Vrg S.a. · GPW:VRG
Vrg — Q1 2022 Earnings Presentation
63 slides from Vrg's earnings presentation, May 19, 2022
Slide 1: 1Q22 Results Presentation
1Q22 RESULTS PRESENTATION MAY 19, 2022
Slide 2: Disclaimer
DISCLAIMER This presentation (the "Presentation") was prepared by VRG S.A. (the knowledge and depend on many factors due to which the actual results "Company") with a due care. Still, it may contain certain inconsistencies or achieved by the Company may differ materially from the results presented o
Slide 3: Introduction
VISTULA BYTOM WOL(ZANKA DENICLER = WKRUK INTRODUCTION
Slide 4: Traditional store sales rebound
TRADITIONAL STORE SALES REBOUND Local restrictions, closed shopping malls in Shopping malls opened in Shopping malls closed Shopping malls open Shopping malls closed selected regions, and early May, demand all month. all month. all month. from March 20 recovery faster YoY. throughout the country. I.
Slide 5: High sales in traditional stores
HIGH SALES IN TRADITIONAL STORES Revenues (PLN m) 108.5 15.9 1 Group Strong Group sales dynamics in the first 81.7 81.7 79.7 months of the year, despite unfavorable combination of external factors. 18.2 13.3 12.1 59.7 2 6.8 92.6 68.4 67.6 Stores 63.5 52.9 High sales dynamics in traditional stores. I
Slide 6: Good results in both segments
GOOD RESULTS IN BOTH SEGMENTS Revenues (PLN m) Strong trends in Capital 108.5 Group revenues. 81.7 81.7 79.7 47.2 The jewellery segment showed 59.7 strong dynamics from the beginning of 36.3 47.6 44.3 the year, regardless of the pandemic 25.7 and the war. 61.3 45.4 34.0 35.4 34.0 The apparel segment
Slide 7: Growing gross profit margin
GROWING GROSS PROFIT MARGIN I.22 II.22 III.22 IV.22 1-17.V.22 Gross profit margin on sales 51.2% 50.8% 51.1% 57.2% 59.4% Change YoY +8.1 pp. +2.4 pp. +2.5 pp. +11.5 pp. +2.9 pp. 7 | 1Q22 Presentation
Slide 8: Significant YoY improvement in 1Q22 results
SIGNIFICANT YOY IMPROVEMENT IN 1Q22 RESULTS IFRS16 1Q21 1Q22 YoY SALES PLN 172.1m PLN 243.8m + 41.6% GROSS PROFIT MARGIN ON SALES 47.5% 50.5% + 3.1 pp. EBIT PLN (15.8)m PLN 5.0m NET PROFIT (LOSS) PLN (18.6)m PLN (2.9)m The first quarter is seasonally the weakest in the whole year. 8 | Prezentacja 1Q
Slide 9: Performance by brands
02 PERFORMANCE BY BRANDS
Slide 10: A good start to the year in all brands
A GOOD START TO THE YEAR IN ALL BRANDS 106 0 YoY strong Group sales +41.6 % YoY cities 52.5 1 549 +41.8 % YoY ths m2 0% YoY PLN floorspace sales/m2 546 -15 YoY 18.0% -13.5 pp. YoY stores share of the internet 10 | 1Q22 Presentation
Slide 11: Vistula: Executive summary
VISTULA EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 12: Vistula: doubling of traditional store sales
VISTULA: DOUBLING OF TRADITIONAL STORE SALES Vistula brand network 1Q21 1Q22 YoY Vistula brand floorspace was stable YoY at the end of 1Q22, while the number of stores of the brand fell by 3 net YoY. Number of stores 148 145 -3 Both franchise floorspace and number of stores declined YoY at the i
Slide 13: Vistula: increasing share of formal
VISTULA: INCREASING SHARE OF FORMAL Vistula brand revenue split Continuation of YoY increase in the share of formal in 1Q22 along 13% 12% with higher demand for formal clothing due to return of celebrations and return to offices and hybrid work 54% 49% As a result, share of casual clothing has d
Slide 14: Bytom: Executive summary
BYTOM SZTUKA KRAWIECTWA OD 1945 EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER = =WKRUK
Slide 15: Bytom: store sales increase
BYTOM: STORE SALES INCREASE Bytom brand network Number of Bytom stores decreased by 3 net YoY, while the number 1Q21 1Q22 YoY of franchise stores increased by 1 net YoY. Number of stores 115 112 -3 Floorspace decreased by 2% YoY. Sizeable changes in floorspace incl. franchise 10 11 +1 also took
Slide 16: Bytom: gross margin improvement
BYTOM: GROSS MARGIN IMPROVEMENT Bytom brand revenue split Consistently growing share of formal sales due to return to 9% 8% stationary work and celebrations. 52% 48% Drop in the share of casual sales due to a partial lock-down in 1Q21, which increased the demand for informal clothing. 39% 44%
Slide 17: Wólczanka: Executive summary
| WOLCZANKA EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 18: Wólczanka: an on-line brand
WÓLCZANKA: AN ON-LINE BRAND Wólczanka brand network 1Q21 1Q22 YoY Wólczanka network decreased by 14 stores net YoY. Closing downs related to both own boutiques - number of stores dropped by 8 Number of stores 127 113 -14 net YoY, and franchise stores – decrease by 6 YoY. incl. franchise 53 47 -6
Slide 19: A growing share of new assortment
A GROWING SHARE OF NEW ASSORTMENT Wólczanka brand revenue split Increase in sales of knitted fabrics due to broadened range of polo shirts, t-shirts and sweaters. A higher share of the remaining 11% 5% 17% assortment due to a wider range of trousers (for men and women) 9% 7% 13% 52% 50% and introd
Slide 20: Deni Cler: Executive summary
DENI CLER MILANO EXECUTIVE SUMMARY > VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 21: Deni Cler: dynamic sales growth
DENI CLER: DYNAMIC SALES GROWTH Deni Cler brand network 28 monobrand stores, both own and franchise, in top shopping malls in Poland. 1Q21 1Q22 YoY Development of shop-in-shop concept. Deni Cler collections Number of stores 31 28 -3 available at selected partners running multiband stores in 22 t
Slide 22: Deni Cler: high growth of store EBIT
DENI CLER: HIGH GROWTH OF STORE EBIT Deni Cler brand revenue split Emphasis on capsule collections. Development of accessories, which have a significant share in collection (handbags, shoes). 24% 22% Classic clothing is still the biggest element of the collection. Growing share due to return to
Slide 23: W.KRUK: Executive summary
WKRUK 1 8 4 0 EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 24: W.KRUK: continuation of dynamic growth
W.KRUK: CONTINUATION OF DYNAMIC GROWTH W.KRUK brand network 1Q21 1Q22 YoY Continuation of W.KRUK brand development. Growth in net number of stores by 8 YoY and 7% YoY increase in brand’s Number of stores 140 148 +8 floorspace. incl. franchise 18 23 +5 The brand already had 23 franchise stores at
Slide 25: W.KRUK: stable sales structure
W.KRUK: STABLE SALES STRUCTURE W.KRUK brand revenue split 3% 3% 30% 28% Stable share of watches in relation to jewellery. Advantageous 48% 46% influence of sale exclusivity for luxury Rolex and Patek Philippe watches, but also a rebound in jewellery sales. In the jewellery section, there was a s
Slide 26: Improved performance of all brands
IMPROVED PERFORMANCE OF ALL BRANDS HIGH SIGNIFICANT THE HIGHEST SHARE SALES DYNAMICS IMPROVEMENT IN OF INTERNET GROSS PROFIT MARGIN DOUBLE-DIGIT THE HIGHEST GROWTH GROSS PROFIT MARGIN OF STORE EBIT 26 | 1Q22 Presentation
Slide 27: Group results
Zdjecia do wymiany 03 GROUP RESULTS
Slide 28: Stable group floorspace
STABLE GROUP FLOORSPACE Group floorspace change YoY (ths m2) 52.5 52.5 Group floorspace reached 52.5 ths m2 at the end of 1Q22, stable 0.7 YoY. 10.9 11.6 0.7 The apparel segment floorspace fell by 0.7 ths m2, down 1.6% YoY, due to closing down of unprofitable stores. 41.6 0% YoY 40.9 The jewel
Slide 29: Favourable trends in revenues/m2
FAVOURABLE TRENDS IN REVENUES/M2 Group revenues (PLN m) 348.8 Group revenues reached PLN 243.8m in 1Q22 (up 41.6% YoY), due 249.4 305.0 to rebound in traditional stores of both segments. 197.5 232.0 244.0 174.2 243.8 174.9 172.1 136.5 Apparel segment revenues grew 34.0% YoY, reaching PLN 115.3m,
Slide 30: Comparable margins in both segments
COMPARABLE MARGINS IN BOTH SEGMENTS Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 123.2m in 1Q22 (+50.8% YoY). 192.0 163.3 123.2 In 1Q22 gross profit on sales of the apparel segment reached 122.4 118.9 131.1 91.8 94.0 71.0 PLN 58.3m, up 51.5% YoY. 82.1 81.7 53.0 52.9
Slide 31: Operating profit improvement
OPERATING PROFIT IMPROVEMENT Monthly operating costs per m2 (PLN, IAS17) Group operating costs/ m2 (IAS17) reached in 1Q22 PLN 774/ m2 per month, up 31.8% YoY. Growth in costs/m2 lower than 918 revenues/m2 resulted from cost discipline. 654 712 726 774 672 680 587 276 520 199 218 203 Costs of st
Slide 32: 1Q22 results sizeably better YoY
1Q22 RESULTS SIZEABLY BETTER YOY PLN m, IFRS16 1Q21 1Q22 YoY Revenues 172.1 243.8 41.6% Gross profit on sales 81.7 123.2 50.8% Gross profit on sales margin 47.5% 50.5% 3.1pp. SG&A costs 96.1 117.4 22.1% Higher YoY revenues due to favorable sales trends in both EBIT -15.8 5.0 N/M segments. Gross ma
Slide 33: Inventory stabilization
INVENTORY STABILIZATION Change in inventories (PLN m) Inventory down 0.3% YoY to PLN 515.1m in 1Q22 due to lower inventory in the apparel segment and increased inventory in the 516.5 515.1 jewellery segment. 15.3 -16.6 Apparel segment inventory fell 6.2% YoY, due to strong sales in 247.9 263.2 1
Slide 34: Safe debt level
SAFE DEBT LEVEL Net debt / (net cash) (PLN m, IAS17 plus reverse factoring) Long-term and short-term indebtedness shown together with 142.5 reverse factoring and financial leases, yet excluding leases from 87.9 106.5 79.3 53.7 IFRS16. Financial leases under IFRS16 at PLN 334.5m in 1Q22. 74.2 25.2
Slide 35: Seasonal engagement of working capital
SEASONAL ENGAGEMENT OF WORKING CAPITAL Net working capital (PLN m) PLN 364.9m Stable YoY inventories drop in apparel segment, increase in 17.3 PLN 368.1m 24.1 jewellery segment (preparation for celebrations season in 2Q22). Stable YoY receivables due to higher prepayments for goods (new 516.5 51
Slide 36: 2022+ Outlook
04 2022+ OUTLOOK
Slide 37: Celebrations: season for formal and wedding jewellery
CELEBRATIONS: SEASON FOR FORMAL AND WEDDING JEWELLERY Vistula and Bytom have a wide range of wedding suits and shirts. Wólczanka has a wide range of accessories. Wedding jewellery is one of the most important categories in the W.KRUK offer. 37 | 1Q22 Presentation
Slide 38: Jewellery and accessories for celebrations
JEWELLERY AND ACCESSORIES FOR CELEBRATIONS New W.KRUK Ambassador Collection for Mother's Day and Children's Day - Natalia Kukulska with her daughter W.KRUK - a wide range of jewellery for women as well as children and teenagers The collection is advertised in the press, social media and television 3
Slide 39: Actions for omnichannel in 2022
ACTIONS FOR OMNICHANNEL IN 2022 Activities focused on the customer and his comfort - building a close relationship with the customer, different from fast fashion. Careful selection of technologies A wide range of Continuation All VRG brands and digital pickup and with sales of cooperation solutions.
Slide 40: Floorspace optimisation in 2022
FLOORSPACE OPTIMISATION IN 2022 2021 2022 target YoY In 2022, floorspace of traditional APPAREL stores 404 401 -3 stores should increase by 3% YoY. SEGMENT m2 40,930 41,299 + 1% stores 145 147 +2 VISTULA m2 18,531 18,619 0% stores 114 113 -1 Floorspace of franchise stores BYTOM at the end of 2022 sh
Slide 41: 2Q22 should be a seasonally strong quarter
2Q22 SHOULD BE A SEASONALLY STRONG QUARTER 108.5 102.6 104.9 83.2 62.6 34.9 29.1 IV.20 IV.21 IV.22 V.20 V.21 V.22 VI.20 VI.21 VI.22 Assuming a very conservative scenario that revenues in May and June 2022 would be equal to the results for 2021, the 2Q22 result should be very good due to growing gros
Slide 42: 2022 targets maintained
2022 TARGETS MAINTAINED RISKS Continuation of the double-digit sales growth 1 of the Group. Off-line and on-line increases. impact of war in Ukraine Further improvement of the gross margin - 2 more effective discount policy. high inflation Increase in operating margin due to the 3 positive effect of
Slide 43: Dividend policy
DIVIDEND POLICY The Management Board of VRG has adopted a dividend policy to share the profit with shareholders in line with it • The Management Board intends to recommend annually to the General Meeting payment between 20% to 70% of the consolidated net profit presented in the audited consolidated
Slide 44: Q&A
05 Q&A
Slide 45: Back-up
06 BACK-UP
Slide 46: Vistula: Executive summary
VISTULA: EXECUTIVE SUMMARY VISTULA (FASHION FOR MEN AND WOMEN) SPRING/SUMMER 2022: „EVERYDAY JOY” - Traditional tailoring and global trends – modern, original and MEN'S COLLECTION individual style - Complete, full offer for men including suits and jackets - Men's collections: VISTULA, - Formal and m
Slide 47: Bytom: Executive summary
BYTOM: EXECUTIVE SUMMARY SPRING/SUMMER 2022 COLLECTION - In the collection, the brand presents the RETRO FUTURE style, combining fabric patterns from the past years with modern tailoring. This style is present in suits, jackets and shirts, as well as BYTOM accessories, in both formal and smart casua
Slide 48: Wólczanka: Executive summary
WÓLCZANKA: EXECUTIVE SUMMARY WÓLCZANKA (FASHION SPRING/SUMMER 2022 COLLECTION: FOR MEN AND WOMEN) OFFICE COLLECTION - Polish chain of own and franchise - Semi-formal offer intended for professionals in modern working stores with women's and men's conditions clothing (total look) - Men's offer: chino
Slide 49: Deni Cler: Executive summary
DENI CLER: EXECUTIVE SUMMARY DENI CLER (WOMEN’S FASHION) - Women’s fashion brand established in Italy in 1971 - Addressed to women over 35 who value high quality and elegance SPRING/SUMMER 2022 COLLECTION - Superior quality fabrics with superior „MANIFESTO DEL COLORE” accessories and designer cut -
Slide 50: W.KRUK: Executive summary
W.KRUK: EXECUTIVE SUMMARY THE OLDEST JEWELLERY BRAND IN POLAND - The jewellery offer includes gold and silver NOVELTIES IN COLLECTIONS jewellery, diamonds, precious stones and - Traditional Winter Special Offer – promotions for original collections. purchase of jewellery, accessories and watches - W
Slide 51: Group structure
GROUP STRUCTURE VRG CO 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 1 Q 2 2 JEWELLERY SEGMENT APPAREL SEGMENT OTHER ACTIVITY VRG S.A. W.KRUK S.A. WSM Factory sp. z o.o. (formerly parent company WSM Sp. z o.o.), VG Property sp. z o.o. Jewellery, watches, accessor
Slide 52: Number of stores optimisation continues
NUMBER OF STORES OPTIMISATION CONTINUES NUMBER OF STORES 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 440 427 426 427 421 415 409 404 398 APPAREL SEGMENT franchise 126 126 129 136 135 135 131 127 126 total 148 145 147 149 148 148 146 145 145 VISTULA franchise 59 60 62 65 64 64 63 61 62 total 137 132
Slide 53: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 total 42,962 41,953 41,891 42,021 41,564 41,337 40,864 40,930 40,891 APPAREL SEGMENT franchise 9,123 9,195 9,368 9,882 9,789 9,794 9,577 31,468 9,425 total 18,650 18,291 18,508 18,695 18,586 18,593 18,390 18,531 18,5
Slide 54: 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 on-line stores of own brands (monoshops). 16.8 13.4 12.2 14.2 Revenues and costs of on-line stores are allocated directly to the 7.9 10.6 9.1 8.3 9.3 brands. 48.9
Slide 55: Costs/m2 under control
COSTS/ M2 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 higher revenues and 1,766 1,248 1,158 1,196 1,266 costs/m2 than these of the apparel segment.
Slide 56: Seasonal increase in marketing expenses
SEASONAL INCREASE IN MARKETING EXPENSES Off-line marketing costs by segments (PLN m) Off-line marketing costs are part of group selling costs. These encompass recurring advertising spending (catalogues, 6.8 photoshoots) and nationwide marketing campaigns in editorial, internet and TV with celebr
Slide 57: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 2Q20 2Q21 YoY 3Q20 3Q21 YoY 4Q20 4Q21 YoY 1Q21 1Q22 YoY Revenues 174.9 244.0 39.5% 249.4 305.0 22.3% 232.0 348.8 50.3% 172.1 243.8 41.6% Gross profit on sales 82.1 131.1 59.8% 122.4 163.3 33.4% 118.9 192.0 61.5% 81.7 123.2 50.8% Gross profit on sales margin
Slide 58: Results under IAS17
RESULTS UNDER IAS17 PLN m, IAS17 1Q21 1Q22 YoY Revenues 172.1 243.8 41.6% Gross profit on sales 81.7 123.2 50.8% Gross profit on sales margin 47.5% 50.5% 3.1pp. SG&A costs 92.6 121.8 31.6% EBIT -12.3 -0.2 N/M EBIT margin -7.1% -0.1% 7.1pp. Net financial line -2.1 -3.6 Net income -11.9 -2.9 N/M Net m
Slide 59: FX risk exposure
FX RISK EXPOSURE Purchases by currencies (PLN m) FX risk is sizeable for the capital group, thus it is being hedged CHF, 16% CHF, 18% since 2Q16. Hedging only relates to the apparel segment. USD, 26% USD, 36% The group is a beneficiary of strengthening of zloty versus foreign currencies. 1Q21 EU
Slide 60: Safe indebtedness level
SAFE INDEBTEDNESS LEVEL PLN m 1Q21 4Q21 1Q22 Long-term debt 45.3 34.6 31.5 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 44.1 33.7 30.6 Bank loans include: overdrafts and investment bank loans. Bank Financ
Slide 61: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 18.05.2022 (share in equity and votes) Other free- Number of float IPOPEMA TFI % share shares/votes 28.74% 23,72% 1. IPOPEMA TFI 55,601,846 23.72% 2. PZU OFE and DFE 39,870,193 17.01% 3. NN OFE 32,750,487 13.97% PZU OFE and 4. Jerzy Mazgaj 21,900,000
Slide 62: Glossary
GLOSSARY APPAREL SEGMENT REVENUES (PLN/M2 PER MONTH) STORE EBIT (PLN M) FORMAL Revenues from brands: Vistula, Wólczanka, Quarterly revenues of segment or brand Store operating profit calculated as gross Revenues from sale of formalwear, including Bytom (from XII 2018), Deni Cler and (stores and inte
Slide 63: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow