Slide 1: 1Q20 Results Presentation
WKRUK — DENICLER BYTOM WOLCZANKA VISTULA VRG VISTULA RETAIL GROUP 1Q20 RESULTS PRESENTATION
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 — DENICLER VRG VISTULA RETAIL GROUP
Slide 4: Key 1Q20 event: COVID-19
Key 1Q20 event: COVID-19 1st January – 13th March 14th – 31st March Closing down of shopping malls January and February 2020 – no coronavirus impact Operating: 1st -13th March • e-stores of all brands – strong A gradual coronavirus impact along with YoY growths increasing uncertainty towards epidemi
Slide 5: Results impacted by COVID-19
Results impacted by COVID-19 IFRS 16 EBIT LOSS NET LOSS REVENUES PLN (11.9) m PLN (32.0) m PLN 197.5m, -7.9% (1.2) (2.4) IAS 17 EBIT LOSS NET LOSS GROSS PROFIT MARGIN PLN (12.2) m PLN (14.0) m 47.6%, -1.4 pp. (1.1) (1.2) 1Q20 presentation 5
Slide 6: Group's development continues
Group’s development continues NUMBER OF STORES EOP 1Q20 102 +3 YoY 148 -4 cities 125 +4 140 +9 YoY franchise 137 -2 stores 53.7 30 -1 +2% YoY 140 +8 ths m2 23% +7.5 pp. YoY 580 +5 internet share 1Q20 presentation 6
Slide 7: Continuation of group's floorspace growth
Continuation of group’s floorspace growth Group floorspace growth YoY (ths m2) Group floorspace reached 53.7 ths m2 at the 53.7 end of 1Q20, up 2% YoY. 52.4 0.6 0.7 The apparel segment added 0.7 ths m2, up 10.0 10.7 1% YoY. The jewellery segment added 0.7 ths m2 net to group floorspace, growin
Slide 8: Slide 8
Slide 9: Vistula: over 25% of revenues from on-line
Vistula: over 25% of revenues from on-line Vistula brand network Vistula brand floorspace was stable YoY at the end of 1Q20, while the sales network 1Q19 1Q20 YoY contracted by 4 stores net. Number of stores 152 148 -4 Franchise development continued: 1 new 58 59 +1 franchise store net and 3% Yo
Slide 10: Vistula: growing share of casual
Vistula: growing share of casual Vistula brand revenue split Growth of Vistula Red share in revenues 12% 12% 14% 12% coupled with fall of Lantier brand. 16% 18% Stable share of the main line in revenues 41% 45% (lack of occasional lines in the base). Further YoY growth in share in revenue of 7
Slide 11: Bytom
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Slide 12: Bytom: doubling of on-line sales
Bytom: doubling of on-line sales Bytom brand network Bytom’s network grew YoY by 4 stores net, out of which 2 were franchise stores. 1Q19 1Q20 YoY Brand’s floorspace grew 5% YoY due to Number of stores 121 125 +4 opening of increasingly large stores and incl. franchise 6 8 +2 expansions of franc
Slide 13: Bytom: a growing share of casual
Bytom: a growing share of casual Bytom brand revenue split A growing share of casual in 1Q20 revenues, 8% 8% 11% 9% in line with market tendencies and increased interest due to home office from 39% 45% 33% 37% mid-March 2020. A stable share of accessories in sales split. 52% 56% 54% 47% 1Q19 1Q2
Slide 14: Wólczanka
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Slide 15: Wólczanka: an internet brand
Wólczanka: an internet brand Wólczanka brand network Wólczanka network contracted by 2 stores net YoY. Growth materialised in franchise 1Q19 1Q20 YoY stores – there were 2 more of these YoY. Number of stores 139 137 -2 Brand’s floorspace was stable YoY. Franchise incl. franchise 48 50 2 store fl
Slide 16: Wólczanka: a growing share of knitwear
Wólczanka: a growing share of knitwear Wólczanka brand revenue split A higher share of knitwear due to extended 7% 11% assortment (introduction of chinos trousers) 4% 3% at the expense of mens’ shirts. 41% 40% 27% 27% A stable share of women shirts in sales structure. 62% 59% 59% 60% Stable Yo
Slide 17: Deni Cler
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Slide 18: Deni Cler: stable network, shop-in-shop development
Deni Cler: stable network, shop-in-shop development Deni Cler brand network Deni Cler network encompasses 30 stores in 1Q19 1Q20 YoY top shopping malls in Poland. Number of stores 31 30 -1 There are 9 franchise stores in the network. incl. franchise 8 9 1 Development of shop-in-shop concept. D
Slide 19: Deni Cler: the highest gross profit margin
Deni Cler: the highest gross profit margin Deni Cler brand revenue split Emphasis on capsule collections. Stable YoY sales structure. 16% 16% 16% 17% 8% 7% 8% Only a couple percentage fall in sales/ m2 8% with low e-commerce share shows the success of the strategy to gradually increase the cas
Slide 20: W.KRUK
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Slide 21: W.KRUK: leader of floorspace growth
W.KRUK: lider wzrostu powierzchni W.KRUK brand network Dynamic YoY growth in W.KRUK brand stores. Opening of 8 stores net translated into a 7% 1Q19 1Q20 YoY YoY increase in brand’s floorspace. Number of stores 132 140 +8 The brand had 14 franchise stores at the end incl. franchise 11 14 +3 of
Slide 22: W.KRUK: a growing share of watches
W.KRUK: a growing share of watches W.KRUK brand revenue split Closing down of shopping malls has not altered the sales split. 28% 30% 33% 35% Watches continued to increase their share in revenues in 1Q20. Within jewellery, there was a growing YoY share of gold jewellery over higher-margin 72%
Slide 23: Group Results
VISTULA WOLCZANKA BYTOM WKRUK — DENICLER GROUP RESULTS |
Slide 24: Higher revenues in jewellery segment
Higher revenues in jewellery segment Group revenues (PLN m) Group revenues reached PLN 197.5m in 1Q20 332.5 (down 8% YoY). 272.1 270.2 251.2 125.6 Apparel segment revenues fell 13% YoY, 192.9 214.4 197.5 reaching PLN 123.3m. 160.6 180.1 110.2 86.7 90.8 72.8 74.2 Jewellery segment revenues amou
Slide 25: Lower gross profit in both segments
Lower gross profit in both segments Gross profit on sales (PLN m) Group gross profit on sales amounted to 178.5 PLN 94.0m in 1Q20 (down 10.5% YoY). 143.8 144.6 In 1Q20 gross profit on sales of the apparel 128.0 67.6 100.6 105.0 45.9 segment reached PLN 56.8m, down 16% YoY. 90.1 59.7 94.0 77.8 47
Slide 26: Lower operating costs/ m2
Lower operating costs/ m2 Operating costs, monthly per m2 Group operating costs/ m2 (IAS17) reached (PLN m, excl. IFRS16) PLN 654/ m2 monthly and fell 4% YoY in 1Q20 due to lack of rentals in second half of 852 761 802 784 811 March 2020. 723 717 683 654 249 230 Costs of stores/ m2 reached 451 P
Slide 27: 1Q20 results affected by COVID-19 (IFRS16)
1Q20 results affected by COVID-19 (IFRS16) YoY fall in revenues as a result of shopping malls being closed since mid-March 2020. 1Q19 1Q20 PLN m YoY IFRS16 IFRS16 Lower YoY gross profit margin due to higher share of on-line and stronger promotions. Revenues 214.4 197.5 -7.9% Results comparable
Slide 28: 1Q20 results affected by COVID-19 (IAS17)
1Q20 results affected by COVID-19 (IAS17) YoY fall in revenues as a result of shopping malls being closed since mid-March 2020. 1Q19 1Q20 PLN m YoY IAS17 IAS17 Lower YoY gross profit margin due to higher share of on-line and stronger promotions. Revenues 214.4 197.5 -7.9% Stable YoY costs (no
Slide 29: Impact of COVID-19 on inventory
Impact of COVID-19 on inventory Change in inventory (PLN m) Inventory up 12% YoY to PLN 547.1m due to network development plans, expectations for +26.6 547.1 higher YoY revenues and shopping malls +31.6 closed since mid-March. 488.9 Apparel segment inventory increased 11% 235.8 209.2 YoY. Inve
Slide 30: Fall in net debt
Fall in net debt 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 284.5m. 69.3 101.4 53.4 45.0 91.9 48.5 58.6 Usage of reverse factoring for supply ch
Slide 31: Inventory as a key to NWC
Inventory as a key to NWC Working capital Higher YoY inventories due to impact of (PLN m) coronavirus and lack of revenues from 26.8 32.2 shopping malls through half of the key PLN month – March. PLN 373.8m Lower YoY receivables due to fall in 329.7m prepayments for goods purchased on 547.1 488.
Slide 32: 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 33: So-far coronavirus impact
So-far coronavirus impact 169% 118% E-stores of our brands are operational and record high sales growths. 82% 17% 14% 11% 10% -42% -40% 9% 10% -65% -64% -63% Closing of shopping malls -98% resulted in majority of Group’s Jan'20 Feb'20 March'20 April'20 1-18 May'20 traditional stores Group sales (YoY
Slide 34: Actions taken due to coronavirus
Actions taken due to coronavirus Cost reductions: Support of sales, emphasis HR, rentals, on on-line marketing Working capital Capex reduction improvements LIQUIDITY 1Q20 presentation 34
Slide 35: Support for on-line sales
Support for on-line sales Target for 2020: e-commerce constituting 25% of revenues. Higher outlays to gain on-line traffic. Streamlining of on-line logistics. Launch of sales application. Salonet development. 1Q20 presentation 35
Slide 36: 2020 floorspace lower YoY
2020 floorspace lower YoY 2020 2020 2019 YoY former target APPAREL stores 451 435 413 -38 In 2020 floorspace will be lower YoY SEGMENT m2 43,731 42,471 40,813 -7% due to closing down of unprofitable stores 154 149 140 -14 stores. VISTULA m2 19,320 18,697 17,787 -8% stores 140 135 126 -14 WÓLCZANKA m
Slide 37: Actions related to HR costs
Actions related to HR costs DELIVERED maximum use of overdue and this year’s holidays TO BE DELIVERED limiting sales bonuses at stores and bonuses at HQs obtaining of co-financing dynamic adjustment of employment to for salaries: 20% salary expected sales dynamics, departure reduction, 40% of salary
Slide 38: Actions taken to reduce rentals
Actions taken to reduce rentals DELIVERED TO BE DELIVERED renegotiation of rental agreements taking up with shopping malls – prolonging the negotiations with majority of the agreements at terms shopping malls adjusted to the current market _____________ conditions _________________ usage of State de
Slide 39: Working capital improvements
Working capital improvements APPAREL SEGMENT JEWELLERY SEGMENT Some 20% orders reduction for Spring/Summer 2020. 20% orders reduction. Some 30% orders reduction for Autumn/Winter 2020. In process Lengthening of payment terms. In process Lengthening of payment terms. Limiting the watches distribution
Slide 40: April 2020 – month under COVID-19 impact
April 2020 – month under COVID-19 impact Group gross profit margin: Group revenues: 35.7%, - 18.7pp. PLN 29.0m, - 65.2% YoY Reasons behind margin fall: Apparel segment revenues: only on-line sales, lower gross PLN 20.8m, profit margin - 62.4% YoY __________ stronger YoY promotions, sell-offs at W.KR
Slide 41: Base case scenario: a gradual return of clients to stores
Base case scenario: a gradual return of clients to stores YoY GROUP SALES DYNAMICS (BASE CASE SCENARIO) Shopping malls A gradual recovery from revenue fall. closed by 4th May. 10% 9% -20% -30% -10% -10% -10% -10% -10% -53% -40% Possible loss of -65% more than 20% of retail sales. Previous assumption
Slide 42: Targets for 2020
Targets for 2020 REVENUES EBITDA LIQUIDITY RISKS Negative impact of coronavirus, lower consumer demand. Loss of more than 20% of revenues in base EBITDA (IAS17) Maintaining liquidity. case scenario. above zero. OPPORTUNITIES Stable YoY debt at the Share of internet Fixed costs reduction, end of 2020
Slide 43: We help
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Slide 44: Q&A
VISTULA WOLCZANKA BYTOM WKRUK — DENICLER Q&A VRG VISTULA RETAIL GROUP
Slide 45: Back-up
VISTULA WOLCZANKA BYTOM WKRUK — DENICLER BACK-UP VRG VISTULA RETAIL GROUP
Slide 46: 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 47: 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 48: 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 49: 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 50: W.KRUK: executive summary
W.KRUK: executive summary The oldest jewellery brand in Poland The jewellery offer includes gold and silver 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- LeCoultre, H
Slide 51: Summary of brands' 1Q20 results
Summary of brands’ 1Q20 results GROWING SHARE GROWING SHARE OF CASUAL. OF ON-LINE. BROADENING THE JEWELLERY OFFER. FURTHER INCRE ASE 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. 1Q20 presentation 51
Slide 52: 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 1 Q 2 0 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 53: Growing number of stores
Growing number of stores NUMBER OF STORES 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 APPAREL total 299 300 304 440 443 452 451 451 440 SEGMENT franchise 93 94 100 117 120 126 129 132 126 total 136 138 141 148 152 154 152 154 148 VISTULA franchise 46 47 50 56 58 60 60 62 59 total 131 132 133 139 13
Slide 54: Higher floorspace
Higher floorspace FLOORSPACE (M2) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 APPAREL total 24,822 24,864 25,163 42 072 42,429 43,207 43,461 43,731 42,962 SEGMENT franchise 6,389 6,487 6,820 8 394 8,621 9,223 9,322 9,590 9,123 total 16,855 17,176 17,429 18 230 18,727 19,007 19,058 19,320 18,650 VIS
Slide 55: 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 7.9 Our aim is to develop on-line stores of own brands (monoshops). 7.2 5.4 6.0 7.0 Revenues and costs of on-line stores are 4.3 38.8 4.8 5.5 37.5 allocated directly to the brands
Slide 56: Fall in costs/ m2
Fall in costs/ m2 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 1,376 1,510 higher revenues and costs/ m2 than these of 1,094 1,131 1,139 1,177 1,226 1,143 1,142 the
Slide 57: Marketing: 180th jubilee of W.KRUK
Marketing: 180th jubilee of W.KRUK 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, 1.7 2.7 internet and TV with celebrities. 3.0
Slide 58: 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. 1Q19 1Q20 The group is a beneficiary of strengthening of CHF, 4% USD; CHF, 7% zloty versus foreign currencies. USD, 39% YoY shift in purchases structure due to EUR; 3
Slide 59: Historical quarterly results
Historical quarterly results 3Q19 3Q19 4Q19 4Q19 1Q19 1Q20 PLN m 3Q18 YoY 4Q18 YoY YoY IFRS16 IAS17 IFRS16 IAS17 IFRS16 IFRS16 Revenues 180.1 251.2 39.5% 251.2 272.1 332.5 22.2% 332.5 214.4 197.5 -7.9% Gross profit on sales 90.1 128.0 42.1% 128.0 143.8 178.5 24.1% 178.5 105.0 94.0 -10.5% Gross profi
Slide 60: Safe indebtedness level
Safe indebtedness level PLN m 1Q19 4Q19 1Q20 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring Long-term debt 73.8 58.0 57.9 (taken over with Bytom S.A. merger). Bank loans include: overdrafts and Bank loans 70.5 55.9 55.7 investment bank loans. Bank loan c
Slide 61: Monthly sales data
Monthly sales data APPAREL SEGMENT REVENUES (VISTULA, WÓLCZANKA, DENI CLER, BYTOM from XII 2018) 90 84 80% 78 78 80 60% 70 66 40% 52 58 60 55 53 20% 51 51 42 48 48 47 50 47 45 42 42 0% 39 38 40 40 40 3940 38 40 40 37 34 35 34 34 34 34 33 33 32 32 3133 33 33 33 32 32 33 27 29 29 28 -20% 30 27 2325 25
Slide 62: Monthly sales data
Monthly sales data JEWELLERY SEGMENT REVENUES (W.KRUK) 80 50% 69 40% 70 65 65 30% 20% 60 51 10% 50 0% -10% 40 -20% 31 32 31 32 29 29 30 26 28 27 27 28 27 28 27 -30% 24 25 26 26 25 26 24 25 23 26 22 22 22 22 22 21 22 21 -40% 20 20 20 20 20 20 20 17 18 18 18 19 17 18 20 17 17 17 15 16 -50% -60% 10 7 -
Slide 63: Monthly sales data
Monthly sales data REVENUES OF THE CAPITAL GROUP 180 60% 156 160 147 147 40% 140 20% 120 107 96 98 0% 100 90 83 85 86 83 79 76 78 76 80 71 73 71 69 73 67 69 67 69 67 69 67 -20% 63 61 62 60 57 57 57 62 60 57 56 57 56 57 57 60 53 50 52 53 52 56 53 50 47 49 44 45 43 -40% 40 29 -60% 20 0 -80% revenues -
Slide 64: Shareholder structure
Shareholder structure Shareholder structure as of 19.05.2020 Sources of information on VRG S.A. shares (share in equity and votes) Number of 1. information on the number of shares provided in accordance with the notification received by % stake the Company pursuant to art. 69 clause 1 point 2 and ar
Slide 65: 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 66: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow