Welcome everyone. Magda Koparczka, Investor Relations and Trimyslaw Fluzkiewicz, Vice President of the Management Board of LPP. We'd like to welcome you to our results conference where we will present financial results for the past quarter and the entire year. We will also discuss the corporate events and tell you about our plans for the coming months. In the last part of the presentation, as usual, we kindly invite you to participate in our Q and A session And the question you can place in the chat window.
That's all for introduction. Now, Pramek, you have the floor. Thank you very much. Welcome, ladies and gentlemen. Today, we will, as usual, start with financial results for the Q4 of 2020, 2021.
I would like to remind you that this is the shifted fiscal year. The past year normally had 12 months, but it starts In February and finishes in January, so it's not equal to the calendar year. The Q4, which we'll be talking about today, It comprises the months of November, December, and January. We will, of course, compare it to the analogous shifted quarter from the previous year. The slide that you have already seen in the previous conferences, we updated along with the situation developments As to COVID situation, I would like to refer to it, but discuss the newest part of the schedule here.
Let me remind you that at the end of October, the epidemiological situation in Poland and in neighboring countries It was very hard. Poland was all in the red zone and therefore in November, those 2nd lockdown introduced in Poland. All the stores were closed. After that, some lifting for lifting of the restrictions before Christmas, after Christmas. Again, some restrictions and a 3rd lockdown was introduced.
In February, the stores reopened again, But mid March 4th, lockdown started and has been continuing up to today, and the stores are closed mostly. Please take a look. This is the graph, which looks something like an amphitheater. We decided to present the The lockdown calendar in the previous year starting from February 2020 were the 1st month of financial year, started until the January 2021. You can see all the countries where we operate On the left hand side, where we have the stores starting from Poland, Russia, Ukraine, and so on, finishing with Kazakhstan and Belarus.
And what you can see, which is clearly visible, March 2nd part of March April May 2020, where the lockdowns in many countries were introduced, this was the hardest period for the company As we were uncertain as to what to expect, what the situation will look like, how long the lockdowns would take, and what the customer behaviors would be like. So the beginning of last year was the hardest for us. Only 2 countries didn't have lockdowns. You can see Finland and Belarus. Since the middle of May, the restrictions were lifted and the stores reopened.
You can see the Following months, June, July, August, September, were free from lockdowns, apart from some minor exceptions. Then in October, the situation deteriorated in November, December, and January. You can see that the lockdowns in many countries We're reintroduced. This unfortunately hindered our results. The lockdowns were not so stringent as the first ones.
You can see that Russia, the 2nd most important market in Romania. They didn't have lockdowns in the Q4, which allowed us to Achieve quite good results, the best we could. Summarizing or showing you the Big picture of the company at the end of last year. There were 1856 Stores open in the 25 countries. The floor space increased by almost 17% And traditional stores because of lockdowns, of course, recorded very low results, almost 40% On demand is like for likes.
However, the online sales was doubled last year. Now we are present in 30 countries with our online offer. But despite the Because of the size of lockdowns, the revenues of online sales could not offset the falls, which we recorded in Offline sales. So group revenues deteriorated by 15.9 almost 15%. Let's take a look on the map.
Let me remind you that in green, you can see the countries where online and offline sales is available, the gray countries Where we only have the offline offer and the blue ones with only online offer. As you can see by the number of Stores, the most important country is still Poland, but the growth has been noted in Russia, Ukraine, and Romania. These three markets, because of their size and attractiveness for LPP, have recorded the fastest growth, And it will be continued in the years to come, but we will discuss that in the slides connected with plans for the future. You can see the table, 1856 stores, so plus 110 stores year on year. In Poland, we noticed a slight decline, but quite considerable increases in the CIS regions, Belarus and Kazakhstan.
As of the 31st January, 45% of all stores were opened. As you can see, the Eastern markets were operational 100%. In Poland, only 10% were opened. Apart from Poland, in the European Union without Poland, only half of the stores were open. Moving on to sales results, starting with like for likes in traditional stores.
As you can see on the left hand side, considerable 50% drop in like for likes, similar to the Q1, Where in the countries we operate, the countries were actually affected by lockdowns. On the right hand side, you can see Like for likes of open stores. There were 3 months last year only where we recorded Increases the beginning of the year, then July and always the end of the year, we recorded drops, but similar level, More or less minus 12% in each month, which is probably connected to the fact that some parts of the customers Transitioned to online shopping permanently, and therefore, these drops In open stores that we recorded. So all in all, all our brands recorded Drops in like for likes, which is, of course, related to the number of stores in particular cities that we have. Now moving on to e commerce Revenues, our online sales has been increasing considerably, almost PLN800 1,000,000 in sales in the Q4 on is a record sales result comparing to any quarter.
On the right hand side, you can see online revenues by regions, Poland in green. And almost a half of the revenues still we noted increases 99% on the plus and Poland 70%. The yellow, we can see European countries apart from Poland, so almost tripled the Increase in sales in CIS countries in Russia and Ukraine. Considerable increases At the moment where we see the customer behavior who actually transitioned to online sales when the Stores are closed due to the pandemic. So now considerable part of those shopping is done through mobile device.
80% of the visits in our stores are through online device mobile devices, And it's 2 thirds of overall purchases. So we wanted To move towards the mobile devices sales, and we knew that we had adjust our website for the purposes of The online says through mobile devices, so with pictures quickly loading and so on. So Everything had to be possible via smartphone. Summing up, overall sales On the left hand side, you can see how fast and how strong the sale increases outside Poland. So CIS region and Europe, They are almost the same as the green Poland result you can see on the graph.
All these regions recorded falls In the Q4, of course, due to lockdown, but not all the countries recorded lockdowns. The example of Romania, Serbia and Bosnia and Herzegovina, Where the revenues year on year increases, this was mostly due to opening of new stores, Like in Bosnia and Herzegovina, but the fast ecommerce growth also contributed. So not all countries recorded losses. On the right hand side, you can see the floor space increases. It's by almost 17% and the most increases recorded in the Eastern countries, over 30%.
Poland around 7% of increase. The most important information that you can get from this slide is probably the fact that Poland, our most important market, It's becoming dominated by other countries. Or maybe to put it differently, for the first time in history, Poland Dropped in its share in the revenues below 40%. All of our brands recorded more sales in the 4th quarter Outside Poland, as compared to Poland, so the strategy of group development focusing on the sales abroad is Actually, giving better and better results. Let's have a look at Revenues by quarters.
On the left hand side, you can see, especially the left part, pertaining to 20 19, you can see the normal distribution of our seasonality. The Q1 is the Worst and then similar results in the 2nd and third and the 4th quarter is the best one with November, December and January. And you can see how COVID strongly affected the seasonality last year, Well, the Q1 was very, very bad and then increases in the 2nd and third, and the third was actually the best. Because of the lockdown's overall poor results in the Q4, so the seasonality of the past year Has been strongly affected by lockdowns introduced. E commerce sales marked in yellow is clearly visible, Almost 40% in the Q4.
On the right hand side, you can see omni channel revenues. So offline and online together, broken down by particular brands. So the year on year dropped by 23%. Reserves crop house mojito, around 30% drop year on year. Since I is an exception here.
So here we have the most increases in terms of number of stores, And this is the only brand that recorded increase in the 4th quarter. Let's move on to gross profit margin. In the 1st part of the year, the gross profit margins were Lower than previous years, it was a result of lockdowns and the fact that we tried to sell the spring and summer collections as fast as we could, even despite the restrictions. And we saw the effects of those actions. So Moving a certain part of spring collection to autumn and a 40% reductions In purchases for the autumn winter collections, these 40% reductions caused that There was less inventory to sell off.
It was like shooting at a moving target. We didn't know what The customer behavior would be like the lockdown situation and what kind of stock taking approach to adopt. We are pleased with those actions. And the shifts of collections that we introduced, the decrease in the purchases that we introduced Brought the expected result. At the end of the year, we didn't we were not left with Too much stock.
Considerable increases in online sales caused that we didn't have to introduce Excessive sell offs and prolong the campaigns. Stocks were less than we planned. So At the end of the year, we are not experiencing any problems with excessive inventory and margins have increased and are better in the Q4 comparing year on year. Of course, on the other hand side, the foreign exchange rate of dollar Helped in this situation. It was lower towards the end of the last year than in the comparing it to the previous months.
Let's move on to costs. On the left hand side, you can see the graph with, own stores costs. Similarly to previous quarters, the Q4 2, recorded lower costs, so minus 26% year on year. With all the cost elements, rents, HR costs, and other costs are considerably lower, 144, PLN per square meter per month. On the right hand side, you can see the overall SG and A costs, Ecommerce and headquarters cost.
And this is also a drop by 14% year on year. You could say that our business has been changing considerably from the one that fixed costs dominate where we have Changeable costs introduced. The most considerable here are allowed to are related to online Sales with variable costs and transitioning in the stores to turnover rents, for example, and the costs related to turnover such as 3rd party costs. All of these causes that the variable costs are predominant here. Summing up of the quarter, the revenues are lower by 23.1% year on year.
Gross profit margin is slightly better. SG and A costs, a similar level to the previous year. And as usual, at the end of the year, we have a lot of one offs. On the One, hence, we had considerable write offs related to unprofitable stores And the goodwill write off in Slovakia. And on the plus side, we had subsidies obtained in many countries For the salaries of employees, so the operating profit, a considerable 80% PLN80 million drop, And the previous year was PLN300 1,000,000.
There is a loss Over PLN40 million with EBITDA. In the Q4, we are pleased with operating profit, but The net profit due to the foreign exchange differences And various operations related to IFRS 16 and lease contracts, which Burdened our financial activity, the company generated a loss here. Looking at the entire year 2020, we have revenues drop by 15%, PLN7,800,000,000. This is the revenues for the whole year, a little bit lower Profit margin, the cost slightly lower as well, but it was not as considerable as Dropping revenues. So, the operating profit, PLN 150,000,000 a considerable drop comparing to last year.
So on the net level, it's almost PLN 200,000,000 And the last year, it was 500 on the plus side. So it's a difficult year. The financial results reflect those difficulties, but The measures that the company has taken, on the one hand, in relation to investments in new technology, on the other hand, optimizations of Working capital and good management of cash, overall costs that closing the year with a loss, The financial condition is stable. We are quite optimistic about the future. And when the lockdowns are lifted, we could Show better financial results than in the previous year.
Let's discuss some elements of our balance Sheet, starting with inventory. Inventory grew over PLN2 1,000,000,000. This is due to full inventory with new collections. Over 70% Of this is, spring summer collections. The sell offs since January February were successful, so We don't really have a lot of older collection pieces in the inventory.
On the right hand side, you can see Our working capital, considerable increase in trade liabilities. It's over the inventory levels, so it means that the company has quite considerable cash levels. Inventory per square meter, 455, This is the level that we would try to, like, achieve in the 2021 period. 2019 showed up. Now we have in the COVID, the inventory dropped considerably, PLN1200 per square meter.
So we're coming back to the Optimum levels, €1500,000 will probably mark the new standards for the post COVID period. The next slide shows net cash on the balance sheet. Net debt, You can see on the graph that the considerable changes visible in the Q3 is over €1,000,000,000 net cash. Now it's Less than 300, which is related also to some operations that we have been conducting. We shifted some financial assets from the bank to money market funds, And we used some of the some of them as deposits.
So almost PLN1 billion, They are not demonstrated in financial. The 1,000,000,000 cash, which you can see In a different in a different item, we can still use if we wanted to look overall, this indicator would be better. But this approach, the accounting approach showing that the cash should be recorded differently Causes this kind of result that you can see on the graph. Let's stop for a moment here because I think the situation is quite strange. I have never experienced such a thing before.
And I think Keeping cash in the bank is connected with some negative Interest. So company would have to try to do something with the extra cash. They try to find alternatives. So moving from Deposits in the banks towards some funds options. We're trying to Take into consideration the security issues also.
So we place our cash in the money market funds. Another comment, some deposits, some cash is in With such increase in purchases and the liabilities With reverse factoring, we decided that the limits that we have in 2 banks, HSBC and Santander, are not Satisfactory for now with increased liabilities and purchases. So in order to still be working on these factoring platforms to keep Increasing the liabilities and at the same time, giving the possibilities for our suppliers to have convenient way of financing And processing of invoices, we decided to increase our possibilities here on these platforms by way of Adding our own cash. So we put in certain deposits here for the banks, And we could increase our factoring limits in order to continue increasing the liabilities. Of course, these deposits are short term, like fixed term.
We can, In advance, withdraw them. So this is not like blocked money. This is for a fixed period of time. Let's move on to CapEx. You can see on the right, our CapEx is almost PLN 300,000,000 in the 4th quarter.
You can see the acceleration here. In the first half of the year, we kind of stopped the investments, Both in terms of infrastructure investments with office premises and stores, In the second half of the year, when the situation improved, the markets unblocked, we also decided to speed up the development. So more Outplays in the Q4, most of them for the stores, and we also unlocked certain costs. And We moved to this increasing mode in the company. We decided to continue with opening of Stores and investing in infrastructure, which we will discuss in a second.
So summing up the last year, We have been developing our floor space, but these are stores in smaller cities, Opened under better conditions than before. Still, we record e commerce Increases, we have doubled the revenues. The costs are under control and the Working capital is managed well. We are safe on the financial side, so net cash is still present. As far as key developments in the past period are concerned, let me start with Charity operations that we have been carrying out in the company, there is a foundation called FPP Foundation, which helps, Most of all, those excluded, we primarily want to help institutions and persons In our neighboring areas, in Danske and Krakow, where we do have our offices, It was a record year in this respect.
PLN 9,000,000 in Clothes and in financial aids for the institutions were donated. And for the first time, we helped Hospitals and rescue workers, which really needed special attention in this difficult period, and Our foundation tried to assist the medical personnel in this period. Another three events It pertains to logistics, and logistics is a very important aspect of our business in this difficult period. As you can see, We have been building new e commerce warehouse in Russia. This will be dedicated to El Pepe, but it will be rented.
And fulfillment center in Romania is expanded. The dynamic growth of e commerce Cause to the need for more warehouse space. In Drevkovsky, this is related to, stationery Now going into details, Russia, as you know, is a very big country. So logistics is quite a challenge here. And here, we decided to increase our logistics resources, both in terms of development distribution center for stationary stores and for e commerce too.
So that's the decision of doubling the floor space in warehouses For e commerce, the construction has started and in the Q3 of this year, it will become operational To make the delivery faster and to improve the quality of logistics So that it's better and better in this promising but challenging market. Another element of these logistics Changes is the warehouse in Drevskoyevsky. We announced some time ago the opening and construction of this warehouse. Then COVID and lockdowns caused that for several months. The construction has been installed, but we have accelerated The construction, as you can see in the picture, from above, Half of this warehouse is actually covered with a roof, and we are planning to make it operational in a year.
So the Q1 of 2022. In the first phase, the employment target employment will be 500 people and maybe 1,000 overall. And plant CapEx is €200,000,000 The warehouse in Romania, The e commerce has been developing very quickly in this market, and we're hoping that the country will be able to Of the logistics from this country, we will be able to support also neighboring countries. So we are doubling the floor space So the warehouse in Romania, we would like to service from that spot also Bulgaria and maybe some other countries in Southern Europe. On the map, you can see How many warehouses we have right now?
The black elements, these service e commerce, We have 5 of those in Gdansk, Strickov, Bratislava, Bucharest, and Moscow. And there are 2 warehouses dedicated to Traditional stores in Prusdansky and Moscow and Zhevsky that is under construction. So we would ultimately have 3 warehouses dedicated to, traditional stores. Why are we focusing on the development of our logistics network? To be closer to the customer, to be able to deliver the goods Faster, when you purchase online, the faster delivery is next business day delivery is key, and we need to Be as close as possible to the customer.
Thanks to technology, thanks to new warehouses, we are able to increase The delivery times to shorten the delivery times. So, Thanks to the defrost project related to defrosting of the inventory that we have in the stores. We are able to deliver the purchased items also from the stationary clothes to the people who buy online. A few words about our plans for the next months. Let's start with the omni channel term.
Omnichannel for us means perspective. What trade will look like in the coming years? So Both offline and online channels combined together in the omnichannel will make it possible to Have more effective stock management and the use of the resources available. So the traditional stores, Which are at the same time kind of warehouses for e commerce orders, and they can service the online customer as well. On the other hand, the purchases, done through mobile devices and desktop Purchases.
The customer can come and collect the goods at the stores, return the goods at the stores. So this permeation of the 2 channels is key for us, and we will focus on developing this strategy. Technology is also important here. The electronic tag technology, RFID technology, which has been implemented in reserve successfully. This has brought tangible results.
Thanks to the availability of goods and bigger rotation and better And more availability of goods on the shop floor. We have decided to accelerate the development of RFID technology in our company and include other brands, Crop, Mohita and House. VERIFID technology will be developed in these brands this year. So we believe that this will help improve the effectiveness of our younger brands. The pace of implementation is key as well.
Thanks to RFID and the experiences that we have gathered in reserved brand, we can actually implement these solutions in new brands Faster. This slide focuses on Our own e stores and the answer to the question why we're not entering online platforms, like collective platforms. We are asked often Why LPP is not in Zalando? Answer, we are not doing it for several reasons. The Most important reason is that we want to have full control over our goods, the pricing policy, and How the customer is serviced by our stores.
On the other hand side, we want to have the knowledge about the customer. This is Key in the times like these, we want to develop our capacity or resources in terms of AI. We want to see the customer behavior, what goods they choose and why they choose particular goods To be able to provide them with better service in the future, we don't want to shift this knowledge and these elements to 3rd parties. The pace of the development is key. We have doubled the sales online Last year, this means that we need to develop online stores very quickly.
So, we don't want to We don't want our people to focus on other platforms. We want them to have 100% attention Focused on our development. Therefore, we decided not to enter such platforms. Our strategy, as for now, covers Our own e stores, which is quite challenging as it is. We need to provide good service with this fast development.
We don't want our IT forces to be distracted by other businesses. Now some fashion related comments, what sells well, and Magda will tell you all about it. Thank you, Pshame. Ladies and gentlemen, One of my favorite expressions is related to fashion is that fashion does not exist, not disconnected from reality, from what is going on, from the economic trends or the social moods. As an example, you can see last year, the COVID affected year.
During the pandemic, all of us have changed our lifestyle, the way we spend our time. We stayed at home more and our home and work merged somehow. So as a result, there were less official outings, formal outings. So the formal office wardrobe was Neglected and we discovered that comfort and casual outfits as the key ones. And it was the buzzword for the passing year.
Right now, We still value comfortable clothes and this casual trend. Formal clothing is still on the defense because, there are no occasions to wear such clothing. But we can see that something has been going on, something has been changing. We can see quite considerable Optimism in purchases, especially in the ladies collection. Ladies are willing to buy not only oversized dresses but also those flowery pieces.
It seems that everybody has had enough of sitting at home in their sweats and there is hope to wear new clothing at some other events and present themselves. Fashion is always related to what is going on outside. The trends are visible also. We noticed them. We noticed them among our clients and the fashion houses also see that.
And it seems that those trends will be will stay strong for the coming season, spring summer season, but also for the autumn winter seasons and the big fashion houses in fashion mix show that. Talking about trends, we have to mention here the polarization that has been observed. This is related to the increase in the interest in Value for money segment clothing, where the price is the key driver to purchase some items. This is related again to the current economic situations. On the other hand, we can also see A considerable interest in a sustainable fashion.
This also reflects The current awareness of, ecology that is on the increase. Our response to those two trends It's, 1st of all, since a brand in the value for money segment and the eco aware collection in the sustainable Fashion trend. EchoAware is our line with all our brands. Of course, in Reserved Echo Aware is like every third piece of clothing. There are certain standards to be met in terms of this collection.
These refer to the use of materials from The materials that are more environmentally friendly, this is organic cotton, Recycled fibers and cellulose based materials like Tensor. On the other hand, These are products which have been manufactured in factories, which operate According to ecological standards, these standards pertain to less water consumption, The use of renewable energy sources or factories with their own water treatment We place considerable focus on this Echoware collections. We have target sets. We can A brag now that these targets are better than expected now. To make it easier for the customer to find such Collections, we introduced this Echo Aware label.
This label used to be green, But we have decided that more environmentally friendly option would be To change the color into white as you can see on the slide. If you're interested in the details pertaining to our sustainable fashion policy and sustainable approach, We encourage you to have a look at there are several days off that we have ahead of us. So it's a great opportunity to have a look at our new integrated report. This has been published today. So that's all from me.
Now, Pshemek, you have the floor again. And you will discuss another more important trend that is online shopping. We talked about fashion and what happened, But what is interesting for you is the future. What is going to happen in the company, how we see the market and what kind of trends are to be expected? It would be hard to forecast in the turbulent times like these.
COVID came and destroyed several plans. So my attitude to planning is quite negative. It's difficult right now. What was our approach to build our plans for the coming months? It's difficult to expect what lockdowns will be introduced, the waves of pandemics.
So we assumed that the goods So we will purchase for this year. We will do it looking at 2019 models. If something goes wrong, if the reality of this starts from the plan, We basically are going to react ad hoc. So we assume that this year will be quite normal, but after the first Quarter and shifted lockdowns that our plans, initial plans, were not in tune with reality. Starting from the online sales plan, we can see that as long as lockdowns are introduced, The dynamic increases are noted in online sales.
PLN2.8 billion is the plan for this year. Last year, it was €2,200,000,000 So on the one hand, it's an ambitious plan. And on the other hand, it's very difficult to guess what's going to happen because on the basis of the results from the markets reopened after the lockdown, Like Lithuania or Slovakia or Bulgaria, on those markets, the traditional store sales Has accelerated and the online growth has stopped a little. It's very difficult to anticipate whether this target will be achieved. We are hoping for that because some of the customers got used to the new way of doing But in Lithuania, Slovakia or Bulgaria, after reopening of the stores, we noted considerable Increases in year on year sales.
So there is always a group of customers who prefer To go to the actual store to have this tangible and real experience of buying instead of clicking on the screen. If the store is unavailable for some time, this especially increases the willingness to go there when it's reopened. As far as our plans for the traditional network, we planned 20% increase in floor space for this year. This is quite faster than last year. Then it was 16.5% year on year.
Of course, the question is whether in the times like these in the Internet focus like these To develop the traditional store chain, our answer is yes. This is worth doing because our omnichannel strategy With the traditional stores, constituting support for e commerce and vice versa, we see Further possibilities of developments in traditional stores, especially in the Eastern European countries like Russia, Ukraine And the Southern European countries markets as well like Croatia, Serbia, we constantly see the Possibilities for opening new stores, not necessarily in huge shopping malls. We are talking about Smaller cities where people prefer to go to the actual stores rather than buying online. We see the potential there. So opening stores in retail parks, by the streets, under better commercial conditions than before.
So the 20% plan for the overall network and more development outside Poland, 22% increase in European Union Countries, apart from Poland, over 30% in the Eastern Markets. We are going to develop our youngest brands, those formats which fit well in retail parts like since Crop and House Brands. This year, we will have a new market. The stores will be opened in Northern Macedonia for First time in the second half of the year, and we are going to spend over PLN 800,000,000 on those stores. And the overall CapEx will be PLN1.1 billion.
So apart from building the stores, we will be, of course, building the Drezhkoievski Center And some of the CapEx will be devoted to the development in the IT area and the headquarters in Gdansk. Our CapEx for the 2 coming years, it's almost SEK 2 PLN 1,100,000,000 this year and PLN 900,000,000 the following year. A considerable amount from the CapEx, PLN1.6 billion will be devoted to the development of the stores. Summing up, the targets for this year, what we can see now, we want to continue with the increase In the floor space, we want to continue helping our e commerce stores To grow even in comparison to the COVID year, which was actually focused on online sales, We are expecting double digit growth in sales as compared to last year. We want to improve our operating margin.
On the slide, you can see that double digit growth revenue and operating margin improvement year on year. There was a bad year because of COVID. It's quite easy to do, but we are thinking of the 2019 also. Our operating margin was 9.5% this year. We would like to improve it even more.
Of course, our target is safe liquidity position maintained. What are the challenges? Of course, the further lockdowns, We haven't planned with those in site. This is uncertain where the new wave of infection will come and how The customers will behave in particular industries, how they will operate in this economy And the challenge of exchange rates, what will be the exchange rate for dollar, for ruble, because Russia is the 2nd market for us. We also see a lot of opportunities.
We think that the past period made us as a company adapt to this new way of commerce, This digitization of the business, development of omni channel and RFID tags, all of this together We'll translate into better results in the future. We are quite well positioned right now in terms of traditional Way of operating and some omni channel related Aspects, we are looking with optimism into the future, and we are well prepared to face new market Challenges. The collections are better and better. It seems that we can feel the market and adapt to it quickly. This is especially visible in the in terms of the new collection.
I would also like to mention that After the lockdown, we feel stronger and motivated within the company And we can see the effects now. The first lockdown was the worst because we didn't know what To expect we felt this uncertainty and this in turn caused that we were like driven internally and we can see the positive So that now, certainly the first half of the year was survival. We didn't really know what So to expect and what the situation will bring. But the second part of the year, improvement of the operations and acceleration of the plans. So we still believe in the e commerce development on new markets outside Poland.
We can distribute the marketing budget properly. We can boost the demand outside Poland in terms of e commerce also. AI, the algorithms that we use, these make it possible for us to see the customer behavior and to adapt our operations to that or to plan sales offers, Also the pricing policy, all of those aspects make us well prepared to face the challenge in the coming years. As to the upcoming years, 3, 5 years from now, of course, we want to focus on product development following the customer Improvement of our omni channel business and strengthening the development of value for money segment. Price matters, especially customers in smaller cities.
These customers pay a lot of attention to the pricing. So Our products answer these needs well. We are going to continue this development, the double digit Development in the coming years. And the lockdowns that we observe now will soon be lifted, and we will be Fully operational, both in traditional stores and online. Thank you very much, ladies and gentlemen, for your attention.
And you're kindly welcome to ask some questions if you have some additional queries. There are some questions. Let me start from the beginning. If we think of foreign expansion in Eastern markets, Romania, Ukraine, how do you see the potential in comparison to the Polish market as regards the potential of Floor space in terms of number of inhabitants and what is the rate of return in the opening stores And the competitive pressure relative to your operations in Poland. This is very complicated and complex question.
We see that those markets we consider those markets in terms of the number of stores The number of inhabitants, 50,000,000 inhabitants in Ukraine or 25,000,000 in It seems that we can have more stores in those countries and develop online sales more. Ukraine, the target development will be similar to Poland. Romania, half of what we have in Poland and Russia, Which was not mentioned here, can have many more stores than Poland. So it seems that those markets Very good for us. We are recognized and have developed infrastructure in those countries.
Back office and commerce structures are developed, the logistics structure. So we are well positioned in terms of growth on those markets. What is important, it was also mentioned in the question, the competitive pressure, the competitive environment. Of course, the Eastern markets, Russia, Ukraine are easier for us. There's less competition, and it's easier for us to grow there and to find Attractive locations.
It's more difficult in the European Union countries like Romania. In Romania, Bulgaria or in Croatia, This competition is more, basically. The companies that are our competitors In Czech Republic now, for example, they also plan to develop on those markets. So the competitive pressure is on the increase. We are optimistic.
These markets Very good for us. The rate of return is appropriate. It's short, so Below 20 months. Let me add that the Eastern European market behaves differently Then the Western European markets, I mean, the pandemic situation here, what's happening In retail, in fashion brands, in the Western markets, how many Companies who go bankrupt and so on. We can see that Western Eastern Europe seems to be more resilient to COVID situation, and it's It's quite good for us.
It's a very good comment. In traditional commerce, in traditional stores, after the lockdown, The Central and Eastern Europe sell well. The e commerce customer is always demonstrating in different behavior. The customers I learn and are willing to learn new things. So the returns are lower level of returns is lower in this part of Europe in Western Europe.
How would you comment the latest revelations about retail Retailers wanting to prepare to sue the government. What would be the compensation that LPP would be wanting to get from the government? Who would have to pay that government or the Shopping Mall owners, I wouldn't like to comment on those information. Of course, there are works on various dimensions. We have been carrying out individual negotiations.
After the 1st lockdown, it was successful, but each lockdown is 4th lockdown in Poland, it's getting more and more difficult to negotiate with shopping mall owners. Both sides fought for their rights. I prepare and some Other companies and the shopping malls on the other hand side, they want to stick to their own views and their own tenets. Works have been done on various planes. The government is also considering to Introduce some changes.
Let's wait. I think right now, individual negotiations So we'll not bring a lot of effects. So we are waiting for systemic solutions. The government as a kind of Another question, quite a long question, several. Let me just ask 1 by 1.
To what level, according to your budget, should the stationary sale be rebuilt per Square meter after the pandemic, taking into consideration the growth in e commerce and Cinsei. It's a difficult question. And of course, when you plan, You can miss here, of course, when we plant a stock stocking after the COVID period, we plant Just a few percent growth in like for likes. So we assume that the customers would be willing to return to stationary Stores to change their habits a little bit for this year, but in the long term perspective, the e commerce would continue to be popular. We can see that the sales this month and the coming summer months will return to the levels Like in 2019, but in the long run, I think per square meters, the sales Results will be lower and commerce will be moving towards online sales.
And we are planning to get this balance between the both ways. We don't know if it's 30, 70, 30 Internet and 70% online or 50. This is hard to guess now. So for the coming years, e commerce will be on the increase. We don't know it.
Nobody knows it Because, ecommerce proponents say that this will be the Primary source, some other people say that, stationary stores will be on the increase. So We need a time of stability. Right now we see that when post lockdown Stores are opened. The demand is on the increase and the e commerce is like on the decrease. After some time, It's, stabilizing, so we need this kind of period of stabilization.
It will be like a hybrid model. This is the same as in the case of remote work. So a hybrid model, I think, will be functioning In the coming years, this will be similar in terms of commerce. We saw several analysis of some other companies that We agree with this year will be like a reaction to the complete lockdown And after the lockdowns, the traditional store may record some increases and after several months Online ecommerce will be on the increase again. We are kind of inclined to accept this scenario.
Like for likes in open stores for the previous years looking at the month, we saw that plus results Just after the lockdown, we recorded. And the data that we see from Lithuania, Bulgaria, or Slovakia, Which are the countries where there was defrosting after the lockdown recently. We see considerable shift from online to offline stores. I think in Lithuania, during the lockdown, the increases were 200% in e commerce. When does those reopen the dynamics, like, for, like, 0%.
So it's the same level, Like in the previous year, so lockdown considerably affects online and traditional modes of sales. What is currently the Internet basket value in particular brands, including Cinsei? I don't have such data. I cannot present them to you and so we wouldn't like to disclose this information. What is the operating margin in e commerce and what is the change year on year?
Operating margin in e commerce is better and better, Thanks to the effective scale and investment in logistics and thanks to Broader use for both the purchases done online. The profitability of online business has almost doubled from 10%, 11% in previous year now, Operating levels of 20%, so it's considerably better. The profitability here is affected by Marketing, advertising, operations. So the question is, what part of these revenues We want to devote on marketing actions. So whether we want to have More marketing activities, so the profitability is less.
So we need to balance that. Oh, you exceeded the answer the following questions. So what is the cost of marketing in terms of revenues last year? We are steering this. There is no stable level.
We are trying here to have like smart management of the budget to use it the most effectively As effectively as possible, we are trying, in general, to have a flexible budget between 8% of online sales to 14% of for sales online. And now marketing is considerably different than last year or 2 years ago. It's considerably more digitalized. Another question, request for updates, What is the product offer in Cinsei? The main categories by percentage?
And what categories Should it be developed? Very detailed. I think it's Interesting for our competitors. I cannot answer that, of course. But, we are still working On verifying what share of particular categories should be in the Cinsei store, As you know, apart from ladies collection, we have kids and men's collection accessories and beauty segment.
We are now trying by experimenting to reach this optimum level of Products, we see that each category sells well, but it depends both on the size of the city and the country as well. So that will be the end of my answer here. Let me just add that this Category in terms of accessories in Sensei, it is seasonal it has some seasonality aspects to it. When it's the, for example, Christmas or some holidays, this is on the increase. Apart from RFID, do you identify other elements that would reduce the cost of stores per square meters like rents?
Generally speaking, as far as costs are concerned in the stores, they will probably return to the levels The pre pandemic levels, 100 and 80, 100 and 85, Which elements will return? Cost of personnel will return to the pre COVID levels when the stores will be fully operational And other costs as well related to energy, materials used in the stores. These will return to the levels from before the pandemic where we can save money. I think this is the rent area. When it comes to the quality of the stores, the rents that we are signing now, these are considerably lower than before.
So the savings here will be, will be observed, 185, 190 Square Meters. This is not so long term as before. Yes, this is very important Magda. Before, we signed 7, 8 years agreements, now even 2, 3 years period. The since a sharing revenues has been on the increase, What is the market's profitability now?
Market's profitability of Cinsei is very good. It's somewhere close to the average of the whole group. Can you please refer to the inflation in the whole Transport purchasing value building area in LPP. If we have one hour, we can start discussing that. Ladies and gentlemen, of course, inflation is visible more and more Starting from the supply chain, we are not talking about considerable increases in production here.
Of course materials like Cotton, the prices are on the increase, but it's not so much affecting us now. The cost of transport, Sea transport and rail transport, these costs affect our operations and because of our long term contract, We are mitigating these risks. So they do not, they have not hit us, in the Q1 of this year, but looking at the second Half years to come, these costs of transport will be important and will affect The personnel costs and salaries costs, these will increase in terms of inflation. So we are observing And we need to see how to react. We are not introducing any price increases, But in the coming quarters, we cannot Say that there will be no price increases.
We have been analyzing that and the elements of supply chain and servicing of the stores. We have to take this into consideration and maybe we'll have to react someday. This is the whole set of question From Mr. Grzyegovz, let's move on. Are the covenants in the credit agreements fulfilled at the end of the year?
All the covenants have been fulfilled and no one not anyone was broken. We have net cash on the balance sheet. So In this way everything is okay. What is the difference in gross margin on sale between e commerce and offline And since I versus other brands. For many quarters, we have talked that offline has greater margins than online.
Right now these are balanced and the differences between brands are not considerable, maybe Between offline and offline are not considerable. Looking at the entire last year, I can say that these differences are not more than 1.1 percentage point And offline has higher margin, but these differences are not so considerable. Looking at other brands, since A bit lower margins, but these are not so considerable. This is not like a gap of 10, 8 or 6 points, but considerably lower differences. On the new markets, Is e commerce on the slower increase or the value decreases?
This is the example of Bulgaria, maybe not Bulgaria because Bulgaria online sales will open this year, but Lithuania and Slovakia, The increases observed in observed in offline plus 40%, 60% cause that The online sale on those markets drops by half, looking at values in PLN 1,000 or PLN 1,000,000. What can you expect in the first quarter results when it comes to sales and profitability? Please give us some time after the May break. We will publish the report for the Q1. In 5 days time, please be patient.
What percent of rents are sales related? Directly sales related are still 1 third of the entire rent. In these contracts, there are both caps And some floors, not less than. It's very difficult to sign Agreement for clearly turnover related agreements. There are more and more of those In the new spaces that we rent, we try to have the Purely turnover based rents.
In terms of agreements related to turnover there on the increase, Let's put it differently. The clearly, purely, turnover, The rents that are not related to turnover at all, these are less than 20%. So in each round, there is an element related to turnover. What could be the dividend this year versus 2019. And here again, please give us some time.
We will announce all those details in the report. We are planning to pay out the dividend. Yes, that's true. We are a dividend company. We want to be perceived as such and the COVID year caused that there was A break in the payout of dividends.
We want to reintroduce that and the financial results show that, Of course, we recorded a loss. There is no profit, but we want to We want to pay the dividend from the retained profits. I guess this is all. Thank you very much. So ladies and gentlemen, thank you for joining us today.
We wish you a pleasant May break, good weather and health, and