Slide 1: 2Q23 results presentation
2Q23 results presentation A MODERN GROUP WITH TRADITIONS August 25, 2023
Slide 2: Disclaimer
Disclaimer This presentation (the "Presentation") was prepared by VRG S.A. (the "Company") with a due care. Still, it may contain certain inconsistencies or omissions. The Presentation does not contain a complete or thorough financial analysis of the Company and the Capital Group and does not presen
Slide 3: Introduction
VRG Introduction
Slide 4: Key corporate events
Key corporate events Dividend resolution Ordinary General Meeting of VRG S.A. on June 28, 2023, approved dividend payment of PLN 0.2 per share (PLN 46.9m). Dividend day was set at September 20, and dividend payment date at December 15, 2023. 2023-2025 strategy New ambassador campaign announcement of
Slide 5: More favourable revenue dynamics in jewellery than apparel segment
More favourable revenue dynamics in jewellery than apparel segment Jewellery segment Favorable sales dynamics of the jewellery segment in each REVENUE DYNAMICS month from January 2023 to (PLN m) July 2023 built by network development and stable demand due to stable demand 20% 30% for jewellery and w
Slide 6: Clients prefer to shop off-line than on-line
Clients prefer to shop off-line than on-line Stores Positive sales dynamics in traditional stores in most months of the year. Sales REVENUE DYNAMICS supported by higher YoY prices. (PLN m) 20% 23.2% 30% 15.6% Group 15% 20% 10.5% The Group's sales dynamics 10% 4.3% 5.4% 10% under the influence of mac
Slide 7: Favourable trends in gross profit margin
Favourable trends in gross profit margin GROSS PROFIT MARGIN ON SALES I.23 II.23 III.23 IV.23 V.23 VI.23 VII.23 gross profit margin 50.4% 51.2% 53.7% 56.2% 56.5% 56.6% 53.7% YoY dynamics -0.1 pp. +0.6 pp. +2.4 pp. -0.5 pp. -1.0 pp. +1.4 pp. +2.2 pp. Group gross profit margin on sales above 50% in ea
Slide 8: Stable floorspace
Stable floorspace GROUP FLOORSPACE CHANGE YOY GROUP FLOORSPACE CHANGE YOY (ths m2) (ths m2) +1.0 +1.5 +0.1 10.9 -1.9 9.0 -0.6 -0.8 -0.1 52.0 51.6 42.6 41.1 -1.4 2Q22 VST BTM WLC DCG W.KRUK 2Q23 2Q22 Sklepy własne Franczyza 2Q23 Group floorspace stood at 51.6 ths m2 at the end of 2Q23, down 0.8% Yo
Slide 9: Performance by brands
O 2. Performance by brands
Slide 10: Apparel collections in transition
Apparel collections in transition Work on Work on Spring/Summer Autumn/Winter Spring/Summer Autumn/Winter Spring/Summer 2023 collection in 2023/24 collection 2024 collection in 2023/24 2023 collections stores in stores stores collections 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09
Slide 11: Structure of apparel collections the key to 2Q23 results
Structure of apparel collections the key to 2Q23 results Autumn/Winter 2022/23 Spring/Summer 2023 Autumn/Winter 2023/24 new collections former collections Due to lower YoY orders and plan to reduce This action resulted in a decrease in inventories in the apparel segment, in inventories in the appare
Slide 12: Vistula: high base effect
Vistula: high base effect VISTULA BRAND REVENUES (PLN m) 80.5 70.4 65.4 71.6 11.2 65.8 67.0 57.2 11.0 10.4 6.0 10.9 16.0 9.8 10.4 14.8 14.6 47.6 14.2 13.1 44.0 12.7 6.9 11.8 11.4 28.8 9.0 7.4 53.2 12.9 44.6 41.3 46.6 43.4 46.7 4.2 34.9 31.7 25.2 11.8 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23
Slide 13: Vistula: further growth of women's collection share
Vistula: further growth of women’s collection share VISTULA BRAND REVENUE SPLIT 12% 13% 31% 32% • Relatively stable sales structure broken down into formal and casual clothing. Impact of celebrations on sales was smaller than 57% 55% a year ago. Stable share of accessories in sales. • Continuation o
Slide 14: Bytom: growing on-line sales
Bytom: growing on-line sales BYTOM BRAND REVENUES (PLN m) 51.0 57.4 48.1 50.1 51.6 6.5 2.7 46.7 39.0 9.7 6.9 6.5 7.2 11.4 1.8 2.3 2.5 33.9 8.2 31.2 1.8 1.8 22.5 1.8 6.8 7.9 1.0 1.2 48.3 39.3 38.8 42.9 11.9 37.7 36.9 29.0 26.1 0.6 22.1 10.1 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 Own stores
Slide 15: Bytom: the most formal apparel brand
Bytom: the most formal apparel brand BYTOM BRAND REVENUE SPLIT 16% 17% 22% 22% • Stable share of formal and good reception of the summer offer, especially in the on-line channel. 61% 61% • Higher share of formal collection than in Vistula brand - further work on distinguishing the offer of both bran
Slide 16: Wólczanka: off-line sales stronger than on-line
Wólczanka: off-line sales stronger than on-line WÓLCZANKA BRAND REVENUES (PLN m) 37.1 35.0 37.0 31.1 27.8 28.0 27.7 24.0 21.7 16.7 18.3 19.7 16.7 13.9 10.1 15.5 13.4 4.6 14.1 3.8 4.4 4.4 11.3 3.4 15.2 3.2 3.4 2.0 15.7 2.2 14.9 12.8 13.9 11.4 14.2 1.2 8.9 7.7 8.4 3.3 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q2
Slide 17: Wólczanka: shirts remain the largest category
Wólczanka: shirts remain the largest category WÓLCZANKA BRAND REVENUE SPLIT 18% 11% 7% 6% 16% • Very good sale of shirts, especially men's formal ones. Rebuilding 16% 66% 69% of sales in shirt boutiques (return to the brand's roots). • Women's collection accounts for 24% of the brand's sales and 66%
Slide 18: Deni Cler: demand for premium clothing continues
Deni Cler: demand for premium clothing continues DENI CLER BRAND REVENUES (PLN m) 16.7 13.7 1.4 14.2 13.0 13.0 13.5 12.0 9.8 1.4 11.0 5.7 1.7 1.6 1.6 1.4 8.8 1.2 4.9 1.1 4.6 1.3 4.2 4.5 4.7 3.7 4.4 1.9 3.3 2.8 9.5 7.2 7.4 7.1 7.9 7.2 5.2 6.2 6.4 4.1 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23
Slide 19: Deni Cler: the highest gross profit margin on sales
Deni Cler: the highest gross profit margin on sales DENI CLER BRAND REVENUE SPLIT 82% 82% • Very good sales of the brand's main collection, in particular dresses, sweaters, outerwear and trousers. • High share of premium accessories. 18% 18% • Success of introducing a less formal offer in recent qua
Slide 20: W.KRUK: revenue growth continues
W.KRUK: revenue growth continues W.KRUK RETAIL REVENUES (PLN m) 197.4 174.6 12.7 166.1 148.9 152.2 134.8 14.2 14.5 141.5 7.7 127.8 9.1 8.3 12.0 7.6 11.8 102.8 8.3 9.3 10.0 10.4 85.4 9.2 8.2 8.0 10.6 12.2 5.3 170.2 148.4 133.4 146.5 4.2 118.3 129.8 124.6 110.4 86.9 69.0 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
Slide 21: W.KRUK: growth in store EBIT
W.KRUK: growth in store EBIT W.KRUK BRAND REVENUE SPLIT 3% 2% • Double-digit increase in sales of watches - a positive impact of 28% 28% development of the offer in this area. As a result, share of 42% 45% watches in revenues grew YoY. 72% 72% • High single-digit sales growth dynamics in the jewelle
Slide 22: Group results
VRG [ | Group results
Slide 23: Favourable trends in revenues/m2 in jewellery segment
Favourable trends in revenues/m2 in jewellery segment GROUP REVENUES (PLN m) 348.8 341.8 319.4 369.0 335.3 • Group revenues in 2Q23 amounted to PLN 335.3m (-1.9% YoY), due to 305.0 267.0 lower YoY interest in on-line shopping. 244.0 243.8 174.2 149.6 194.9 167.8 172.1 136.5 152.7 103.6 128.4 142.0 •
Slide 24: Stable gross profit on sales
Stable gross profit on sales GROSS PROFIT ON SALES (PLN m) 192.0 193.2 201.3 188.7 163.3 165.5 • Group gross profit on sales amounted to PLN 188.7m in 2Q23 137.3 131.1 91.8 123.2 78.7 100.8 88.2 (-2.3% YoY). 71.0 79.5 81.7 53.0 73.8 In 2Q23 gross profit on sales in apparel segment reached PLN 100.
Slide 25: Growth in jewellery segment EBIT
Growth in jewellery segment EBIT MONTHLY OPERATING COSTS PER M2 (PLN, IAS17) 1,041 918 877 880 950 • Group operating costs/m2 (IAS17) reached in 2Q23 PLN 950/m2 per 880 712 726 774 310 month, up 8.3% YoY. 276 225 225 237 259 587 203 199 218 • Costs of stores at PLN 691/m2 (+6.0% YoY), while HQs cost
Slide 26: Terminating of clothing production in our own factories
Terminating of clothing 1Q22, 2Q22 results production in our own factories WSM Factory Sp. z o.o. consolidated via full-method • According to 2023-2025 Corporate Strategy, the Group will no longer be involved in clothing production • Rapid increase in labour and energy costs significantly worsened t
Slide 27: Growing net income in 2Q23
Growing net income in 2Q23 PLN m, IFRS16 2Q22 2Q23 YoY NET PROFIT (LOSS) BY SEGMENTS Revenues 341.8 335.3 -1.9% (PLN m, IFRS16) Gross profit on sales 193.2 188.7 -2.3% Gross profit on sales margin 56.5% 56.3% -0.2pp. 70.0 60.0 47.3 47.7 SG&A costs 132.8 143.7 8.2% 39.8 50.0 39.3 40.0 EBIT 60.2 43.3
Slide 28: Lower EBIT, but higher net income in 1H23
Lower EBIT, but higher net income in 1H23 PLN m, IFRS16 1H22 1H23 YoY Revenues 585.5 602.3 2.9% Gross profit on sales 316.4 326.1 3.1% Gross profit on sales margin 54.0% 54.1% 0.1pp. SG&A costs 250.1 276.4 10.5% EBIT 65.2 48.0 -26.4% EBIT margin 11.1% 8.0% -3.2pp. Net financial activity -18.9 13.4 N
Slide 29: Fall in inventory in apparel segment
Fall in inventory in apparel segment CHANGE IN INVENTORIES (PLN m) 561.3 527.9 69.8 • Inventories up 6.3% YoY to PLN 561.3m in 2Q23. -36.5 • Apparel segment inventory declines continued, with a 15.8% YoY fall due 296.5 366.3 to order optimisation and further run-off of collections from earlier quart
Slide 30: Net cash on the balance sheet
Net cash on the balance sheet NET DEBT/(NET CASH) (PLN m, IAS17 plus reverse factoring) 150 106.5 74.2 39.0 110 31.4 • Long-term and short-term indebtedness shown together with reverse -42.0 25.2 -15.6 -35.7 25.4 66.6 -5.4 factoring and financial leases, yet excluding leases from IFRS16. Financial 7
Slide 31: Positive operating cash flows
Positive operating cash flows NET WORKING CAPITAL (PLN m) PLN PLN 20.1 374.9m 19.0 434.2 m • Inventories increasing YoY: decrease in the apparel segment, growth in the jewellery segment. 527.9 561.3 • YoY decrease in receivables due to lower YoY prepayments for collections. 173.1 146.1 • Slightly lo
Slide 32: 2023+ outlook
VRG 2023+ outlook
Slide 33: Strategic changes in apparel brands from Autumn/Winter 2023
Strategic changes in apparel brands from Autumn/Winter 2023 • product and marketing offer addressed to a • modern version of formal clothing, • clear division of assortment offer between younger customer 25+, • extending the smart casual offer with store formats, • women's capsule collection - a wid
Slide 34: New concept of Vistula brand stores
New concept of Vistula brand stores Opening of the first Vistula store in the latest concept KEY ELEMENTS: • larger store size allowing for a better display of goods and comfort for customers when shopping • colours and finishing materials reflecting space and quality • division into women's and men
Slide 35: Modern marketing important for changes in brands
Modern marketing important for changes in brands Focus on social media in both segments Diversification of channels of reaching customers, precise targeting and increasing the number of materials in order to acquire new customers for each brand Attractive and constantly refreshed marketing content s
Slide 36: Focus on on-line channel
Focus on on-line channel Autumn/Winter 2023/24 collections offered in stores will be supported by further development of the on-line offer • implementation of subsequent stages of functional and aesthetic improvements on websites and applications based on customer experience audits • marketing autom
Slide 37: Stores are an important element of contacts with W.KRUK customers
Stores are an important element of contacts with W.KRUK customers Another W.KRUK store with Omega offer - CH Riviera, Gdynia Modernization of the store within the shopping center. A wide portfolio of luxury brands, enlarged by Franck Muller watches brand. Opening: June 2023 Another W.KRUK store with
Slide 38: Further development in W.KRUK offering
Further development in W.KRUK offering SYSTEMATIC DEVELOPMENT DEVELOPMENT OF LUXURY OF THE POPULAR OFFER OFFERING • new jewellery collections in the mid-price • prestigious jewellery manufactures (so- segment, allowing for expansion of called external brands) such as: BIRKS presence to smaller citie
Slide 39: Growth of floorspace in both segments in 2023
Growth of floorspace in both segments in 2023 Apparel segment • new store concepts for Vistula and Wólczanka that meet the needs of the target customer and the market 2023 2022 YoY • development of store space in the target best shopping malls - an attractive stores 382 376 - 6 presentation of the w
Slide 40: 2023 results dependent on 2H23
2023 results dependent on 2H23 Opportunities: good reception of the new collections of the 2023 targets Group's brands, in particular apparel after changes in the brand IDs, and improved structure of the collections better consumer sentiment (lower inflation, work on gross profit margin lower energy
Slide 41: Continuation of dividend payments
Continuation of dividend payments May 30, 2023 - recommendation of the Management Board regarding dividend from 2022 VRG S.A. will pay PLN profits, in accordance with the 46.9m, i.e. PLN 0.2 per share, dividend policy from 2022 profits. June 28, 2023 - Resolution of the General Meeting of VRG S.A.,
Slide 42: Q&A
VRG Q&A
Slide 43: Back-up
VRG Back-up
Slide 44: New collections in all brands in 2Q23
New collections in all brands in 2Q23 Higher share of women's collection On-line The highest share The fastest in sales. sales growth. of internet. floorspace growth. The highest gross profit margin. 44
Slide 45: Vistula: executive summary
Vistula: executive summary Fashion for men and women Traditional tailoring and global Autumn/Winter 2023 collection trends – modern, original and individual style • The Pre-Fall collection (announcing the Autumn season) is focused around the capsule wardrobe and advantages of Men's collection: VISTU
Slide 46: Vistula: 1H23 executive summary
Vistula: 1H23 executive summary VISTULA BRAND REVENUES (PLN m) 124.5 114.6 22.7 • Revenues in 1H23 decreased by 7.9% YoY, due to stable YoY 13.0 23.5 -8% YoY 23.2 sales in own stores (+0.2% YoY) and in franchise stores (-1.3% YoY). 78.3 78.5 • Internet sales fell 42.8% YoY, coming up at 11.3% of bra
Slide 47: Bytom: executive summary
Bytom: executive summary Fashion for men Autumn/Winter 2023/24 collection A Polish brand with a tradition of tailoring craftsmanship dating • The first edition of the collection was based on the idea of light layering. We back to 1945. have designed clothing that can be universally combined to creat
Slide 48: Bytom: 1H23 executive summary
Bytom: 1H23 executive summary BYTOM BRAND REVENUES (PLN m) 88.6 85.5 14.4 13.7 • Revenues in 1H23 fell by 3.5% YoY. Despite stabilization in sales 3.9 -3% YoY 2.8 in own stores (-1.9% YoY), there was a 27.2% YoY decline in sales in franchise stores. 70.3 69.0 • Internet revenues decreased by 4.6% Yo
Slide 49: Wólczanka: executive summary
Wólczanka: executive Fashion for summary women and men Polish network of boutiques and own and franchise stores with Autumn/Winter 2023/24 collection women's and men's clothing (total look). • This season's capsule is based on naturalistic floral patterns. In various The offer includes: shirts, vers
Slide 50: Wólczanka: 1H23 executive summary
Wólczanka: 1H23 executive summary WÓLCZANKA BRAND REVENUES (PLN m) 58.9 49.4 • Revenues in 1H23 fell by 16.3% YoY. Revenues from own stores -16% YoY increased by 4.9% YoY, but revenues from franchise stores 30.8 21.4 decreased by 18.4% YoY. 6.6 5.3 21.6 22.6 • Internet revenues decreased by 30.6% Yo
Slide 51: Deni Cler: executive summary
Deni Cler: executive Women’s fashion summary Women’s fashion brand established in Italy in 1971 Addressed to women over 35 who value high quality and elegance Autumn/Winter 2023/24 collection Superior quality fabrics with superior accessories and designer cut • In the Autumn/Winter 2023/24 season, t
Slide 52: Deni Cler: 1H23 executive summary
Deni Cler: 1H23 executive summary DENI CLER BRAND REVENUES (PLN m) 27.6 24.0 3.3 2.4 +15% • Revenues in 1H23 increased by 15.0% YoY. Revenues from own 9.3 stores increased by 13.4% YoY, and revenues from franchise and 8.3 YoY multibrand stores increased by 12.0% YoY. 13.3 15.1 • Internet sales incre
Slide 53: W.KRUK: executive summary
The oldest jewellery brand in W.KRUK: executive Poland summary The jewellery offer includes gold and silver jewellery, diamonds, gemstones and original collections. Novelties in collections W.KRUK's offer also includes global watch brands, such as Rolex, • In June, W.KRUK and Martyna Wojciechowska p
Slide 54: W.KRUK: 1H23 executive summary
W.KRUK: 1H23 executive summary W.KRUK BRAND REVENUES (PLN m) 307.5 • Revenues in 1H23 increased by 11.1% YoY. Revenues from own 276.7 stores increased by 12.9% YoY, and revenues from franchise 15.3 18.4 18.0 +11% 21.1 stores increased by 16.9% YoY. YoY 271.2 • Internet revenues decreased by 16.9% Yo
Slide 55: Changes in group structure VRG
Changes in group structure VRG Companies included in the consolidated statements for 2Q23 Jewellery segment Apparel segment Other activity W.KRUK S.A. VRG S.A. WSM Factory sp. z o.o. (until the end of May 2023 i.e. the moment of parent company bankruptcy filing), Jewellery, watches, accessories Vist
Slide 56: Continued optimisation of number of stores
Continued optimisation of number of stores Number of stores 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 total 421 415 409 404 398 391 383 382 368 359 Apparel segment franchise 135 135 131 127 126 123 119 116 104 92 total 148 148 146 145 145 144 142 142 137 136 Vistula franchise 64 64 63 61 62
Slide 57: Stable YoY floorspace
Stable YoY floorspace M2 floorspace 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 total 41,564 41,337 40,864 40,930 40,891 40,385 39,778 39,833 39,333 39,007 Apparel segment franchise 9,789 9,794 9,577 9,462 9,425 9,236 9,019 8,798 7,962 7,175 total 18,586 18,593 18,390 18,531 18,509 18,404 18,1
Slide 58: Own e-stores of five brands
Own e-stores of five brands ON-LINE SALES BY SEGMENTS (PLN m) • We have own e-stores for all five retail brands. Our aim is to develop 12.2 14.2 12.7 10.6 9.3 9.1 on-line stores of own brands (monoshops). 8.3 8.3 7.6 7.7 • Revenues and costs of on-line stores are allocated directly to the brands. 41
Slide 59: Costs/ m2 under control
Costs/ m2 under control OPERATING COSTS MONTHLY/M2 (PLN, excl. IFRS16) • Differences in SG&A costs/ m2 between segments result from different 1,970 business models. 1,766 1,411 1,512 1,395 1,367 1,158 1,196 1,266 • The jewellery segment is characterised by higher revenues and costs/m2 1,018 than the
Slide 60: Increase in off-line marketing expenses
Increase in off-line marketing expenses KOSZTY MARKETINGU OFF-LINE WG SEGMENTÓW (PLN m) • Off-line marketing costs are part of group selling costs. 9.5 • These encompass recurring advertising spending (catalogues, 6.8 photoshoots) and nationwide marketing campaigns in editorial, internet 3.4 1.3 2.8
Slide 61: Historical quarterly results, IFRS16
Historical quarterly results, IFRS16 PLN m 3Q21 3Q22 YoY 4Q21 4Q22 YoY 1Q22 1Q23 YoY 2Q22 2Q23 YoY Revenues 305.0 319.4 4.7% 348.8 369.0 5.8% 243.8 267.0 9.5% 341.8 335.3 -1,9% Gross profit on sales 163.3 165.5 1,3% 192.0 201.3 4.8% 123.2 137.3 11.4% 193.2 188.7 -2,3% Gross profit on sales margin 53
Slide 62: Results under IAS17
Results under IAS17 PLN m, IAS17 2Q22 2Q23 YoY 1H22 1H23 YoY Revenues 341.8 335.3 -1.9% 585.5 602.3 2.9% Gross profit on sales 193.2 188.7 -2.3% 316.4 326.1 3.1% Gross profit on sales margin 56.5% 56.3% -0.2pp. 54.0% 54.1% 0.1pp. SG&A costs 137.5 147.8 7.5% 259.3 285.1 10.0% EBIT 55.5 39.2 -29.4% 55
Slide 63: FX risk exposure
FX risk exposure PURCHASES BY CURRENCIES (PLN m) CHF, 19% USD, 23% CHF, 24% USD, 27% • FX risk is sizeable for the capital group, thus it is being hedged since 2Q16. Hedging only relates to the apparel segment. 1H22 1H23 • The group is a beneficiary of strengthening of zloty versus foreign currencie
Slide 64: Consistent debt reduction
Consistent debt reduction PLN m 2Q22 4Q22 2Q23 Long-term debt 29.6 20.7 15.2 • Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 28.7 19.5 13.8 • Bank loans include: overdrafts and investment bank loans. Bank loan
Slide 65: Shareholder structure
Shareholder structure PZU OFE and Other free-float DFE SHAREHOLDER STRUCTURE AS AT 24.08.2023 (SHARE IN EQUITY AND VOTES) 23.14% 19.44% Number of shares/votes % share 1. PZU OFE and DFE 45,589,125 19.44% 2. IPOPEMA TFI 36,238,137 15.46% Shareholders' IPOPEMA TFI agreement 15.46% 3. Jerzy Mazgaj 35,2
Slide 66: Glossary
Glossary Idea Definition Apparel segment Revenues from brands: Vistula, Wólczanka, Bytom, Deni Cler and wholesale segment, B2B and processing (until VI.2023). Jewellery segment Retail revenues of W.KRUK brand and other revenues (including B2B). Casual Revenues including the following assortment: jac
Slide 67: Thank you
Thank you VRG S.A. Pilotów 10, 31-462 Cracow Investor relations e-mail: relacjeinwestorskie@vrg.pl tel. +48 12 656 18 32 faks + 48 12 656 50 98 Press office VRG S.A. e-mail: sekretariat@vrg.pl e-mail: biuroprasowe@vrg.pl