Slide 1: 3Q23 results presentation
3Q23 results presentation A MODERN GROUP WITH TRADITIONS November 16, 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: Debuts of Autumn/Winter 2023/24 collections
Debuts of Autumn/Winter 2023/24 collections September 2023 New men's and women's collections of Vistula brand, in line with the latest trends and changes signaled in the Strategy for 2023-2025. September 2023 October 2023 In September, W.KRUK brand, together A limited collection of Bytom clothing wi
Slide 5: Jewellery segment more resilient than apparel one
Jewellery segment more resilient than apparel one Jewellery segment Favorable sales dynamics of the jewellery segment in REVENUE DYNAMICS every month of the year due (PLN m) to network development and continuing demand for 20% 30% jewellery and watches. 15.0% 15% 12.7% 18.2% 15.7% 20% 5.5% 7.0% 10.0
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. Impact REVENUE DYNAMICS of warm weather on traffic. (PLN m) 20% 40% 23.2% Group 30% 26.9% 15% 15.6% 10.5% Improving sales dynamics in 20% 10% 4.3% 5.4% weeks when most of the
Slide 7: Favourable trends in gross profit margin maintained
Favourable trends in gross profit margin maintained GROSS PROFIT MARGIN ON SALES I.23 II.23 III.23 IV.23 V.23 VI.23 VII.23 VIII.23 IX.23 X.23 gross profit CUMULATIVE 50.4% 51.2% 53.7% 56.2% 56.5% 56.6% 53.7% 53.9% 54.8% 55.2% 54.3% margin YoY -0.1 pp. +0.6 pp. +2.4 pp. -0.5 pp. -1.0 pp. +1.4 pp. +2.
Slide 8: Reversal of the trend– floorspace growth
Reversal of the trend– floorspace growth GROUP FLOORSPACE CHANGE YOY GROUP FLOORSPACE CHANGE YOY (ths m2) (ths m2) 55 50 +2.7 +0.5 -2.2 8.4 45 +0.2 10.6 40 +0.2 -0.5 +0.1 35 30 52.0 52.6 25 20 41.4 44.1 15 0.0 10 5 0 3Q22 VST BTM WLC DCG W.KRUK 3Q23 3Q22 Own stores Franchise stores 3Q23 • Group floo
Slide 9: Performance by brands
VRG O 2. Performance by brands
Slide 10: Key factors affecting brands’ 3Q23 results
Key factors affecting brands’ 3Q23 results Changes in Unfavourably Weak collections warm weather consumption The first brands’ Exceptionally warm Traffic in shopping products in line with the weather in September centers and e-shops new strategy available and its partial impacted by weaker in stores
Slide 11: Vistula: impacted by warm September weather
Vistula: impacted by warm September weather 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 51.8 10.4 14.8 14.6 47.6 14.2 13.1 44.0 12.7 7.0 6.9 11.8 11.4 10.1 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 34.7 25.2 11.8 1Q21 2Q21 3Q
Slide 12: Vistula: further growth of women’s collection share
Vistula: further growth of women’s collection share VISTULA BRAND REVENUE SPLIT 13% 15% • Relatively stable sales structure broken down into formal and 34% 34% casual clothing. Impact of celebrations on sales was smaller than a year ago. 53% • Slightly growing share of accessories in sales. 51% • Co
Slide 13: Bytom: more favourable dynamics than at Vistula
Bytom: more favourable dynamics than at Vistula BYTOM BRAND REVENUES (PLN m) 51.0 57.4 50.1 48.1 51.6 6.5 2.7 46.7 6.9 39.0 6.5 9.7 11.4 38.9 7.2 1.8 2.3 2.5 31.2 1.8 33.9 1.8 6.0 8.2 6.8 1.2 22.5 1.8 7.9 1.0 1.2 48.3 39.3 38.8 42.9 11.9 37.7 36.9 29.0 31.7 22.1 26.1 0.6 10.1 1Q21 2Q21 3Q21 4Q21 1Q2
Slide 14: Bytom: the most formal apparel brand
Bytom: the most formal apparel brand BYTOM BRAND REVENUE SPLIT 8% 9% 35% 33% • Stable share of formal offering – the most formal brand in Capital Group’s portfolio. 57% 58% • Higher share of formal collection than in Vistula brand - further work on distinguishing the offer of both brands. • Relative
Slide 15: 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 16.7 24.0 16.7 18.3 21.7 20.3 19.7 13.9 13.4 10.1 15.5 4.6 14.1 3.8 7.3 4.4 4.4 11.3 3.4 15.2 3.2 2.2 3.4 2.0 15.7 2.2 14.9 12.8 13.9 11.4 14.2 10.8 1.2 8.9 7.7 8.4 3.3 1Q21 2Q21 3Q21
Slide 16: Wólczanka: sizeable growth in gross profit margin
Wólczanka: sizeable growth in gross profit margin WÓLCZANKA BRAND REVENUE SPLIT 15% 13% 8% 7% 15% 14% 65% 70% • Sales of shirts saw smaller declines than those of knitwear. Good sales results in shirt boutiques (return to the brand's roots). 62% 67% 28% 24% • Women's collection accounts for 24% of t
Slide 17: Deni Cler: stronger on-line than off-line trends
Deni Cler: stronger on-line than off-line trends DENI CLER BRAND REVENUES (PLN m) 16.7 13.0 1.4 14.2 13.0 13.7 13.5 12.0 12.4 9.8 1.4 11.0 1.4 5.7 1.7 1.6 1.6 8.8 1.2 1.3 1.1 4.6 4.2 4.9 4.5 4.7 1.3 4.4 4.4 1.9 3.7 3.3 2.8 9.5 7.2 7.4 7.1 7.9 7.2 6.6 5.2 6.2 6.4 4.1 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q2
Slide 18: Deni Cler: the highest gross profit margin on sales
Deni Cler: the highest gross profit margin on sales DENI CLER BRAND REVENUE SPLIT 80% 82% • Very good sales of the brand's main collection, in particular dresses, sweaters, outerwear and trousers. • High share of premium accessories. 20% 18% • Success of introducing a less formal offer in recent qua
Slide 19: W.KRUK: revenue growth continues
W.KRUK: revenue growth continues W.KRUK RETAIL REVENUES (PLN m) 197.4 174.6 12.7 166.1 169.3 14.2 148.9 152.2 14.5 8.2 141.5 7.7 11.7 134.8 12.0 127.8 9.1 8.3 11.8 10.0 10.4 7.6 102.8 8.3 9.3 9.2 8.2 8.0 85.4 10.6 5.3 170.2 12.2 148.4 146.5 149.4 4.2 129.8 133.4 118.3 110.4 124.6 86.9 69.0 1Q21 2Q21
Slide 20: W.KRUK: growth in store EBIT
W.KRUK: growth in store EBIT W.KRUK BRAND REVENUE SPLIT 3% 2% • Increase in sales of watches - a positive impact of development 28% 28% of the offer in this area. As a result, share of watches in revenues 45% 47% grew YoY. 72% 72% • High single-digit sales growth dynamics in the jewellery section 52
Slide 21: Group results
VRG Group results
Slide 22: Favourable trends in revenues/m2 in jewellery segment
Favourable trends in revenues/m2 in jewellery segment GROUP REVENUES (PLN m) 348.8 369.0 335.3 • Group revenues in 3Q23 amounted to PLN 297.1m (-7.0% YoY), due to 305.0 341.8 319.4 244.0 243.8 267.0 297.1 unfavourable weather and lower YoY consumer interest in on-line 174.2 149.6 152.7 194.9 167.8 s
Slide 23: 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 161.0m in 3Q23 (-2.7% 137.3 161.0 131.1 91.8 123.2 78.7 100.8 88.2 YoY). 71.0 79.5 89.5 81.7 53.0 65.0 73.8 In 3Q23 gross profit on sales in apparel segment
Slide 24: Growing EBIT of the jewellery segment
Growing EBIT of the jewellery segment MONTHLY OPERATING COSTS PER M2 (PLN, IAS17) 1,041 950 918 877 880 880 920 • Group operating costs/m2 (IAS17) reached in 3Q23 PLN 920/m2 per 712 726 774 310 259 month, up 4.5% YoY. 587 276 225 225 237 251 199 218 203 • Costs of stores at PLN 669/m2 (+2.1% YoY), w
Slide 25: 3Q23 results affected by lower demand
3Q23 results affected by lower demand PLN m, IFRS16 3Q22 3Q23 YoY NET PROFIT (LOSS) BY SEGMENTS Revenues 319.4 297.1 -7.0% (PLN m, IFRS16) Gross profit on sales 165.5 161.0 -2.7% Gross profit on sales margin 51.8% 54.2% 2.4pp. 70.0 60.0 39.8 39.3 47.3 47.7 SG&A costs 132.6 140.1 5.6% 50.0 23.7 40.0
Slide 26: Lower EBIT, but higher 9M23 net earnings
Lower EBIT, but higher 9M23 net earnings PLN m, IFRS16 9M22 9M23 YoY Revenues 905.0 899.4 -0.6% Gross profit on sales 481.9 487.1 1.1% Gross profit on sales margin 53.2% 54.2% 0.9pp. SG&A costs 382.8 416.4 8.8% EBIT 98.5 67.7 -31.3% EBIT margin 10.9% 7.5% -3.4pp. Net financial activity -40.6 -4.7 N/
Slide 27: Stable inventory
Stable inventory CHANGE IN INVENTORIES (PLN m) 570.1 562.8 46.7 • Stable YoY group inventory at the level of PLN 570.1m. Inventories/m2 at the -39.4 end of 3Q23 at PLN 10,847, +0.3% YoY. 329.0 375.7 • Apparel segment inventories decreased by 16.9%YoY, the same as inventories/m2, which amounted to PL
Slide 28: Safe indebtedness level
Safe indebtedness level NET DEBT/(NET CASH) VS NET DEBT/EBITDA (PLN m, IAS17 plus reverse factoring) 120.0 4.7 5.0 1.6 • Group’s net debt under IAS17 at PLN 9.0m at the end of 3Q23 compared 4.0 100.0 3.0 to PLN 39.0m at the end of 3Q22. Financial leases under IFRS16 at PLN 80.0 60.0 106.5 0.4 0.3 2.
Slide 29: 2023+ outlook
VRG 2023+ outlook
Slide 30: Group prepared to key ending of the year
Group prepared to key ending of the year Apparel collections • New formal products intended for Group prepared for key celebrations and parties • An offer of ready-made accessories’ sets for moments: gifts: winter and leather accessories • A wide range of premium winter products: cashmere, wool, sil
Slide 31: New stores, new concepts
Newly opened store in New stores, new concepts Westfield Mokotów Wólczanka WELL Wólczanka – stores with – shirts’ boutiques total look offer Stores over 100 m2, a wide range of comfortable, high-quality everyday clothes Vistula brand store with a new concept Small stores, up to 60 m2, allowing for q
Slide 32: Further on-line development
Further on-line development Further improvements in our e-shops : Customer experience The next stage of implementing improvements to website and application of Vistula, Bytom, Wólczanka brands - shortening the purchase path Marketing automation Implementation of User ID function as one of the elemen
Slide 33: Floorspace growth in 2023
Apparel segment Floorspace growth in 2023 • new store concepts for Vistula and Wólczanka that meet the needs of the target customer and the market • development of store space in the best shopping malls - an attractive 2022 2023 target YoY presentation of the women's offer of Vistula and Wólczanka s
Slide 34: Invitation for a meeting with Management
Invitation for a meeting with Management Westfield Mokotów, Vistula store 20 18:00 NOVEMBER 2023 MONDAY 34
Slide 35: Q&A
VRG Q&A
Slide 36: Back-up
VRG Back-up
Slide 37: New collections in all brands in 3Q23
New collections in all brands in 3Q23 Higher share of women's collection Stable share The highest gross The fastest in sales. of on-line in sales. profit on sales margin. floorspace growth. The highest gross profit margin. 37
Slide 38: 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 latest Vistula collection is modern and high-quality clothing for men who expect more from their clothes, in every situation. Men's
Slide 39: Vistula: 9M23 executive summary
Vistula: 9M23 executive summary VISTULA BRAND REVENUES (PLN m) 196.0 166.4 33.1 • Revenues in 9M23 decreased by 15.1% YoY, while sales in own 38.0 -15% YoY 20.0 33.3 stores were 9.4% YoY lower YoY. 124.9 113.2 • Internet sales fell 39.7% YoY, coming up at 12.0% of brand’s revenues (-4.9pp). 9M22 9M2
Slide 40: Bytom: executive summary
Bytom: executive summary Fashion for men Autumn/Winter 2023/24 collection A Polish brand with a tradition of tailoring craftsmanship dating back to 1945. • The new limited clothing collection designed in cooperation with composer Tailor-made service available in Radzimir Dębski (JIMEK) combines the
Slide 41: Bytom: 9M23 executive summary
Bytom: 9M23 executive summary BYTOM BRAND REVENUES (PLN m) 135.3 124.5 21.6 19.8 5.7 -8% YoY 4.0 • Revenues in 9M23 fell by 8.0% YoY, while own stores sales fell 6.8% YoY. 108.0 100.7 • Internet revenues decreased by 8.5% YoY, accounting for 15.9% of brand sales (-0.1pp.). 9M22 9M23 Own stores Franc
Slide 42: Wólczanka: executive summary
Wólczanka: executive summary Fashion for women and men Polish network of boutiques and Autumn/Winter 2023/24 collection own and franchise stores with women's and men's clothing • WELL Wólczanka - a new brand concept with an energizing casual (total look). offer - the new name, both in traditional ch
Slide 43: Wólczanka: 9M23 executive summary
Wólczanka: 9M23 executive summary WÓLCZANKA BRAND REVENUES (PLN m) 87.0 69.7 -20% YoY • Revenues in 9M23 fell by 19.9% YoY, while revenues from own 44.3 28.7 stores increased by 1.4% YoY. 9.7 7.5 • Internet revenues decreased by 35.2% YoY, accounting for 33.0 33.5 41.1% of brand sales (-9.7pp.). 9M2
Slide 44: Deni Cler: executive summary
Deni Cler: executive summary Women’s fashion Women’s fashion brand established in Italy in 1971 Autumn/Winter 2023/24 collection Addressed to women over 35 who value high quality and • In Autumn/Winter 2023/24 season, designers take clients on a trip elegance around the world, staying in famous hote
Slide 45: Deni Cler: 9M23 executive summary
Deni Cler: 9M23 executive summary DENI CLER BRAND REVENUES (PLN m) 40.0 36.0 +11% 4.6 • Revenues in 9M23 increased by 11.0% YoY and grew in a similar 3.6 YoY 13.7 pace to own stores’ revenues (+10.3% YoY). 12.7 21.8 • Internet sales increased by 26.6% YoY, accounting for 11.4% of 19.7 brand sales (+
Slide 46: W.KRUK: executive summary
The oldest W.KRUK: executive summary jewellery brand in Poland The jewellery offer includes gold and silver jewellery, diamonds, Novelties in collections gemstones and original collections. W.KRUK's offer also includes • In September 2023, W.KRUK brand, together with ambassador global watch brands,
Slide 47: W.KRUK: 9M23 executive summary
W.KRUK: 9M23 executive summary W.KRUK BRAND REVENUES (PLN m) 476.9 428.9 • Revenues in 9M23 increased by 11.2% YoY. Revenues from own 26.7 +11% 23.5 32.8 stores increased by 12.5% YoY. 28.4 YoY • Internet revenues decreased by 12.1% YoY, accounting for 4.9% 420.6 373.7 of brand sales (-1.3pp). • Inc
Slide 48: Changes in group structure
Changes in group structure VRG Companies included in the consolidated statements for 3Q23 Jewellery segment Apparel segment Other activity W.KRUK S.A. VRG S.A. VG Property sp. z o.o. parent company Real estate Jewellery, watches, accessories Vistula, Wólczanka, Bytom trademarks WK 1840 HU Kft. DCG S
Slide 49: 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 3Q23 total 421 415 409 404 398 391 383 382 368 359 358 Apparel segment franchise 135 135 131 127 126 123 119 116 104 92 84 total 148 148 146 145 145 144 142 142 137 136 135 Vistula franchise
Slide 50: Return to YoY floorspace growth
Return to YoY floorspace growth M2 floorspace 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 total 41,564 41,337 40,864 40,930 40,891 40,385 39,778 39,833 39,333 39,007 39,818 Apparel segment franchise 9,789 9,794 9,577 9,462 9,425 9,236 9,019 8,798 7,962 7,175 6,582 total 18,586 18,593 18,3
Slide 51: 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 8.2 • Revenues and costs of on-line stores are allocated directly to the brands
Slide 52: 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 1,510 1,395 1,367 1,158 1,196 1,266 • Jewellery segment is characterised by higher revenues and costs/m2 than 1,018 t
Slide 53: Increase in off-line marketing expenses
Increase in off-line marketing expenses GROUP OFF-LINE MARKETING COSTS BY SEGMENTS (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 3.1
Slide 54: Historical quarterly results, IFRS16
Historical quarterly results, IFRS16 PLN m 4Q21 4Q22 YoY 1Q22 1Q23 YoY 2Q22 2Q23 YoY 3Q22 3Q23 YoY Revenues 348.8 369.0 5.8% 243.8 267.0 9.5% 341.8 335.3 -1.9% 319.4 297.1 -7.0% Gross profit on sales 192.0 201.3 4.8% 123.2 137.3 11.4% 193.2 188.7 -2.3% 165.5 161.0 -2.7% Gross profit on sales margin
Slide 55: Results under IAS17
Results under IAS17 PLN m, IAS17 3Q22 3Q23 YoY 9M22 9M23 YoY Revenues 319.4 297.1 -7.0% 905.0 899.4 -0.6% Gross profit on sales 165.5 161.0 -2.7% 481.9 487.1 1.1% Gross profit on sales margin 51.8% 54.2% 2.4pp. 53.2% 54.2% 0.9pp. SG&A costs 137.5 143.2 4.1% 396.8 428.3 7.9% EBIT 28.4 16.6 -41.3% 83.
Slide 56: Capex supports growth
Capex supports growth CAPEX VS. NET DEBT/EBITDA 4.7 12 5 -0.3 0.0 0.2 10 4 0.3 -0.3 0.1 1.6 0.4 0.2 8 -0.1 3 • 3Q23 capex amounted to PLN 6.7m, down 4.8% YoY. 11.6 6 2 8.0 10.9 4 8.3 6.1 5.2 7.0 6.7 1 • Capex focused on new stores and upgrades, both in apparel and 2 4.1 0 jewellery segments. 2.3 3.1
Slide 57: FX risk exposure
FX risk exposure PURCHASES BY CURRENCIES (PLN m) CHF, 18% CHF, 23% USD, 29% USD, 26% • FX risk is sizeable for the capital group, thus it is being hedged since 2Q16. Hedging only relates to the apparel segment. 9M22 9M23 • The group is a beneficiary of strengthening of zloty versus foreign EUR, 19%
Slide 58: Consistent debt reduction
Consistent debt reduction PLN m 3Q22 4Q22 3Q23 Long-term debt 26.8 20.7 15.3 • Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 25.8 19.5 13.8 • Bank loans include: overdrafts and investment bank loans. Bank loan
Slide 59: Shareholder structure
Shareholder structure SHAREHOLDER STRUCTURE AS AT 15.11.2023 (SHARE IN EQUITY AND VOTES) Other free-float Shareholders' Number of 22.72% agreement % share 28.83% shares/votes 1. Shareholders' agreement 67,599,097 28.83% 2. PZU OFE and DFE 45,589,125 19.44% 3. Jerzy Mazgaj 35,258,742 15.04% NN OFE 13
Slide 60: 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 61: 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