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LPP SA plunged 24% in Warsaw after Hindenburg Research took a short position, wiping out $2 billion from the Polish fashion retailer\u2019s shares.<\/p>\n
In a report, the short-seller\u00a0alleged<\/a>\u00a0that the Polish company \u2014 one of the biggest clothing retailers in eastern Europe \u2014 hasn\u2019t fully divested its Russia business, and has been selling its goods through third parties. LPP said it was preparing to respond to the claims.<\/p>\n Before the war in Ukraine, Russia was the biggest market for LPP following Poland. The retailer, which owns several brands including its flagship Reserved label, suspended its fast-growing Russian operations in March 2022 \u2014 in the wake of the invasion of Ukraine \u2014 and sold its Russian unit to a Chinese consortium two months later.<\/p>\n \u201cWe think LPP devised an elaborate sham \u2018divestment\u2019 strategy to continue retailing in Russia while trying to fool investors and consumers in Poland, Ukraine, and its other markets into thinking otherwise,\u201d Hindenburg said in its report.<\/p>\n Strong public pressure pushed Polish companies to retreat quickly from Russia following the start of war in Ukraine in February 2022, with shoppers boycotting brands which failed to do so.<\/p>\n Hindenburg said it dispatched \u201csecret shoppers\u201d to Far East Services\u2019 stores in Moscow and St. Petersburg in December, where nearly all garments they found and photographed had \u201cidentical designs and colors to fall\/winter collections in LPP\u2019s online catalogues in Poland.\u201d\u00a0<\/p>\n This, the short-seller noted, indicated that LPP products were still \u201csomehow making their way into Russia at least 18 months after the claimed divestiture.\u201d<\/p>\n Hindenburg\u2019s report follows some high-profile bearish wagers against India\u2019s Adani Group and Icahn Enterprises Inc. in the US in 2023, rounding out a remarkable year for the activist short seller. The firm, founded by Nate Anderson, targeted Swiss fintech Temenos last month.<\/p>\n<\/div>\nSubscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up<\/a> for free.<\/div>\n<\/div>\n