Slide 1: 4Q19 Results Presentation
DENLCLER z == = 4Q19 RESULTS > PRESENTATION 3157 MARCH 2020
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: Executive Summary
VISTULA WOLCZANKA BYTOM WKRUK DENI CLER VRG VISTULA RETAIL GROUP
Slide 4: Key events influencing a strong 4Q19
Key events influencing a strong 4Q19 4Q19 COLLECTIONS BYTOM SYNERGIES IFRS 16 Consolidation of results and margin synergies visible on A favourable season in fashion Vistula, Wólczanka and Bytom IFRS16 application. and jewellery segments. brands (impact of two additional months). 4Q19 presentation 4
Slide 5: Dynamic earnings growth in 4Q19
Dynamic earnings growth in 4Q19 IFRS 16 EBIT NET PROFIT REVENUES PLN 47.6m PLN 44.3m PLN 332.5m, +22.2% +16.7% +36.7% IAS 17 EBIT NET PROFIT GROSS PROFIT MARGIN PLN 47.5m PLN 38.0m 53.7%, +0.8 pp. +16.4% +17.2% 4Q19 presentation 5
Slide 6: Double digit growths in 2019
Double digit growths in 2019 IFRS 16 IAS 17 EBITDA REVENUES PLN 1,068.3m PLN 198.5m PLN 111.1m +32.6% +122.4% +24.5% EBIT PLN 87.5m PLN 87.5m +21.7% +21.7% GROSS MARGIN NET PROFIT 52.1% +0.9 pp. PLN 64.0m PLN 65.9m +19.5% +23.1% 4Q19 presentation 6
Slide 7: Group's development continues
Group’s development continues NUMBER OF STORES EOP 4Q19 104 +6 YoY 154 +6 cities 126 +4 146 +19 YoY franchise 140 +1 stores 31 +0 54,4 +5% YoY ths m2 139 +11 14% +2 pp. YoY 590 +22 internet share 4Q19 presentation 7
Slide 8: Continuation of group's floorspace growth
Continuation of group’s floorspace growth Group floorspace growth YoY (ths m2) Group floorspace reached 54.4 ths m2 at the 54.4 end of 4Q19, up 5% YoY. 51.6 1.7 1.1 The apparel segment added 1.7 ths m2, up 9.6 10.6 4% YoY. The jewellery segment added 1.1 ths m2 net to group floorspace, growing
Slide 9: VRG
VRG VISTULA RETAIL GROUP
Slide 10: Vistula: growth continues
Vistula: growth continues Vistula brand network Vistula brand floorspace grew 6% YoY at the end of 4Q19, while the sales network 4Q18 4Q19 YoY expanded by 6 stores net. Number of stores 148 154 +6 Dynamic franchise development continued: 6 new franchise stores net and 13% YoY incl. franchise 56
Slide 11: Vistula: dynamic store EBIT growth in 4Q19
Vistula: dynamic store EBIT growth in 4Q19 Vistula brand revenue split Growth of Vistula Red share in revenues 13% 13% coupled with stabilisation of Lantier brand. 14% 14% 16% 18% Lower share of the main line in revenues due to reduction in occasional lines (Robert 51% 53% LewandowskI). 71% 69%
Slide 12: Vistula: almost PLN 290m revenues
Vistula: almost PLN 290m revenues Vistula brand revenue split (PLN m) Vistula brand revenues reached PLN 286.4m in 2019, up 7% YoY, showing growths in each 286.4 sales channel. +7% YoY 268.7 43.5 Franchise revenues reached PLN 56.9m in 35.7 56.9 2019, up 13% YoY. Share of franchise grew 50.2 fro
Slide 13: Bytom
BYTOM SZTUKA KRAWIECTWA OD 1945
Slide 14: Bytom: franchise growth
Bytom: franchise growth Bytom brand network Bytom’s network grew YoY by 4 stores net, out of which 3 were franchise stores. 4Q18 4Q19 YoY Brand’s floorspace grew 4% YoY due to Number of stores 122 126 +4 opening of increasingly large stores and incl. franchise 6 9 +3 expansions of franchise stor
Slide 15: Bytom: margin synergies
Bytom: margin synergies Bytom brand revenue split A growing share of casual in 4Q19 revenues, 10% 9% 11% 9% in line with market tendencies. 34% 37% A sizeable part of formal lines in 51% 54% Autumn/Winter 2019 collection. A falling share of accessories in sales split. 55% 54% 39% 37% 4Q18 4Q19
Slide 16: Bytom: stable revenues in 2019
Bytom: stable revenues in 2019 Bytom brand revenue split (PLN m) Bytom brand retail revenues reached PLN 198.2m in 2019 (+1% YoY). 195.8 +1% YoY 198.2 Franchise revenues reached PLN 9.3m in 2019 (+13% YoY). 18.4 23.0 Share of franchise increased from 4.2% in 8.3 2018 to 4.7% in 2019. 9.3 Int
Slide 17: Wólczanka
UINTAITTTNT| WOLCZANKA
Slide 18: Wólczanka: highest share of internet
Wólczanka: highest share of internet Wólczanka brand network Wólczanka network was stable YoY. Growth materialised in franchise stores (5 net more 4Q18 4Q19 r/r YoY). Number of stores 139 140 +1 Brand’s floorspace was also stable YoY. incl. franchise 47 52 +5 Franchise store floorspace grew 6% Y
Slide 19: Wólczanka: double-digit store EBIT growth
Wólczanka: double-digit store EBIT growth Wólczanka brand revenue split A stable share of women shirts in sales 9% 13% structure. 5% 5% A higher share of knitwear due to extended 40% 41% 21% 20% assortment (introduction of chinos trousers) at the expense of mens’ shirts. 65% Stable YoY structu
Slide 20: Wólczanka: 20% YoY store EBIT growth
Wólczanka: 20% YoY store EBIT growth Wólczanka brand revenue split (PLN m) Wólczanka revenues reached PLN 125.9m in 2019, up 8% YoY. +8% YoY 125.9 116.2 Franchise revenues amounted to PLN 18.6m in 2019 (up 10% YoY). 32.9 46.0 Share of franchise in revenues amounted to 17.7 18.6 14.8% in 2019.
Slide 21: Deni Cler
Slide 22: Deni Cler: dynamic on-line growth
Deni Cler: dynamic on-line growth Deni Cler brand network Deni Cler network encompasses 31 stores in 4Q18 4Q19 YoY top shopping malls in Poland. Number of stores 31 31 0 There are 9 franchise stores in the network. incl. franchise 8 9 +1 Development of shop-in-shop concept. Deni Cler collectio
Slide 23: Deni Cler: sizeable gross profit margin growth
Deni Cler: sizeable gross profit margin growth Deni Cler brand revenue split Emphasis on capsule collections. Growth in accessories at the cost of main 16% 17% 18% 21% collection. Stable share of complementary 8% 6% 6% 8% collections. Growth in sales/ m2 shows the success of the strategy to gr
Slide 24: Deni Cler: growing store EBIT in 2019
Deni Cler: growing store EBIT in 2019 Deni Cler brand revenue split (PLN m) 2019 Deni Cler revenues reached PLN 46.6m (+7% YoY). +7% YoY 46.6 43.7 Franchise revenues reached PLN 10.1m in 5.0 2019 (+4% YoY). 4.1 9.7 10.1 Franchise constituted some 21.6% of revenues in 2019. 30.0 31.6 Internet
Slide 25: W.KRUK
UIYTTLITU TTT TITER TTE WKRUK
Slide 26: W.KRUK: acceleration of floorspace growth
W.KRUK: acceleration of floorspace growth W.KRUK brand network Dynamic YoY growth in W.KRUK brand stores. Opening of 11 stores net translated into a 4Q18 4Q19 YoY 11% YoY increase in brand’s floorspace. Number of stores 128 139 + 11 The brand had 14 franchise stores at the end incl. franchise
Slide 27: W.KRUK: stable EBIT in 4Q19
W.KRUK: stable EBIT in 4Q19 W.KRUK brand revenue split Watches continued to increase their share in revenues. 26% 30% 38% 35% Sales of watches amounted to almost PLN 36m in 4Q19, up 34% YoY. Within jewellery, there was a growing YoY share of gold jewellery over higher-margin 74% 70% 62% 65% si
Slide 28: W.KRUK: strong 2019 results
W.KRUK: strong 2019 results W.KRUK brand retail revenues W.KRUK brand retail revenues in 2019 (PLN m) reached PLN 371.4m, +19% YoY. +19% YoY 371.4 312.8 Internet revenues amounted to PLN 27.8m in 2019 (+28% YoY). In 2019 internet revenues came in at 7.5% of revenues compared to 6.9% w 2018. 32
Slide 29: 4Q19 brand's results summary
4Q19 brand’s results summary STORE EBIT STRONG ON-LINE SALES GROWING GROSS MARGIN YoY growth in combined in all brands. in apparel brands. store EBIT. Highest contribution of W.KRUK. FAVOURABLE IMPACT OF MARGIN SYNERGIES FROM MERGER WITH BYTOM. 4Q19 presentation 29
Slide 30: Group Results
VISTULA RETAIL GROUP GROUP RESULTS
Slide 31: Comparable periods
Comparable periods L I M I T E D Y O Y C O M PA R A B I L I T Y 4Q19 4Q19 4Q18 reported excl. IFRS16 The results encompass only The results include VRG The results include VRG one month of Bytom Group with Bytom – the Group with Bytom – the consolidation (merger as of brand’s impact took place for b
Slide 32: Higher revenues in both segments
Higher revenues in both segments Group revenues (PLN m) Group revenues reached PLN 332.5m in 4Q19 (up 22% YoY). 332.5 Bytom added PLN 60.6m to revenues for 4Q19. 272.1 270.2 251.2 There would be 10% YoY growth excluding 223.1 214.4 125.6 192.9 Bytom. 160.6 180.1 110.2 86.7 90.8 95.0 72.8 Appar
Slide 33: Higher YoY gross profit in both segments
Higher YoY gross profit in both segments Gross profit on sales (PLN m) 178.5 Group gross profit on sales amounted to PLN 178.5m in 4Q19 (up 24% YoY). 143.8 144.6 128.0 67.6 In 4Q19 gross profit on sales of the apparel 120.2 100.6 105.0 segment reached PLN 110.9m, up 32% YoY. 45.9 90.1 59.7 77.8
Slide 34: High EBIT dynamics
High EBIT dynamics Operating costs, monthly per m2 Group operating costs/ m2 fell 5% YoY in (PLN m, excl. IFRS16) 4Q19 to PLN 811/m2 per month. 883 852 761 802 784 811 Lower costs of stores/ m2 to 580 PLN/m2 723 717 292 683 (down 4% YoY) and fall in HQs costs/ m2 to 249 230 245 221 244 196 192 P
Slide 35: Strong 4Q19 operating activity
Strong 4Q19 operating activity Higher YoY gross profit margin due to favourable trends in the apparel segment. 4Q18 4Q19 4Q19 PLN m YoY IAS17 IFRS16 IAS17 IFRS16 applied in 4Q19 – rental costs replaced by depreciation of the right of use Revenues 272.1 332.5 22.2% 332.5 asset. A small impact of
Slide 36: Double-digit dynamics in 2019
Double-digit dynamics in 2019 Higher YoY gross profit margin due to favourable trends in both segments. 2018 2019 2019 PLN m IAS17 IFRS16 YoY IAS17 Dynamic YoY EBIT improvement despite SG&A costs growth slightly exceeding top- Revenues 805.7 1,068.3 32.6% 1,068.3 line growth and negative impact
Slide 37: Stocking for 4Q
Stocking for 4Q Change in inventory (PLN m) Inventory up 16% YoY to PLN 535.5m due to network development and opening of new +35.8 stores. +38.8 535.5 460.8 Apparel segment inventory increased 15% YoY. Growth results from stocking for a strong 230.4 4Q – sell-off started at the end of December 1
Slide 38: Safe indebtedness levels
Safe indebtedness levels Net debt (PLN m, excl. IFRS 16) Long-term and short-term indebtedness shown together with financial leases, yet excluding the leases from IFRS16. Financial 109.7 125.5 leases under IFRS16 at PLN 268.3m. 69.3 101.4 33.5 53.4 45.0 48.5 Usage of reverse factoring for supply
Slide 39: Seasonal engagement of cash
Seasonal engagement of cash Working capital Both balance sheet dates include Bytom. (PLN m) Cash flows for 4Q18 show VRG Group 20.0 23.9 excluding Bytom for X and XI, while 4Q19 PLN results include Bytom for the whole PLN 343.8 m quarter. 268.0 m Higher YoY inventories due to 535.5 460.8 develop
Slide 40: Coronavirus – Actions and Plans for 2020
CO RO N AV I R U S – AC T I O N S A N D P L A N S FOR 2020
Slide 41: So-far coronavirus impact
So-far coronavirus impact 103% E-stores of our brands are 88% operational and record high sales growths. 19% 17% 14% 13% 11% 1% 10% 9% 10% -2% -39% -50% -72% -50% -78% Closing of shopping malls -98% resulted in 97% of our Jan'20 Feb'20 March'20 T1 March'20 T2 March'20 T3 March'20 T4 traditional stor
Slide 42: Actions taken due to coronavirus
Actions taken due to coronavirus Cost reductions: Support of HR, rentals, on-line sales marketing (50% YoY cut) LIQUIDITY Capex reduction Working capital (by PLN 10m) improvements 4Q19 presentation 42
Slide 43: Support for on-line sales
Support for on-line sales Stronger promotions (-50% for new collections). Higher outlays to gain on-line traffic. Allocation of goods with priority given to on-line sales. 20% + 14% 12% 8% Target for 2020: e-commerce constituting more than 20% of revenues. 2020 2017 2018 2019 target 4Q19 presentatio
Slide 44: 2020 floorspace lower YoY
2020 floorspace lower YoY 2020 2020 2019 YoY former target stores 451 470 435 -16 APPAREL In 2020 floorspace will be lower SEGMENT m2 43,731 46,013 42,471 -3% YoY due to uncertainty related stores 154 164 149 -5 with coronavirus. VISTULA m2 19,320 20,584 18,697 -3% stores 140 145 135 -5 WÓLCZANKA m2
Slide 45: Actions related to HR costs
Actions related to HR costs maximum use of overdue and this year’s holidays cancelation of contractors limiting sales bonuses at stores and bonuses at HQs reduction of posts proportional to sending as many people as possible to the expected reduction in traffic work in remote mode (home-office) FGŚP
Slide 46: Actions taken to reduce rentals
Actions taken to reduce rentals The key topic is the elimination of rent • No development of traditional stores network in 2020 costs for the time of • Closing unprofitable stores (early termination of lease closed shopping agreements) centers and their renegotiation for the • Rental reductions prop
Slide 47: Working capital improvements
Working capital improvements APPAREL SEGMENT JEWELLERY SEGMENT Some 20% orders reduction for Spring/Summer 2020. 20% orders reduction. 20%-30% orders reduction for Autumn/Winter 2020. Lengthening of payment terms. Lengthening of payment terms. Usage of supply chain financing Limiting the watches dis
Slide 48: Base case scenario: stores closed by end-April
Base case scenario: stores closed by end-April, gradual recovery in clients from then on YoY GROUP SALES DYNAMICS (BASE CASE SCENARIO) Shopping malls A gradual recovery from revenue fall. closed by end-April. 10% 9% -10% -10% -10% -10% -10% -20% -30% -53% -50% Possible loss of more than -80% 20% of
Slide 49: Targets for 2020
Targets for 2020 REVENUES EBITDA LIQUIDITY RISKS Negative impact of coronavirus: closed shopping malls, lower consumer demand. Loss of more than 20% of revenues in base EBITDA above zero. Maintaining liquidity. case scenario. OPPORTUNITIES Fixed costs reduction, Stable YoY debt at the Share of inter
Slide 50: Focus on liquidity in 2020
Focus on liquidity in 2020 resignation from on-line sales cost reductions Klenoty Aurum Resignation from purchase of Strengthening of on-line sales. Fixed costs reduction, variable Klenoty Aurum in Czech costs decrease. Republic. No growth in traditional network. Benefiting from State support. At th
Slide 51: Q&A
VISTULA WOLCZANKA WKRUK — DENI.CLER Q&A VRG VISTULA RETAIL GROUP
Slide 52: Back-up
VISTULA WOLCZANKA BYTOM WKRUK — DENICLER BACK-UP VRG VISTULA RETAIL GROUP
Slide 53: Vistula: executive summary
Vistula: executive summary Vistula (menswear) Vistula brand is characterised by the highest quality of products and a fresh approach to men’s fashion. There are 3 stylistic lines in Vistula brand collections: Vistula – modern classical clothes, Vistula RED – the latest trends, brave colours, Lan
Slide 54: Bytom: executive summary
Bytom: executive summary Bytom (menswear) Bytom – a Polish brand with origin dating back to 1945. The brand offers men’s formalwear and smart casual assortment. ”Made to Measure” – personalised men’s tailoring offered in selected stores. Spring/Summer 2020 collection The heroes of the campai
Slide 55: Wólczanka: executive summary
Wólczanka: executive summary Wólczanka (fashion for men and women) Wólczanka runs a network of own and franchise stores in Poland with shirts for men and women, knitwear and accessories. The brand has two lines: Wólczanka and Lambert. Spring/Summer 2020 collection The faces of the #WE Wólczanka
Slide 56: Deni Cler: executive summary
Deni Cler: executive summary Deni Cler (women’s fashion) Women’s fashion brand with Italian origin, established in Italy in 1972. A network of stores for women over 35 years of age who value high quality and elegance. Collections created from highest quality fabrics with superior accessories a
Slide 57: W.KRUK: executive summary
W.KRUK: executive summary The oldest jewellery brand in Poland The jewellery offer includes gold, silver and platinum jewellery, diamonds, precious stones and original collections. W.KRUK's offer also includes global watches brands, such as Rolex (sole distributor in Poland), Cartier, Jaeger- Le
Slide 58: Summary of brands' 4Q19 results
Summary of brands’ 4Q19 results FRANCHISE NETWORK GROSS PROFIT MARGIN D E V E L O P M E N T. I M P R O V E M E N T. BROADENING THE JEWELLERY OFFER, INTRODUCTION OF PERFUMES. FURTHER INCREASE IN SALES O F W AT C H E S . HIGH SHARE OF HIGHEST GROSS PROFIT I N T E R N E T. MARGIN. 4Q19 presentation 58
Slide 59: CSR Strategy for 2020-22
CSR Strategy for 2020-22 Products People Places Our places Our products Our employees We want our stores to be more and We want our products to be safe, We want to provide our employees more ecological and our activities eco-friendly and ethical. We with the best workplace in which have a positive i
Slide 60: Group's structure
Group’s structure VRG C O M PA N I E S I N C LU D E D I N T H E CO N S O L I DAT E D S TAT E M E N T S F O R 4 Q 1 9 JEWELLERY APPAREL OTHER SEGMENT SEGMENT ACTIVITY VRG S.A. WSM sp. z o.o. ,VG Property W.KRUK S.A. parent company sp. z o.o. Jewellery, watches, accessories Vistula, Wólczanka, Bytom P
Slide 61: Growing number of stores
Growing number of stores NUMBER OF STORES 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 APPAREL total 295 299 300 304 440 443 452 451 451 SEGMENT franchise 88 93 94 100 117 120 126 129 132 total 134 136 138 141 148 152 154 152 154 VISTULA franchise 42 46 47 50 56 58 60 60 62 total 129 131 132 133 139
Slide 62: Higher floorspace
Higher floorspace FLOORSPACE (M2) 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 APPAREL total 24,613 24,822 24,864 25,163 42,072 42,429 43,207 43,461 43,731 SEGMENT franchise 6,006 6,389 6,487 6,820 8,394 8,621 9,223 9,322 9,590 total 16,719 16,855 17,176 17,429 18,230 18,727 19,007 19,058 19,320 VIS
Slide 63: 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. 9.4 Our aim is to develop on-line stores of own brands (monoshops). 7.2 5.4 7.0 6.0 Revenues and costs of on-line stores are 4.3 4.1 4.8 5.5 38.8 allocated directly to the brands. 26.
Slide 64: Costs of own stores under control
Costs of own stores under control Operating costs per month/m2 (PLN, excl. IFRS16) Differences in SG&A costs/ m2 between segments result from different business models. The jewellery segment is characterised by 1,380 1,376 1,510 higher revenues and costs/ m2 than these of 1,131 1,139 1,177 1,226
Slide 65: Discipline in marketing costs
Discipline in marketing costs Marketing costs by segments (PLN m) Marketing costs are part of group selling costs. These encompass: recurring advertising 5.7 spending (catalogues, photoshoots) and 4.7 nationwide marketing campaigns in editorial, 4.2 1.7 2.7 internet and TV with celebrities. 1.1
Slide 66: FX risk exposure
FX risk exposure Purchases by currencies (PLN m) FX risk is sizeable for the capital group, thus it is being hedged since 2Q16. 2018 2019 The group is a beneficiary of strengthening of zloty versus foreign currencies. CHF, 8% USD; CHF, 8% USD; A small YoY shift in purchases structure in 33% 35
Slide 67: Historical quarterly results
Historical quarterly results 2Q19 2Q19 3Q19 3Q19 4Q19 4Q19 PLN m 2Q18 YoY 3Q18 YoY 4Q18 YoY IFRS16 IAS17 IFRS16 IAS17 IFRS16 IAS17 Revenues 192.9 270.2 40.1% 270.2 180.1 251.2 39.5% 251.2 272.1 332.5 22.2% 332.5 Gross profit on sales 100.6 144.6 43.8% 144.6 90.1 128.0 42.1% 128.0 143.8 178.5 24.1% 1
Slide 68: Safe indebtedness level
Safe indebtedness level PLN m 4Q18 2Q19 4Q19 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring Long-term debt 74.4 71.5 58.0 (taken over with Bytom S.A. merger). Bank loans include: overdrafts and Bank loans 70.8 68.3 55.9 investment bank loans. Bank loan c
Slide 69: Monthly sales data
Monthly sales data APPAREL SEGMENT REVENUES (VISTULA, WÓLCZANKA, DENI CLER, BYTOM from XII 2018) 90 80% 84 78 78 80 70% 70 66 60% 52 58 60 52 53 50% 51 51 42 48 48 47 50 47 44 42 42 40% 31 39 38 40 40 40394038 40 40 37 35 33 34 33 33 34 32 32 3333 3434 33 33 34 32 32 33 34 31 29 27 29 29 28 31 30% 3
Slide 70: Monthly sales data
Monthly sales data JEWELLERY SEGMENT REVENUES (W.KRUK) 80 40% 69 70 65 65 60 30% 51 51 50 44 40 20% 31 32 31 32 29 29 30 26 28 27 27 28 27 28 27 24 25 26 26 25 26 23 26 22 22 22 22 22 21 22 21 18 20 20 20 20 20 20 20 19 17 18 18 18 19 17 18 20 17 17 17 17 10% 15 14 16 15 10 0 0% revenues -1 year (PL
Slide 71: Monthly sales data
Monthly sales data REVENUES OF THE CAPITAL GROUP 180 50% 156 45% 160 147 147 40% 140 35% 120 107 107 98 30% 96 100 92 90 83 85 86 25% 79 76 78 76 80 71 69 73 71 69 57 67 69 67 67 69 67 56 63 61 62 60 62 60 20% 57 56 57565757 57 56 57 57 60 52 53 50 52 53 52 53 50 48 47 49 15% 43 48 44 45 40 10% 20 5
Slide 72: Shareholder structure
Shareholder structure Shareholder structure as of 30.03.2020 Sources of information regarding holdings of (share in equity and votes) VRG S.A. shares 1. information on the number of shares provided in accordance with the notification received by Number of the Company pursuant to art. 69 clause 1 poi
Slide 73: Glossary
Glossar y Revenues from brands: Vistula, Wólczanka, Bytom (from XII 2018), Deni Cler and Apparel segment wholesale segment, B2B and processing. Jewellery segment Retail revenues of W.KRUK brand and other revenues (including B2B). Casual Revenues including the following assortment: jackets, trousers,
Slide 74: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow