Vrg S.a. · GPW:VRG
Vrg — Q1 2023 Earnings Presentation
54 slides from Vrg's earnings presentation, May 18, 2023
Slide 1: 1Q23 Presentation
1Q23 PRESENTATION A modern group with traditions MAY 18, 2023
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
01 INTRODUCTION
Slide 4: Key corporate events of the last five months
KEY CORPORATE EVENTS OF THE LAST FIVE MONTHS Introduction of new APPAREL SEGMENT collections in each of the Network upgrade March 2023: opening apparel brands, with a (standardization of the of Wólczanka Wesfield greater share of the appearance of the stores Mokotów and Bytom women's collection in o
Slide 5: Varied situation of the last months
VARIED SITUATION OF THE LAST MONTHS Favorable sales dynamics in the Revenue dynamics (PLN m) jewellery segment from January 2023 to 20% 30% April 2023 due to strong demand for 23.2% jewellery and watches. 20% 15.6% 15% 10% 10.5% Significant fluctuations between the 10% 4.3% 0% dynamics of individual
Slide 6: Favourable dynamics in stores
FAVOURABLE DYNAMICS IN STORES Revenue dynamics (PLN m) 1 Group The Group's sales dynamics 15% 20% supported by higher customer 15.0% purchases in traditional stores 12.7% (growing average price and average basket). 10% 5.5% 11.9% 11.4% 10% 2 6.1% 7.0% 9.8% Stores 5% 9.3% 5.7% 0% -0.6% 0% Positive sa
Slide 7: Performance by brands
02 PERFORMANCE BY BRANDS
Slide 8: A network of profitable stores all over Poland
A NETWORK OF PROFITABLE STORES ALL OVER POLAND NUMBER OF STORES AT THE END OF 1Q23 Apparel segment YoY change 137 -8 104 -8 Continuation of optimization 98 -15 of number of stores in apparel 29 +1 brands and development Jewellery segment YoY change of W.KRUK brand. 157 +9 525 -9 8 | 1Q23 presentatio
Slide 9: Stable floorspace
STABLE FLOORSPACE Group floorspace change YoY (ths m2) Group floorspace change YoY (ths m2) -1.6 +0.1 +0.9 +0.6 11.0 -1.2 9.7 -0.8 -0.8 -0.2 52.5 51.9 41.6 42.2 1Q22 VST BTM WLC DCG W.KRUK 1Q23 1Q22 Own stores Franchise stores 1Q23 Group floorspace stood at 51.9 ths m2 at the end of 1Q23, down 1.2
Slide 10: Strong off-line revenue growth
STRONG OFF-LINE REVENUE GROWTH Vistula brand revenues (PLN m) 80.5 70.4 65.4 71.6 57.2 65.8 47.6 44.0 28.8 53.2 44.6 41.3 46.6 43.4 34.9 31.7 25.2 11.8 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Own stores Franchise stores Internet • Revenues in 1Q23 increased by 8.3% YoY, due to a 26.2% YoY growt
Slide 11: Vistula: further growth in share of casual in sales
VISTULA: FURTHER GROWTH IN SHARE OF CASUAL IN SALES Vistula brand revenue split 7% 8% Growth in casual sales; stronger interest in knitwear and trousers. 53% 55% Lower demand for formal. Share of Vistula WOMEN at the level of 4.5% of sales. 39% 37% Double-digit increase in sales/m2. 1Q22 1Q23
Slide 12: Growing off-line revenues
GROWING OFF-LINE REVENUES Bytom brand revenues (PLN m) 51.0 57.4 48.1 50.1 46.7 39.0 31.2 33.9 22.5 48.3 39.3 38.8 37.7 36.9 29.0 26.1 22.1 10.1 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Own stores Franchise stores Internet • Revenues in 1Q23 increased by 8.8% YoY, due to 18.2% YoY growth in own
Slide 13: Bytom: double-digit sales per m2 growth
BYTOM: DOUBLE-DIGIT SALES PER M2 GROWTH Bytom brand revenue split 8% 6% A stable share of formal and a well-received Spring casual offer. 48% 50% High sales of shirts and knitwear, especially in the on-line channel. 44% 44% Increase in sales/ m2 - higher ticket value with similar YoY traffic.
Slide 14: Balance between on-line and off-line
BALANCE BETWEEN ON-LINE AND OFF-LINE Wólczanka brand revenues (PLN m) 37.1 35.0 37.0 31.1 27.8 28.0 24.0 21.7 19.7 12.8 15.7 13.9 14.9 8.9 11.4 8.4 7.7 3.3 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Own stores Franchise stores Internet • Revenues in 1Q23 fell by 9.5% YoY. Revenues from own stores
Slide 15: Wólczanka: shirts remain the largest category
WÓLCZANKA: SHIRTS REMAIN THE LARGEST CATEGORY Wólczanka brand revenue split The women's collection accounts for c. 40% of the brand's sales and 18% 15% c. 50% of the brand's on-line sales. 7% 8% 47% 14% 11% 54% Stable share of accessories in revenue structure. Very good sale of shirts, especiall
Slide 16: Strong demand for premium products
STRONG DEMAND FOR PREMIUM PRODUCTS Deni Cler brand revenues (PLN m) 16.7 13.7 14.2 13.0 13.0 11.0 12.0 9.8 5.7 8.8 4.9 4.6 4.2 4.5 3.7 4.4 3.3 2.8 9.5 7.2 7.4 7.1 7.9 5.2 6.2 6.4 4.1 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Own stores Franchise stores + multibrands Internet • Revenues in 1Q23 in
Slide 17: Deni Cler: highest gross profit margin on sales
DENI CLER: HIGHEST GROSS PROFIT MARGIN ON SALES Deni Cler brand revenues Very good sales of the brand's main collection, in particular dresses, sweaters, outerwear and trousers. 79% 82% High proportion of premium accessories. 21% 18% Success of introducing a less formal offer in recent quarter
Slide 18: Revenue growth continues
REVENUE GROWTH CONTINUES W.KRUK brand retail revenues (PLN m) 197.4 174.6 148.9 152.2 134.8 141.5 127.8 102.8 85.4 170.2 148.4 129.8 133.4 124.6 118.3 110.4 86.9 69.0 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 Own stores Franchise stores Internet • Revenues in 1Q23 increased by 10.7% YoY. Revenue
Slide 19: W.KRUK: double-digit store EBIT growth
W.KRUK: DOUBLE-DIGIT STORE EBIT GROWTH W.KRUK brand revenue split 3% 2% Double-digit increases in watch sales - a positive impact of 28% 28% development of the watches offer. As a result, a high and stable YoY 46% 47% share of watches in sales. Comparably high dynamics of sales growth in the jew
Slide 20: Group results
GROUP RESULTS . an). ,
Slide 21: Favourable trends in revenues/m2
FAVOURABLE TRENDS IN REVENUES/M2 Group revenues (PLN m) Group sales in 1Q23 amounted to PLN 267.0 million (+9.5% YoY), due to a rebound in traditional sales. 348.8 369.0 341.8 319.4 305.0 267.0 In 1Q23, revenues of the apparel segment increased by 8.4% YoY, 244.0 243.8 149.6 194.9 172.1 136.5 17
Slide 22: Growing gross profit on sales
GROWING GROSS PROFIT ON SALES Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 137.3m in 1Q23 192.0 193.2 201.3 (+11.4% YoY). 163.3 165.5 137.3 In 1Q23 gross profit on sales in apparel segment reached 131.1 91.8 123.2 78.7 100.8 71.0 79.5 PLN 63.5m, +9% YoY due to introd
Slide 23: Higher SG&A/m2 costs
HIGHER SG&A/M2 COSTS Monthly operating costs per m2 (PLN, IAS17) Group operating costs/m2 (IAS17) reached in 1Q23 PLN 880/m2 per month, up 13.8% YoY. 1,041 880 Costs of stores at PLN 643/m2 (+12.7% YoY), while HQs costs/m2 918 877 880 712 726 774 310 at PLN 237/m2, +16.8% YoY (under IAS17), due
Slide 24: From losses to earnings in 1Q23
FROM LOSSES TO EARNINGS IN 1Q23 PLN m, IFRS16 1Q22 1Q23 YoY Net profit by segments (PLN m, IFRS16) Revenues 243.8 267.0 9.5% Gross profit on sales 123.2 137.3 11.4% 70.0 60.0 47.3 Gross profit on sales margin 50.5% 51.4% 0.9pp. 39.8 39.3 50.0 SG&A costs 117.4 132.7 13.1% 3.2 40.0 23.7 21.4 9.2 EBIT
Slide 25: Inventory growth for planned network expansion
INVENTORY GROWTH FOR PLANNED NETWORK EXPANSION Change in inventories (PLN m) Inventories up 7.8% YoY to PLN 553.3m in 1Q23. 515.1 555.3 73.2 Apparel segment inventory declines continued, with a 13.1% YoY fall due to order optimisation and further run-off of collections 33.1 263.2 336.4 from earl
Slide 26: Safe indebtedness level
SAFE INDEBTEDNESS LEVEL Net debt / (net cash) (PLN m, IAS17 plus reverse factoring) Long-term and short-term indebtedness shown together with 106.5 reverse factoring and financial leases, yet excluding leases from 140 IFRS16. Financial leases under IFRS16 at PLN 313.9m in 1Q23. 74.2 39.0 100 31.4
Slide 27: Seasonal engagement of cash
SEASONAL ENGAGEMENT OF CASH Net working capital (PLN m) PLN 419.6m Inventories increasing YoY: decrease in the apparel segment, PLN 364.9m 18.4 growth in the jewellery segment. 24.1 YoY decrease in receivables due to lower YoY prepayments for 515.1 555.3 Spring/Summer collection orders. 174.3 15
Slide 28: 2023+ Outlook
04 2023+ OUTLOOK
Slide 29: Tailored offer for women and men for SS2023
TAILORED OFFER FOR WOMEN AND MEN FOR SS2023 Traditional style in a formal Using high brand recognition to develop The Group's exposure to the collection, perfect for the office women's collection. premium segment. and for celebrations. Development of a modern "total look" offer Collections including
Slide 30: W.KRUK wide offer for Spring/Summer 2023
W.KRUK WIDE OFFER FOR SPRING/SUMMER 2023 POPULAR OFFER LUXURY OFFER JEWELLERY Continuation of the author's Flowers of the Night JEWELLERY collection and the „Immensity of feelings" Products of prestigious jewellery manufactories campaign with a special Mother's Day offer. from around the world (so-c
Slide 31: Growth of floorspace in both segments in 2023
GROWTH OF FLOORSPACE IN BOTH SEGMENTS IN 2023 2022 2023 target YoY The need to renew the Group's stores after 2020-21, when capital expenditures were suspended due to stores 382 376 - 6 the pandemic. Current brand APPAREL collections are wider due to stronger SEGMENT introduction of women's collecti
Slide 32: Plans for 2023 maintained
PLANS FOR 2023 MAINTAINED 2023 TARGETS DIVERSIFIED CAPITAL GROUP Zarząd VRG na bieżąco monitoruje wyniki sprzedażowe i marżowe wszystkich marek i continuing revenue będzie elastycznie dostosowywał działania do growth in both segments sytuacji rynkowej. work on gross margin improvement OPPORTUNITIES:
Slide 33: We maintain our dividend policy
WE MAINTAIN OUR DIVIDEND POLICY ACTION PLAN FOR 2023 THE OBJECTIVE OF THE MANAGEMENT BOARD IS TO SHARE THE PROFIT GENERATED WITH THE SHAREHOLDERS IN LINE WITH THE DIVIDEND Last week of May 2023 - POLICY recommendation of the Management Board regarding the dividend • The Management Board intends to r
Slide 34: Q&A
VISTULA BYTOM WOL(ZANKA DENICLER = WKRUK 05 Q&A
Slide 35: Back-up
06 BACK-UP
Slide 36: New collections in all brands in 1Q23
NEW COLLECTIONS IN ALL BRANDS IN 1Q23 INCREASING SHARE DOUBLE-DIGIT THE HIGHEST SHARE OF WOMEN'S REVENUE/M2 OF INTERNET. COLLECTION IN SALES. GROWTH. THE FASTEST THE HIGHEST GROSS FLOORSPACE PROFIT MARGIN. GROWTH. 36 | 1Q23 presentation
Slide 37: Vistula: executive summary
VISTULA: EXECUTIVE SUMMARY SPRING/SUMMER 2023 COLLECTION - The Celebrations collection in stores since April. In addition to VISTULA (FASHION FOR classic products in shades of navy blue or black, Vistula presents light, top-quality materials, pastel colors and fashionable cuts. MEN AND WOMEN) Accord
Slide 38: Bytom: executive summary
BYTOM: EXECUTIVE SUMMARY Do wymiany SPRING/SUMMER 2023 COLLECTION BYTOM (FASHION FOR - Supreme Comfort is the first part of the brand's image Spring MEN) campaign. A palette of colors such as rooibos (a warm and rich shade that is a mix of timeless brown and red), beiges, cool blues - A Polish brand
Slide 39: Wólczanka: executive summary
WÓLCZANKA: EXECUTIVE SUMMARY WÓLCZANKA (FASHION FOR MEN AND WOMEN) SPRING/SUMMER 2023 COLLECTIONS - Polish network of boutiques and - Spring campaign of the "Close to You" attracted attention with own and franchise stores with basic, but also saturated, energetic colors. New items in it were women's
Slide 40: Deni Cler: executive summary
DENI CLER: EXECUTIVE SUMMARY SPRING/SUMMER COLLECTION - Deni Cler's collection for the Spring/Summer 2023 season was called "THE MAGIC OF CINEMA". It was inspired by film and the icons of world cinema. It consists DENI CLER (WOMEN’S FASHION) of 6 capsules. - Women’s fashion brand established in Ital
Slide 41: W.KRUK: executive summary
W.KRUK: EXECUTIVE SUMMARY THE OLDEST JEWELLERY BRAND NOVELTIES IN COLLECTIONS IN POLAND - The jewellery offer includes gold and silver jewellery, diamonds, gemstones and - W.KRUK started the Spring/Summer 2023 season with original collections. another edition of the original, best-selling Flowers of
Slide 42: Stable group structure
STABLE 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 Q23 JEWELLERY SEGMENT APPAREL SEGMENT OTHER ACTIVITY VRG S.A. WSM Factory sp. z o.o. (formerly WSM W.KRUK S.A. parent company sp. z o.o.) ,VG Property sp. z o.o. Jewellery, watches, acc
Slide 43: Continued optimisation of the number of stores
CONTINUED OPTIMISATION OF THE NUMBER OF STORES NUMBER OF STORES 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 total 421 415 409 404 398 391 383 382 368 APPAREL SEGMENT franchise 135 135 131 127 126 123 119 116 104 total 148 148 146 145 145 144 142 142 137 VISTULA franchise 64 64 63 61 62 62 61 61 55
Slide 44: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 total 41,564 41,337 40,864 40,930 40,891 40,385 39,778 39,833 39,333 APPAREL SEGMENT franchise 9,789 9,794 9,577 9,462 9,425 9,236 9,019 8,798 7,962 total 18,586 18,593 18,390 18,531 18,509 18,404 18,118 18,139 17,73
Slide 45: 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 online stores of own brands (monoshops). 12.2 14.2 12.7 Revenues and costs of on-line stores are allocated directly to the 10.6 8.3 9.3 9.1 brands. 8.3 7.6 41.9 38
Slide 46: 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. 1,766 1,970 The jewellery segment is characterised by higher revenues and 1,411 1,395 1,367 1,158 1,196 1,266 costs/m2 than these of the
Slide 47: Increase in off-line marketing expenses
INCREASE IN OFF-LINE 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, 9.5 photoshoots) and nationwide marketing campaigns in editorial, 6.8 internet and TV with ce
Slide 48: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 2Q21 2Q22 YoY 3Q21 3Q22 YoY 4Q21 4Q22 YoY 1Q22 1Q23 YoY Revenues 244.0 341.8 40.1% 305.0 319.4 4.7% 348.8 369.0 5.8% 243.8 267.0 9.5% Gross profit on sales 131.1 193.2 47.3% 163.3 165.5 1.3% 192.0 201.3 4.8% 123.2 137.3 11.4% Gross profit on sales margin 53
Slide 49: Results under IAS17
RESULTS UNDER IAS17 PLN m, IAS17 1Q22 1Q23 YoY Revenues 243.8 267.0 9.5% Gross profit on sales 123.2 137.3 11.4% Gross profit on sales margin 50.5% 51.4% 0.9pp. SG&A costs 121.8 137.3 12.8% EBIT -0.2 -0.5 N/M EBIT margin -0.1% -0.2% -0.1pp. Net financial line -3.6 -0.0 Net income -2.9 -0.7 N/M Net m
Slide 50: 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, 18% USD, 26% USD, 24% CHF, 25% since 2Q16. Hedging only relates to the apparel segment. The group is a beneficiary of strengthening of zloty versus foreign 1Q22 1Q23 currencie
Slide 51: Safe debt level
SAFE DEBT LEVEL PLN m 1Q22 4Q22 1Q23 Long-term debt 31.5 20.7 18.3 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 30.6 19.5 16.6 Bank loans include: overdrafts and investment bank loans. Bank loan collatera
Slide 52: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 17.05.2023 (share in equity and votes) Number of Other free- PZU OFE and % share shares/votes float DFE 1. PZU OFE and DFE 45,251,894 19.30% 22.77% 19.30% 2. Jerzy Mazgaj 38,332,632 16.35% 3. IPOPEMA TFI 36,038,137 15.37% Shareholders' 32,750,487 13.
Slide 53: 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 54: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow