensive, the full business. Existing stores, contracts with landlords, contracts with warehouses, maintaining the consistency of the whole company, which is more giving us more guarantee that the new investor will be able to pay the debts that the company has towards LPP for the goods sent there.
All the liabilities will be honored and this is what we find important so that the employees can continue career in that company. These decisions, of course, will be made by the new investors. We'll see what it's going to be like. It seems to us that this offer is the best, financially speaking, and also having regard to getting the receivables for selling the business. It will take several months, but we will keep you informed in the half-year report, probably in more detail. Next question is about competitors. After the closure of the stores of Orsay, do you think that your sales will increase? Yes, we do think so. We think that. Let me put it this way. Lower competition, this is, I think, visible right now.
On the one hand, the pandemic, on the other hand, difficulty in supplying the stores. Higher transport costs have already translated into the financial standing and possibilities for the companies in our industry. The fact that we have the goods, even in surplus, translates into good sales results. This indicates that lower competition, some competitors closing their operations, this is of course favorable to us because we increase our share in the market. Withdrawal of several new companies is beneficial to us. Another question, we have seen this a lot. This is about Serbian online store. When are we planning to launch it? We are working on it. I cannot give you the proper dates, but I can say that it's still going to happen this year. Why the write-offs for Russian business?
This business was decided to be sold. Looking at the investors, we see that the stores can be still operational. The write-off concerns unprofitable stores. Now when they are reopened with new logo, they should become profitable. That's why we reverted the write-off. The next question is about introducing home decor into Reserved and Sinsay. Why did you make this decision? Observing what competitors are doing, what the customers demand, what the customers are looking for. Very often, looking at the demand for home decor and for the goods, how to call it? Yes, the homeware, accessories for your home, accessories, cosmetics, gadgets. These are really cool things that also Gen Z are buying as presents, gifts for their peers.
Observing the market, what is selling well in Western countries, we also decided to expand the range of products that we offer. Given the fact that we have quite large stores, Sinsay is 1,000 square meters on average, we can ensure proper display of such various products, also homeware. We see the demands. We have been observing what is sold well, what is the demand. We are expanding our offer continuously and trying to follow the customer needs. This demand actually started during COVID times, where we spent more time at home, and we felt the need to beautify our home and ourselves. This has been observed until today. Homeware in Sinsay and Reserved this has been developed. Another question.
In the balance sheet, the assets intended for sale, we have PLN 3 billion and 1.7. What is the write-off value for these assets? There are no write-offs for these assets yet. The previous ones. We are preparing the Russian subsidiary for sale and showing its value on one hand, assets and liabilities on the other hand, because we have the missing amount, the equity of that company. We're preparing for the sale, and we have not been doing any write-offs in this balance sheet. They will be done in the first half year. Next question about planned floor space for the coming year. Still, we will be dynamically developing Sinsay brand. Looking at the pipeline of our projects or new openings for Sinsay brands, we have seen quite a lot of contracts signed for 2023 already.
We are counting on, and this is actually the plan, in the long-term perspective, two-three year perspective, so that we can increase by 15% the available floor space in 2024, by another 10%-15%, mostly thanks to the development of the Sinsay brands, on European markets. Thank you. Another question concerning our development. When are you planning to open the first store in Italy? We are planning to open the stores in Italy and Greece for December. This is what I can say now. We have been holding conversations and talks with landlords. The first stores contracts have been almost settled. Looking at how much it takes, we believe that in this calendar year, the first stores will be opened. It seems that we have exhausted the pool of questions. That was the last question.
Ladies and gentlemen, thank you so much for attending, for your presence during our conference, and we would like to wish you a great long weekend and summertime, and we strongly invite you to our next conference in October. Thank you very much. Goodbye. Thank you.