Slide 1: 2Q22 Results Presentation
2Q22 RESULTS PRESENTATION AUGUST 26, 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
01 INTRODUCTION
Slide 4: Successful first half of 2022
SUCCESSFUL FIRST HALF OF 2022 Strong results in the first six months First dividend payment in years Transparent structure of VRG Management Board 4 | 2Q22 presentation
Slide 5: Dynamics revenues
TRADITIONAL STORE SALES REBOUND Local restrictions Shopping malls Shopping malls Shopping malls in selected regions, Shopping malls Faster YoY demand Faster YoY demand opened in early May, closed open and from March 20 closed rebound rebound faster YoY demand all month. all month. throughout the all
Slide 6: High sales in stores
HIGH SALES IN STORES Revenues (PLN m) 1 Group Growing Group sales dynamics in the first half of the year, despite unfavorable 120.7 combination of external factors. 108.5 111.9 110.5 14.0 15.9 15.0 16.2 2 81.7 81.7 79.7 18.2 13.3 12.1 Stores 106.7 92.6 96.9 94.3 68.4 67.6 63.5 High 1H22 sales dynami
Slide 7: Very good results in both segments in 2Q22
VERY GOOD RESULTS IN BOTH SEGMENTS IN 2Q22 Revenues (PLN m) 120.7 Strong trends in the Capital Group 108.5 111.9 110.5 revenues. 81.7 81.7 79.7 54.2 47.2 48.1 51.9 The jewellery segment showed strong dynamics from the beginning 36.3 47.6 of the year, regardless of the pandemic 44.3 and the war. 61.3
Slide 8: Very good results in 2Q22 and 1H22
VERY GOOD RESULTS IN 2Q22 AND 1H22 2Q22 IFRS16 1H22 IFRS16 REVENUES EBIT REVENUES EBIT PLN 341.8m PLN 60.2m PLN 585.5m PLN 65.2m 40.1% YoY +260.1% YoY 40.7% YoY 7,184.7% YoY GROSS MARGIN NET PROFIT (LOSS) GROSS MARGIN NET PROFIT (LOSS) ON SALES ON SALES 56.5% PLN 39.3m 54.0% PLN 36.4m 2.8 pp. YoY +8
Slide 9: Results better than in pre-pandemic 2019
RESULTS BETTER THAN IN PRE-PANDEMIC 2019 Revenues (PLN m) EBIT (PLN m) 65.2 585.5 484.6 +21% 27.3 +139% 1H19 1H22 1H19 1H22 Gross margin (%) Net profit (PLN m) 36.4 54.0% 21.5 +70% 51.5% + 2.5 pp. 1H19 1H22 1H19 1H22 9 | 2Q22 presentation
Slide 10: Transparent group management structure
TRANSPARENT GROUP MANAGEMENT STRUCTURE VRG S.A. MANAGEMENT BOARD Janusz Płocica Marta Fryzowska Michał Zimnicki Łukasz Bernacki President Executive Vice President Executive Vice President Executive Vice President of the Management Board of the Management Board of the Management Board, CFO of the Man
Slide 11: Performance by brands
02 PERFORMANCE BY BRANDS
Slide 12: Good first half of the year
GOOD FIRST HALF OF THE YEAR 585.5 109 PLN m +40.7% YoY +3 YoY Group revenues cities 1,863 +40.8 % YoY 52.0 PLN -1% YoY ths m2 sales/m2 floorspace 15.2% -8.9 pp. YoY 539 -18 YoY share stores 1H22 results significantly better of internet than 1H19 pre-pandemic results. 12 | 2Q22 presentation
Slide 13: Vistula executive summary
VISTULA EXECUTIVE SUMMARY
Slide 14: Vistula: on-line and off-line growth
VISTULA: ON-LINE AND OFF-LINE GROWTH Vistula brand network Vistula brand floorspace was stable YoY at the end of 2Q22, while the 2Q21 2Q22 YoY number of stores of the brand fell by 4 net YoY, including net loss 148 144 -4 of 2 franchise stores. Number of stores Store floorspace decreased by 1% Y
Slide 15: Vistula: doubling of store EBIT
VISTULA: DOUBLING OF STORE EBIT Vistula brand revenue split 13% 12% High revenue growth rates on every category: formal, casual, 41% 38% accessories and other. Increased share of formal due to return to offices and celebrations. 46% 50% YoY growth in sales/m2 due to the rebound in traditional
Slide 16: Bytom executive summary
BYTOM SZTUKA KRAWIECTWA OD 1945 EXECUTIVE SUMMARY
Slide 17: Bytom: double-digit revenue growth
BYTOM: DOUBLE-DIGIT REVENUE GROWTH Bytom brand network Number of Bytom stores decreased by 7 net YoY, while the number 2Q21 2Q22 YoY of franchise stores fell by 1 net YoY. Number of stores 116 109 -7 Floorspace of Bytom stores decreased by 5% YoY, while franchise incl. franchise 11 10 -1 floorsp
Slide 18: Bytom: store EBIT significantly improved
BYTOM: STORE EBIT SIGNIFICANTLY IMPROVED Bytom brand revenue split 7% 7% Growing three sales categories: formal, casual, accessories and other. 30% 39% Consistently growing share of formal sales due to return to office work and celebrations. 53% 63% High, double-digit increase in sales/ m2 - i
Slide 19: Wólczanka executive summary
é hay is aaa ia ul ~~ WOLCZANKA EXECUTIVE SUMMARY
Slide 20: Wólczanka: balance between on-line and off-line
WÓLCZANKA: BALANCE BETWEEN ON-LINE AND OFF-LINE Wólczanka brand network Floorspace increased by 3% YoY due to new-concept store openings, 2Q21 2Q22 YoY while franchise floorspace decreased by 14% YoY. Number of stores 121 110 -11 Wólczanka network decreased by 11 stores net YoY. The close downs
Slide 21: A growing share of new assortment
A GROWING SHARE OF NEW ASSORTMENT Wólczanka brand revenue split Increased sales of shirts with a positive reception of new assortments 13% 18% 10% from the "total look" range. 6% 14% 16% 63% 66% Growing share of women's collection results from successful introduction of the extended brand assort
Slide 22: Deni Cler executive summary
DENI CLER MILANO EXECUTIVE SUMMARY
Slide 23: Deni Cler: franchise and multibrands support revenues
DENI CLER: FRANCHISE AND MULTIBRANTS SUPPORT REVENUES Deni Cler brand network Deni Cler brand revenues (PLN m) 2Q21 2Q22 YoY 13.7 13.0 13.0 10.9 Number of stores 30 28 -2 10.3 9.3 9.8 11.0 8.8 4.9 4.2 4.5 incl. franchise 7 6 -1 7.0 3.7 3.7 2.9 3.3 3.3 2.8 Floorspace (m2) 2,897 2,799 -3% 2.5 7.4 5.6
Slide 24: W.KRUK executive summary
WKRUK 18 4 0 EXECUTIVE SUMMARY
Slide 25: W.KRUK: development of the brand's floorspace
W.KRUK: DEVELOPMENT OF THE BRAND'S FLOORSPACE W.KRUK brand network 2Q21 2Q22 YoY Continuation of W.KRUK brand development YoY. Growth in net 142 148 +6 number of stores by 6 YoY and 5% YoY increase in brand’s floorspace. Number of stores The brand already had 26 franchise stores at the end of 2Q
Slide 26: W.KRUK: strong growth of store EBIT
W.KRUK: STRONG GROWTH OF STORE EBIT W.KRUK brand revenue split 3% 3% 29% 28% 45% 42% Increased share of jewellery in sales. In jewellery section, higher sales dynamics of gold jewellery than silver jewellery in 2Q22. 71% 72% Continued strong sales growth in watches. 52% 55% High sales/ m2 grow
Slide 27: 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 27 | 2Q22 presentation
Slide 28: Group results
VISTULA BYTOM WOLCZANKA DENICLER WKRUK GROUP RESULTS
Slide 29: Stable group floorspace
STABLE GROUP FLOORSPACE Group floorspace change YoY (ths m2) 52.4 52.0 Group floorspace reached 52.0% ths m2 at the end of 2Q22, drop 0.6 by 1% YoY. 11.1 11.6 -1.0 The apparel segment floorspace fell net by 1.0 ths m2, i.e. 2.3 % YoY, due to closing down of unprofitable stores. 41.3 -1% YoY 40.4
Slide 30: Favourable trends in revenues/m2
FAVOURABLE TRENDS IN REVENUES/ M2 Group revenues (PLN m) Group revenues reached PLN 341.8m in 2Q22 (up 40.1% YoY), due 348.8 341.8 to rebound in traditional stores of both segments. 249.4 305.0 243.8 197.5 232.0 244.0 174.2 149.6 Apparel segment revenues grew 36.9% YoY, reaching PLN 192.1m, 174.
Slide 31: Record quarterly gross profit on sales
RECORD QUARTERLY GROSS PROFIT ON SALES Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 193.2m in 2Q22 192.0 193.2 (+47.3% YoY). 163.3 In 2Q22 gross profit on sales of the apparel segment reached 122.4 118.9 131.1 91.8 123.2 78.7 94.0 82.1 71.0 PLN 114.4m, up 46.5% YoY.
Slide 32: 2Q22 operating profit above 4Q21
2Q22 OPERATING PROFIT ABOVE 4Q21 Monthly operating costs per m2 (PLN, IAS17) Group operating costs/ m2 (IAS17) reached in 2Q22 PLN 877/ m2 918 per month, up 23.1% YoY. Growth in sales/ m2 higher than growth 877 726 774 in costs/ m2. 654 672 680 712 276 225 520 587 203 203 169 188 199 218 Costs o
Slide 33: Very strong 2Q22 results
VERY STRONG 2Q22 RESULTS PLN m, IFRS16 2Q21 2Q22 YoY Revenues 244.0 341.8 40.1% Revenues and gross profit margin on sales higher YoY due to favourable trends in both segments. Gross profit on sales 131.1 193.2 47.3% Gross profit on sales margin 53.7% 56.5% 2.8pp. More favourable YoY balance of n
Slide 34: PLN 120m EBITDA in 1H22
PLN 120M EBITDA IN 1H22 PLN m, IFRS16 1H21 1H22 YoY Revenues 416.1 585.5 40.7% Revenues and gross profit margin on sales higher YoY due to favourable trends in both segments. Gross profit on sales 212.8 316.4 48.7% Gross profit on sales margin 51.1% 54.0% 2.9pp. More favourable YoY balance of ne
Slide 35: Stable inventories despite dynamic sales growth
STABLE INVENTORIES DESPITE DYNAMIC SALES GROWTH Change in inventories (PLN m) Slight increase in inventories by 2.4% YoY to PLN 527.9m in 2Q22 515.8 527.9 alongside a 40.1% increase in Group revenues in 2Q22. 39.4 Apparel segment inventories fell 10.5% YoY due to good sales -27.2 257.1 296.5 in
Slide 36: Net cash on the balance sheet
NET CASH ON THE BALANCE SHEET 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 79.3 87.9 106.5 53.7 74.2 IFRS16. Financial leases under IFRS16 at PLN 314.8m i
Slide 37: Strong operating cash flow
STRONG OPERATING CASH FLOW Net working capital (PLN m) Slight YoY increase in inventories: decrease in apparel segment, PLN 335.0m increase in jewellery segment (preparation for floorspace growth 13.7 PLN 347.9m 20.1 in 2H22). YoY increase in receivables due to higher YoY prepayments (new 515.8
Slide 38: 2022+ Outlook
04 2022+ OUTLOOK
Slide 39: Group floorspace stabilization in 2022
GROUP FLOORSPACE STABILIZATION IN 2022 2021 2022 target YoY Stabilization of floorspace in the apparel stores 404 378 -26 segment - changes in stores, introduction APPAREL SEGMENT of new concepts adequate to broadened m2 40,930 39,503 -3% collections. stores 145 139 -6 VISTULA m2 18,531 17,813 -4% s
Slide 40: Omnichannel built around customer convenience
OMNICHANNEL BUILT AROUND CUSTOMER CONVENIENCE Wide range of Works on modern delivery and return visuals for websites Continuation options for Group and applications of cooperation with brands, including reflecting Zalando. express delivery. the brands’ ID. Improved functionality of the Interactive s
Slide 41: Building a modern brands offer
BUILDING A MODERN BRANDS OFFER Functional elegance - the High quality distinguishes latest trends in apparel the Group's brands. brands' collections. Development of smart Athleisure and sports casual products as Vistula a tailor of national limited collections at Deni a response to football team in
Slide 42: Diversification of the jewellery segment offer
DIVERSIFICATION OF THE JEWELLERY SEGMENT OFFER Broadening of the jewellery offer: Luxury jewellery offer • new gold and silver collections development at W.KRUK: Birks, (ambassador collection), Recarlo, Pasquale Bruni, Marco • a wide range of gemstone Bicego and Hulchi Belluni. jewellery, • expansio
Slide 43: Plans for the second half of 2022
PLANS FOR THE SECOND HALF OF 2022 VRG Management Board APPAREL SEGMENT continuously monitors revenue and margin • gross margin on sales maximization in post- performance of all brands sales periods, and will flexibly adapt its • marketing adapted to omnichannel actions to the market solutions, situa
Slide 44: 2022 targets maintained
2022 TARGETS MAINTAINED Continuation of double-digit sales growth 1 of the Group. YoY improvement of the gross profit margin - 2 more effective discount policy. Increase in operating margin due to the 3 positive effect of operating leverage. 4 YoY improvement of Capital Group results. 5 Safe liquidi
Slide 45: Q&A
05 Q&A
Slide 46: Back-up
06 BACK-UP
Slide 47: Vistula: executive summary
VISTULA: EXECUTIVE SUMMARY VISTULA (FASHION FOR AUTUMN/WINTER 2022 COLLECTION MEN AND WOMEN) - The campaign under the slogan "VISTULA ON THE GO. Find what - Traditional tailoring and global defines you". The collection will be presented in five in-takes, trends – modern, original and providing the c
Slide 48: Vistula: triple-digit increases in store EBIT
VISTULA: TRIPLE-DIGIT INCREASES IN STORE EBIT Vistula brand revenues (PLN m) Vistula brand revenues amounted to PLN 124.5m in 1H22, growing by 124.5 44.7% YoY. The brand's stores generated PLN 78.3m, +67.9% YoY, due 86.0 22.7 to demand recovery in shopping centers. +45% 23.5 23.3 Franchise reven
Slide 49: Bytom: executive summary
BYTOM: EXECUTIVE SUMMARY BYTOM (FASHION FOR MEN) AUTUMN/WINTER 2022 COLLECTION - A Polish brand with a tradition - The brand's new campaign under the slogan Woven Stories is a of tailoring craftsmanship dating tribute to art, culture and history. Inspiration and leitmotif of the back to 1945 campaig
Slide 50: Bytom: gross profit margin improvement
BYTOM: GROSS PROFIT MARGIN IMPROVEMENT Bytom brand revenues (PLN m) 88.6 Bytom brand revenues amounted to PLN 88.6m in 1H22, growing by 61.4 14.4 44.3% YoY. The brand's stores generated PLN 70.3m, +80.2% YoY. 3.9 44% Franchise revenues amounted to PLN 3.9m in 1H22, +66.1% YoY. The 20.0 2.4 franc
Slide 51: Wólczanka: executive summary
WÓLCZANKA: EXECUTIVE SUMMARY WÓLCZANKA (FASHION FOR MEN AND WOMEN) - Polish chain of own and franchise stores with women's and men's AUTUMN/WINTER 2022 COLLECTION clothing (total look) - The new collection's leitmotif is the energy of the city and the - The offer includes: shirts, surrounding nature
Slide 52: Wólczanka: highest share of on-line
WÓLCZANKA: HIGHEST SHARE OF ON-LINE Wólczanka brand revenues (PLN m) 58.9 Wólczanka brand revenues amounted to PLN 58.9m in 1H22, growing by 24.2% YoY. The brand's stores generated PLN 21.6m, +77.7% YoY. 47.5 +24% 30.8 Franchise revenues amounted to PLN 6.6m in 1H22, up 44.3% YoY. 30.8 The franc
Slide 53: Deni Cler: executive summary
DENI CLER: EXECUTIVE SUMMARY AUTUMN/WINTER 2022 „Viaggio in città” DENI CLER (WOMEN’S FASHION) - The latest collection is inspired by a journey around - Women’s fashion brand established in Italy different world capitals. The first capsule collection is in 1971 Tokyo, a mix of urban fashion and glam
Slide 54: Deni Cler: strong growth of store EBIT
DENI CLER: STRONG GROWTH OF STORE EBIT Deni Cler brand revenues (PLN m) Deni Cler brand revenues amounted to PLN 24.0m in 1H22, growing 24.0 by 28.8% YoY. The brand's stores generated PLN 13.3m, +43.2% YoY. 18.7 2.4 Franchise and multibrand revenues amounted to PLN 8.3m in 1H22, 29% 8.3 3.2 up 3
Slide 55: W.KRUK: executive summary
W.KRUK: EXECUTIVE SUMMARY THE OLDEST JEWELLERY BRAND NEW COLLECTIONS IN POLAND - For Mother's Day, W.KRUK has prepared a selection - The jewellery offer includes gold and silver of jewellery with coloured gemstones and an attractive jewellery, diamonds, gemstones and original shopping offer. The fac
Slide 56: W.KRUK: continuation of strong performance
W.KRUK: CONTINUATION OF STRONG PERFORMANCE W.KRUK brand revenues (PLN m) 276.7 Retail revenues of the W.KRUK brand amounted to PLN 276.7m in 1H22, growing by 47.0% YoY. The brand's stores generated 18.4 188.3 PLN 240.3m in revenue, 54.1% YoY. 22.9 47% Franchise revenues amounted to PLN 18.0m in
Slide 57: 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 2 Q 2 2 JEWELLERY SEGMENT APPAREL SEGMENT OTHER ACTIVITY VRG S.A. WSM Factory sp. z o.o. W.KRUK S.A. parent company (formerly WSM Sp. z o.o.), VG Property sp. z o.o. Jewellery, watches, accessor
Slide 58: Continued optimisation of the number of stores
CONTINUED OPTIMISATION OF THE NUMBER OF STORES NUMBER OF STORES 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 440 427 426 427 421 415 409 404 398 391 APPAREL SEGMENT franchise 126 126 129 136 135 135 131 127 126 123 total 148 145 147 149 148 148 146 145 145 144 VISTULA franchise 59 60 62 65 64 6
Slide 59: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 total 42,962 41,953 41,891 42,021 41,564 41,337 40,864 40,930 40,891 40,385 APPAREL SEGMENT franchise 9,123 9,195 9,368 9,882 9,789 9,794 9,577 31,468 9,425 9,236 total 18,650 18,291 18,508 18,695 18,586 18,593
Slide 60: 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 9.1 8.3 9.3 brands. 4
Slide 61: 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 The jewellery segment is characterised by higher revenues and 1,411 1,142 1,113 1,248 1,158 1,196 1,266 costs/ m2 than these of th
Slide 62: 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, photoshoots) and nationwide marketing campaigns in editorial, 6.8 internet and TV with celebr
Slide 63: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 3Q20 3Q21 YoY 4Q20 4Q21 YoY 1Q21 1Q22 YoY 2Q21 2Q22 YoY Revenues 249.4 305.0 22.3% 232.0 348.8 50.3% 172.1 243.8 41.6% 244.0 341.8 40.1% Gross profit on sales 122.4 163.3 33.4% 118.9 192.0 61.5% 81.7 123.2 50.8% 131.1 193.2 47.3% Gross profit on sales margi
Slide 64: Results under IAS17
RESULTS UNDER IAS17 PLN m, IAS17 2Q21 2Q22 YoY PLN m, IAS17 1H21 1H22 YoY Revenues 244.0 341.8 40.1% Revenues 416.1 585.5 40.7% Gross profit on sales 131.1 193.2 47.3% Gross profit on sales 212.8 316.4 48.7% Gross profit on sales margin 53.7% 56.5% 2.8pp. Gross profit on sales margin 51.1% 54.0% 2.9
Slide 65: 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, 19% USD, 27% since 2Q16. Hedging only relates to the apparel segment. USD, 30% The group is a beneficiary of strengthening of zloty versus foreign currencies. 1H21 EU
Slide 66: Safe debt level
SAFE DEBT LEVEL PLN m 2Q21 4Q21 2Q22 Interest bearing indebtedness includes: bank loans, finance leases Long-term debt 42.6 34.6 29.6 and reverse factoring (taken over with Bytom S.A. merger). Bank loans 41.1 33.7 28.7 Bank loans include: overdrafts and investment bank loans. Bank loan collatera
Slide 67: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 26.08.2022 (share in equity and votes) PZU OFE and DFE Number of % share 17.62% shares/votes 1. PZU OFE i DFE 41,314,600 17.62% Other free-float 29.46% 2. Jerzy Mazgaj 38,332,632 16.35% 3. IPOPEMA TFI 36,038,137 15.37% Jerzy Mazgaj 16.35% 4. NN OFE 3
Slide 68: 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 69: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow