Slide 1: 2Q21 Results Presentation
2Q21 RESULTS PRESENTATION AUGUST 26, 2021
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 01 INTRODUCTION
Slide 4: Half of the year affected by pandemics
Do poprawek HALF OF THE YEAR AFFECTED BY PANDEMICS graficznych 2020 2021 Information from China about the virus, JANUARY increasing uncertainty about the supply Shopping malls closed all month chain Growing uncertainty about the situation FEBRUARY Shopping malls open all month in Poland, delays in d
Slide 5: Recovery in demand after store opening
RECOVERY IN DEMAND AFTER STORE OPENING 1 E-stores High growth rate in the first months of the year, especially during the time traditional stores were closed. Weakening of dynamics YoY in 2Q21. Return to growths in the summer months. 844% 2 Stores 90% 123% Sales in traditional stores affected by loc
Slide 6: Further network optimisation
FURTHER NETWORK OPTIMISATION NUMBER OF STORES EOP 2Q21 YoY 148 +3 116 -4 106 -3 YoY 52,4 - 1% YoY towns ths m2 121 -11 30 0 155 24.1% -5.8 pp. YoY franchise +14 YoY internet share stores 142 +2 557 - 10 6 | 2Q21 presentation
Slide 7: Growth in both segments
GROWTH IN BOTH SEGMENTS Apparel segment return of favorable development of the positive trends in sales dynamics in casual offer and sales of each of the formal clothing eco collections brands Jewellery segment favorable trends in positive trends in demand for gold off-line sales sales of watches an
Slide 8: Better YoY results in 2Q21 and 1H21
BETTER YOY RESULTS IN 2Q21 AND 1H21 2Q21 IFRS16 1H21 IFRS16 REVENUES EBIT REVENUES EBIT PLN 244.0m PLN 16.7m PLN 416.1m PLN 0.9m 39.5% YoY 2Q20: PLN (10.4)m 11.8% YoY 1H20: PLN (22.3)m GROSS PROFIT MARGIN NET PROFIT (LOSS) GROSS PROFIT MARGIN NET PROFIT (LOSS) 53.7% PLN 23.0m 51.1% PLN 2.8m 6.8 pp.
Slide 9: Performance by brands
02 PERFORMANCE BY BRANDS
Slide 10: Vistula executive summary
VISTULA EXECUTIVE SUMMARY 7 S VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 11: Vistula: rebound in brand's revenues
VISTULA: REBOUND IN BRAND’S REVENUES Vistula brand network 2Q20 2Q21 YoY Vistula brand floorspace was stable YoY at the end of 2Q21, while the number of stores of the brand increased by 3 net YoY. Number of stores 145 148 +3 Both franchise floorspace and number of stores grew YoY at the incl. fr
Slide 12: Vistula: rebound in formal clothing sales
VISTULA: REBOUND IN FORMAL CLOTHING SALES Vistula brand revenue split 10% 7% 14% 13% 6% Significant increase in share of formal w 2Q21 along with a 16% stronger demand for formal clothing at the expense of casual 41% 47% clothing, due to the return of celebrations, i.e. communions, 87% weddings. 7
Slide 13: Vistula: double-digit store EBIT growth
VISTULA: DOUBLE-DIGIT STORE EBIT GROWTH Vistula brand revenues (PLN m) Revenues of the Vistula brand amounted to PLN 86.0m in 1H21, 92.1 down 6.6% YoY. The brand's stores in shopping centers were closed 86.0 for over 2 months due to COVID-19. 28.0 23.3 Internet revenues amounted to PLN 23.3m in
Slide 14: Bytom executive summary
BYTOM SZTUKA KRAWIECTWA OD 1945 EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 15: Bytom: growth in offline revenues
BYTOM: GROWTH IN OFFLINE REVENUES Bytom brand network Number of Bytom stores decreased by 4 net YoY, while the number 2Q20 2Q21 YoY of franchise stores increased by 3 net YoY. Number of stores 120 116 -4 Floorspace decreased by 4% YoY. Sizeable changes in floorspace incl. franchise 8 11 +3 also
Slide 16: Bytom: stable store EBIT
