The stock price of the Warsaw-listed Polish fashion retailer LPP collapsed 35.8% on March 15 following a report by Hindenburg Research, a business investigation company and short seller, which said that the sale of the LPP’s Russian business was staged and it continues to do business in Russia.

The report, titled “Operating behind enemy lines: how fashion powerhouse LPP masked a fake Russia ‘sell-off’ using front entities and encrypted barcodes”, claimed that LPP’s excellent financial results after it had announced it was exiting Russia prove that the exit was a “complete sham”.

Selling LPP’s Russian business to a Chinese entity was “a façade to hide [the] truth of not selling the Russian operations”, a “senior LPP employee” told Hindenburg Research.

“LPP’s Russian operations are still ‘directly controlled by LPP HQ and board’,” the report also said, quoting the employee.

Hindenburg Research said in its report that it took a short position on LPP shares. 

LPP fiercely denied the report, which collapsed its stock price nearly 36% in one day, dragging the Warsaw Stock Exchange’s main index, the WIG, and the blue-chip index WIG-20, along.

According to LPP, the report by Hindenburg Research is part of a “planned five-month disinformation attack aimed at lowering the company's stock value” and an attempt at taking control of LPP by external entities.

"The report prepared by Hindenburg Research is a component of a long-standing disinformation attack aimed at reducing the value of the LPP Group's shares. We informed the Ministry of Foreign Affairs and the National Revenue Administration about this situation,” LPP said.

Hindenburg Research is an American company founded in 2017, specialising in financial investigations and taking short positions on selected company stocks.

LPP called a press conference on March 18 to address the allegations by Hindenburg Research.