BYTOM: STABLE STORE EBIT Bytom brand revenue split 7% 7% 9% 9% Growing share of formal sales in 2Q21, due to growing interest in suits with the return to weddings and communion. 48% 39% 37% 45% As a result, a decrease in sales and share in sales of the casual collections. High share of knitted f
Slide 17: Bytom: gross profit margin improvement
BYTOM: GROSS PROFIT MARGIN IMPROVEMENT Bytom brand retail revenues (PLN m) Revenues of the Bytom brand amounted to PLN 61.4m in 1H21, 68.4 falling by 10% YoY. The brand's stores in shopping centers were 61.4 closed for more than 2 months due to the COVID-19 pandemic. 25.0 20.0 Internet revenues
Slide 18: Wólczanka executive summary
WOLCZANKA EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 19: Wólczanka: an on-line brand
WÓLCZANKA: AN ON-LINE BRAND Wólczanka brand network 2Q20 2Q21 r/r Wólczanka network contracted by 11 stores net YoY. Optimisation affected mostly own stores – there were 4 more franchise stores Number of stores 132 121 -11 YoY. incl. franchise 49 53 +4 Brand’s floorspace fell 6% YoY, while franc
Slide 20: 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 14% 20% 4% 8% 3% assortment due to a wider range of trousers (for men and women) 14% 65% and introducti
Slide 21: The highest share of on-line in sales
THE HIGHEST SHARE OF ON-LINE IN SALES Wólczanka brand revenues (PLN m) Revenues of the Wólczanka brand amounted to PLN 47.5m in 1H21, falling by 1.9% YoY. The brand's stores in shopping centers 48.4 47.5 were closed for more than 2 months due to COVID-19. Internet revenues amounted to PLN 30.8m
Slide 22: Deni Cler executive summary
DENI CLER MILANO EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 23: Deni Cler: stable network, shop-in-shop development
DENI CLER: STABLE NETWORK, SHOP-IN-SHOP DEVELOPMENT Deni Cler brand network 2Q20 2Q21 YoY Deni Cler network encompasses 30 monobrand stores (both own Number of stores 30 30 0 and franchise) in top shopping malls in Poland. incl. franchise 9 7 -2 Development of shop-in-shop concept. Deni Cler col
Slide 24: Deni Cler: triple digit growing store EBIT
DENI CLER: TRIPLE DIGIT GROWING STORE EBIT Deni Cler brand revenue split Emphasis on capsule collections. Stable share of accessories and 0% 20% 21% 33% growth in complementary collections - products that used to be 7% 38% 12% more of a supplement are growing stronger (including casual). 73% 47% 4
Slide 25: Deni Cler: doubling store EBIT
DENI CLER: DOUBLING STORE EBIT Deni Cler brand revenues (PLN m) Revenues of the Deni Cler brand amounted to PLN 18.7m in 1H21, 17.3 18.7 growing by 7.7% YoY. The brand's stores in shopping centers were 3.2 closed for more than 2 months due to the COVID-19 pandemic. 3.2 8% 6.1 Internet revenues a
Slide 26: W.KRUK executive summary
) EXECUTIVE SUMMARY Ak VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 27: W.KRUK: over PLN 100m revenues in 2Q21
W.KRUK: OVER PLN 100M REVENUES IN 2Q21 W.KRUK brand network 2Q20 2Q21 YoY Continuation of W.KRUK brand development. Growth in number of net stores by 2 YoY translated into a 3% YoY increase in brand’s Number of stores 140 142 +2 floorspace. incl. franchise 15 20 +5 The brand had 20 franchise sto
Slide 28: W.KRUK: doubling the store EBIT
W.KRUK: DOUBLING THE STORE EBIT W.KRUK brand revenue split Significant changes in the sales structure - growing share of 31% 30% 29% 47% watches in relation to jewellery. Advantageous effect of exclusivity on the sale of luxury Rolex and Patek Philippe watches. In the jewellery section, in 2Q21
Slide 29: W.KRUK: doubling store EBIT
W.KRUK: DOUBLING STORE EBIT W.KRUK brand retail revenues (PLN m) W.KRUK brand's retail revenues amounted to PLN 188.3m in 1H21, growing by 41.0% YoY. The brand's stores in shopping centers were 188.3 133.5 closed for more than 2 months due to COVID-19. 22.9 Internet revenues amounted to PLN 22.9
Slide 30: Group results
WKRUK WOLCZANKA WISTULA DENI CLER BYTOM GROUP RESULTS
Slide 31: Stable group floorspace
STABLE GROUP FLOORSPACE Group floorspace change YoY (ths m2) 52.7 52.4 Group floorspace reached 52.4 ths m2 at the end of 2Q21, down 0.3 0.6% YoY. 10.7 11.1 0.6 The apparel segment floorspace fell 0.6 ths m2, down 1.5% YoY, due to closing down of unprofitable stores. 42.0 Stable YoY 41.3 The j
Slide 32: Rebound in jewellery and apparel segment
REBOUND IN JEWELLERY AND APPAREL SEGMENT Group revenues (PLN m) Group revenues reached PLN 244.0m in 2Q21 (up 39.5% YoY), due 332.5 to rebound in traditional stores of both segments. 270.2 251.2 125.6 197.5 249.4 232.0 244.0 Apparel segment revenues grew 23.1% YoY, reaching PLN 140.4m, 86.7 90.8
Slide 33: More favourable trends in the apparel segment
MORE FAVOURABLE TRENDS IN THE APPAREL SEGMENT Gross profit on sales (PLN m) 178.5 Group gross profit on sales amounted to PLN 131.1m in 2Q21 (up 144.6 128.0 131.1 59.8% YoY). 67.6 122.4 118.9 45.9 94.0 In 2Q21 gross profit on sales of the apparel segment reached 47.1 82.1 52.9 81.7 53.0 37.2 60.
Slide 34: Operating costs/m2 under control
OPERATING COSTS/ M2 UNDER CONTROL Monthly operating costs per m2 (PLN, excl. IFRS16) Group operating costs/ m2 (IAS17) reached PLN 712/ m2 monthly and up 36.9% YoY in 2Q21 due to rising rent costs and a shorter 723 811 YoY period of reducing FTEs to 4/5 due to COVID-19. 717 654 672 680 712 230 520
Slide 35: Inventory write-off
INVENTORY WRITE-OFF SEMI-ANNUAL INVENTORY VALUATION Decision made after the analysis and review as well as recognition of inventory write- off, including: Write-off of PLN 1.9m in other operating line resulting from the PLN 5.3m – clothing intended for sale revaluation of the property. in the whol
Slide 36: 2Q21 results sizeably better YoY
2Q21 RESULTS SIZEABLY BETTER YOY PLN m, IFRS16 2Q20 2Q21 YoY Revenues 174.9 244.0 39.5% Higher YoY revenues due to favorable sales trends in both Gross profit on sales 82.1 131.1 59.8% segments. Gross margin increase YoY due to lower YoY promotions Gross profit on sales margin 46.9% 53.7% 6.8pp. i
Slide 37: 1H21 results sizeably better YoY
1H21 RESULTS SIZEABLY BETTER YOY PLN m, IFRS16 1H20 1H21 YoY Revenues 372.3 416.1 11.8% Gross profit on sales 176.0 212.8 20.9% Higher YoY revenues due to favorable sales trends in both segments. Gross margin increase YoY due to lower YoY promotions Gross profit on sales margin 47.3% 51.1% 3.9pp.
Slide 38: Inventory for the key season
INVENTORY FOR THE KEY SEASON Change in inventories (PLN m) Increase in inventories by 6.3% YoY to PLN 515.8m in 2Q21 results from higher inventories in the jewellery segment and the impact of 485.3 515.8 write-downs on inventories in the apparel segment. 32.5 Apparel segment inventory fell 0.8%
Slide 39: Net debt continues to fall
NET DEBT CONTINUES TO FALL Net debt (PLN m, excl. IFRS16 plus reverse factoring) Long-term and short-term indebtedness shown together with 179.9 reverse factoring and financial leases, yet excluding leases from 149.8 142.5 IFRS16. Financial leases under IFRS16 at PLN 345.1m in 2Q21. 91.3 79.3 87.9
Slide 40: Seasonal engagement of cash
SEASONAL ENGAGEMENT OF CASH Net working capital (PLN m) PLN 348.5m YoY growth in inventories due to earlier reductions in orders for PLN 341.1m 13.7 17.2 collections. YoY decrease in receivables due to lower prepayments for goods 485.3 515.8 purchased on Asian markets (using reverse factoring).
Slide 41: 2021 Outlook
04 2021 OUTLOOK
Slide 42: Stable floorspace in 2021
STABLE FLOORSPACE IN 2021 2021 former 2020 2021 target YoY target In 2021, floorspace of traditional APPAREL stores 427 415 416 -11 stores should be stable YoY. SEGMENT m2 42,021 41,400 41,591 -1% stores 149 149 150 1 VISTULA m2 18,695 18,653 18,805 1% stores 129 121 122 -7 Floorspace of franchise s
Slide 43: Favourable trends in 3Q21
FAVOURABLE TRENDS IN 3Q21 + 25.3% Group revenue growth 07.21 +16.8% growth in apparel segment + 37.6% growth in the jewellery segment Continuation of positive trends from July 08.21 2021 Good reception of first elements of new collections Good preparation of apparel brands for the 09.21
Slide 44: Two strong pillars: casual and formal
TWO STRONG PILLARS: CASUAL AND FORMAL FORMAL CASUAL Increased interest in A broad casual offer formal clothing in all the Group's apparel brands Formal offer adapted Jeans, sweatpants, to the latest fashion sweatshirts, dresses, trends jackets, sweaters More casual in women's collections - The lates
Slide 45: A stronger accent of women collection
A STRONGER ACCENT OF WOMEN COLLECTION VISTULA WOMAN the first full women's collection with new branding. A varied offer, suitable for both formal and everyday stylizations. Elegant models such as suits, skirts or shirts, and every day models - jeans, dresses and sweaters. Thick sweaters with braids,
Slide 46: Further on-line development
FURTHER ON-LINE DEVELOPMENT OWN E-STORES ENTRY ON EXTERNAL PLATFORMS Sales application is available in the Vistula and Wólczanka brands. Vistula on Modivo (eObuwie) and Zalando platforms Introduction of deferred Deni Cler on Zalando platform payments for on-line customers in May 2021. Wólczanka on Z
Slide 47: 2021 targets maintained
2021 TARGETS MAINTAINED YoY growth in Gross profit margin Maintaining cost revenues, both higher YoY, despite efficiency. off-line and on-line. inventory reduction. E-commerce share at Sizeably better YoY Maintenance of safe 20% +. financial results. liquidity position. 47 | 2Q21 presentation
Slide 48: Risk and opportunities for 2021
RISK AND OPPORTUNITIES FOR 2021 OPPORTUNITIES RISK new collections with a broader another wave of COVID-19 casual offer and stronger sanitarily restrictions development of jewellery offer lowering consumer demand on-line growth disturbances in supply chain and resultant growth in costs further worki
Slide 49: Executive summary
EXECUTIVE SUMMARY Group is well prepared for the Autumn/ 1 Winter season, both in the apparel and jewellery segments. Continuation of development of new 2 product lines in both segments. Opportunity to take advantage of 3 opportunities in 2H21 offered by both the on-line and off-line channel. Plan t
Slide 50: Q&A
VISTULA BYTOM WOL(ZANKA DENICLER = WKRUK 05 Q&A
Slide 51: Back-up
06 BACK-UP
Slide 52: Vistula: executive summary
VISTULA: EXECUTIVE SUMMARY VISTULA (MENSWEAR, ELEMENTS OF LADIES COLLECTION) - VISTULA is a brand that combines traditional tailoring and global trends, inspiring customers looking for a modern, original and individual style. - Within the VISTULA brand, we distinguish VISTULA, VISTULA RED, and LANTI
Slide 53: 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 and casual assortment. - ”Made to Measure” – personalised men’s tailoring offered in selected stores. AUTUMN/WINTER 2021 COLLECTION - BYTOM Autumn/
Slide 54: Wólczanka: executive summary
WÓLCZANKA: EXECUTIVE SUMMARY WÓLCZANKA (FASHION FOR MEN AND WOMEN) - Wólczanka runs a chain of its own and franchise boutiques with women's and men's clothing in Poland. The offer includes, among others shirts, sweaters, pants, dresses, t- shirts, jackets and accessories. Wólczanka also owns the Lam
Slide 55: Deni Cler: executive summary
DENI CLER: EXECUTIVE SUMMARY DENI CLER (WOMEN’S FASHION) - Women’s fashion brand with Italian origin, established in Italy in 1971. - 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 56: W.KRUK: executive summary
W.KRUK: EXECUTIVE SUMMARY THE OLDEST JEWELLEY 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 and Patek Philippe (sole distributor in Poland), Cartier, Ja
Slide 57: Summary of brands' 2Q21 results
SUMMARY OF BRANDS’ 2Q21 RESULTS GROWTH IN FORMAL DOUBLE-DIGIT THE HIGHEST SHARE REVENUES. REVENUE GROWTH. OF INTERNET. THE HIGHEST GROSS OVER PLN 100M PROFIT MARGIN. REVENUES IN QUARTER. 57 | 2Q21 presentation
Slide 58: 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 1 JEWELLERY SEGMENT APPAREL SEGMENT OTHER ACTIVITY VRG S.A. W.KRUK S.A. parent company WSM sp. z o.o. ,VG Property sp. z o.o. Jewellery, watches, accessories Vistula, Wólczanka, Bytom bran
Slide 59: Optimisation of number of stores continues
OPTIMISATION OF NUMBER OF STORES CONTINUES NUMBER OF STORES 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 total 452 451 451 440 427 426 427 421 415 APPAREL SEGMENT franchise 126 129 132 126 126 129 136 135 135 total 154 152 154 148 145 147 149 148 148 VISTULA franchise 60 60 62 59 60 62 65 64 64 tota
Slide 60: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 total 43,207 43,461 43,731 42,962 41,953 41,891 42,021 41,564 41,337 APPAREL SEGMENT franchise 9,223 9,322 9,590 9,123 9,195 9,368 9,882 9,789 9,794 total 19,007 19,058 19,320 18,650 18,291 18,508 18,695 18,586 18,59
Slide 61: 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 Selected products of Vistula available on multibrand platform 9.4 7.9 10.6 9.1 eObuwie, while Deni Cler an
Slide 62: Fall in costs/m2
FALL IN COSTS/ M2 Koszty operacyjne m-c/m2 (PLN, bez MSSF16) Differences in SG&A costs/ m2 between segments result from different business models. 1,510 The jewellery segment is characterised by higher revenues and 1,177 1,226 1,248 1,158 1,142 1,113 1,018 costs/ m2 than these of the apparel seg
Slide 63: Seasonal growth in marketing costs
SEASONAL GROWTH IN MARKETING COSTS Off-line marketing costs by segments (PLN m) Marketing costs are part of group selling costs. These encompass: recurring advertising spending (catalogues, 5.7 photoshoots) and nationwide marketing campaigns in editorial, 2.7 internet and TV with celebrities. 3.
Slide 64: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 3Q19 3Q20 YoY 4Q19 4Q20 YoY 1Q20 1Q21 YoY 2Q20 2Q21 YoY Revenues 251.2 249.4 -0.7% 332.5 232.0 -30.2% 197.5 172.1 -12.8% 174.9 244.0 39.5% Gross profit on sales 128.0 122.4 -4.4% 178.5 118.9 -33.4% 94.0 81.7 -13.1% 82.1 131.1 59.8% Gross profit on sales mar
Slide 65: Results under IAS17
RESULTS UNDER IAS17 PLN m, IAS17 2Q20 2Q21 YoY PLN m, IAS17 1H20 1H21 YoY Revenues 174.9 244.0 39.5% Revenues 372.3 416.1 11.8% Gross profit on sales 82.1 131.1 59.8% Gross profit on sales 176.0 212.8 20.9% Gross profit on sales margin 46.9% 53.7% 6.8pp. Gross profit on sales margin 47.3% 51.5% 3.9p
Slide 66: 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, 10% CHF, 16% since 2Q16. USD, 30% USD, 39% The group is a beneficiary of strengthening of zloty versus foreign EUR, 16% currencies. 1H20 1H21 EUR, 19% YoY shift in purchases
Slide 67: A safe indebtedness level
A SAFE INDEBTEDNESS LEVEL PLN m 2Q20 4Q20 2Q21 Long-term debt 56.5 48,6 42,6 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 54.6 47.2 41.1 Bank loans include: overdrafts and investment bank loans. Bank Fina
Slide 68: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 26.08.2021 (share in equity and votes) IPOPEMA TFI Other free- Number of 22.21% % share float shares/votes 31.27% 1. IPOPEMA TFI 52,066,678 22.21% 2. PZU OFE i DFE 36,470,100 15.56% 3. NN OFE 32,750,487 13.97% PZU OFE and DFE 4. Jerzy Mazgaj with rel
Slide 69: 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 70: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow