Slide 1: 4Q22 Results Presentation
4Q22 RESULTS PRESENTATION 2022 targets achieved APRIL 5, 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: Almost PLN 100m net income in 2022
ALMOST PLN 100M NET INCOME IN 2022 1,274.0 52.0 PLN m +19.1% YoY -1% YoY Group revenues ths m2 140.6 PLN m +44.2% YoY 534 -16 YoY Group EBIT stores 93.0 14.4% -3.8 pp. YoY PLN m +40.2% YoY share of on-line Group net profit in sales 4 | 4Q22 presentation
Slide 5: Targets for 2022 achieved
TARGETS FOR 2022 ACHIEVED REVENUES Double-digit revenue growth continued. +19.1% EFFICIENCY YoY gross profit margin expansion. 53.6% + 0.5pp. Growth in operating margin. 11.0% +1.9pp. Better YoY results of the Capital Growth in EBIT and Group. net income LIQUIDITY Safe liquidity standing. Net cash (
Slide 6: Changing situation in the past months
CHANGING SITUATION IN THE PAST MONTHS Favourable sales dynamics for the Revenue dynamics (PLN m) jewellery segment between October 2022 and March 2023 due to strong 14.8% 17.1% demand for jewellery and watches. 15.0% 12.7% 12.5% 11.9% 6.1% 9.8% 7.7% 5.5% 4.2% Positive Group sales growth in each of 1
Slide 7: Strong store sales dynamics
STRONG STORE SALES DYNAMICS Revenues dynamics (PLN m) 1 Group Growing Group sales dynamics due to customers returning to 23.2% traditional stores. 17.3% 15.6% 14.7% 7.4% 10.5% 6.4% 11.1% -14.0% -12.3% 2 Stores -18.7% Positive sales growth in traditional -27.5% stores from October 2022 to March 2023.
Slide 8: Performance by brands
VISTULA WOL(ZANKA BYTOM WKRUK — DENICLER PERFORMANCE BY BRANDS
Slide 9: Key trends impacting brand performance in 4Q22
KEY TRENDS IMPACTING BRAND PERFORMANCE IN 4Q22 Impact of the macroeconomic Continuation of the new inventory situation on the retail customer management policy in the apparel segment The Group's brands were well prepared for the season. The difficult economic The aim of the policy is to maintain the
Slide 10: Vistula Executive Summary
VISTULA EXECUTIVE SUMMARY VRG
Slide 11: Vistula: off-line revenue growth
VISTULA: OFF-LINE REVENUE GROWTH Sieć sprzedaży marki Vistula Optimisation of the number of Vistula brand stores in 4Q22: the 4Q21 4Q22 YoY number of brand stores fell by 3 net YoY (these were own stores). Number of stores 145 142 -3 Store floorspace decreased by 2% YoY and floorspace of franchi
Slide 12: Vistula: growing share of casual in sales
VISTULA: GROWING SHARE OF CASUAL IN SALES Vistula brand revenue split 7% 4% Growth in casual revenues - strong growth in knitwear (especially jumpers) and trousers. 61% 64% Stable share of formal and good reception of Autumn collections. Communication supported by collection for the Polish natio
Slide 13: Bytom Executive Summary
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Slide 14: Bytom: double-digit on-line revenue growth
BYTOM: DOUBLE-DIGIT ON-LINE REVENUE GROWTH Bytom brand network 4Q21 4Q22 YoY Optimisation of the sales network mainly concerned the franchise 114 107 -7 store network. The total number of Bytom shops fell by a net 7 YoY, Number of stores while the number of franchise stores fell by a net 4 YoY. in
Slide 15: Bytom: growing sales per m2
BYTOM: GROWING SALES PER M2 Bytom brand revenue split 10% 7% Stable share of formal and casual in sales due to returns to off-line work and celebrations. 59% 58% Strong sales of jackets as well as jumpers, T-shirts and other knitwear. 31% 34% Increase in sales/m2 - increase in online sales and
Slide 16: Wólczanka Executive Summary
WOLCZANKA EXECUTIVE SUMMARY
Slide 17: Wólczanka: balance between on-line and off-line
WÓLCZANKA: BALANCE BETWEEN ON-LINE AND OFF-LINE Wólczanka brand network A 2% YoY increase in brand floorspace due to opening of own stores, particularly large-format stores. Decrease in floorspace of franchise 4Q21 4Q22 YoY stores by 14% YoY. Number of stores 116 105 -11 The number of Wólczanka
Slide 18: Wólczanka: a growing share of new assortment
WÓLCZANKA: A GROWING SHARE OF NEW ASSORTMENT Wólczanka brand revenue split Growing share of knitwear and development of 'total look' range. 12% 16% 10% The women's collection accounts for around one third of the brand's 10% 14% 15% 57% 59% sales, more than 50% of the brand's on-line sales. 63%
Slide 19: Deni Cler Executive Summary
DENI CLER MILANO EXECUTIVE SUMMARY
Slide 20: Deni Cler: highest growth profit margin
DENI CLER: HIGHEST GROWTH PROFIT MARGIN Deni Cler brand network Deni Cler brand revenues (PLN m) 4Q21 4Q22 r/r 16.7 13.0 13.7 Number of stores 29 28 -1 11.0 13.0 10.3 10.9 12.0 9.3 9.8 8.8 5.7 incl. franchise 6 6 0 7.0 4.2 4.9 4.5 3.7 3.7 4.4 2.9 3.3 3.3 Floorspace (m2) 2,835 2,799 -1% 2.5 2.8 9.5 5
Slide 21: W.KRUK Executive Summary
EXECUTIVE SUMMARY VRG
Slide 22: W.KRUK: record revenues in the quarter
W.KRUK: RECORD REVENUES IN THE QUARTER W.KRUK brand network Continued growth of the W.KRUK brand YoY. An increase in number 4Q21 4Q22 YoY of stores by 6 YoY and a 7% YoY increase in the brand's floorspace. Number of stores 146 152 +6 At the end of 4Q22, the brand had 26 franchise stores, 3 more
Slide 23: W.KRUK: growth in store EBIT
W.KRUK: GROWTH IN STORE EBIT W.KRUK brand revenue split 3% 4% High and stable YoY share of watches in sales - favourable impact of 39% 33% 32% expanded luxury watch offer. 40% In the jewellery section in 4Q22, higher sales dynamics of gold jewellery than silver jewellery, favourable impact of no
Slide 24: Group results
03 GROUP RESULTS
Slide 25: Stable group floorspace of group's brands
STABLE GROUP FLOORSPACE OF GROUP’S BRANDS Group floorspace change YoY (ths m2) 52.3 52.0 Group floorspace stood at 52.0 ths m2 at the end of 4Q22, stable 0.8 YoY. 11.4 12.2 1.1 Apparel segment floorspace decreased by 1.1 ths m2 net, +2.7% YoY, due to closing down of unprofitable stores. 40.9 -0.
Slide 26: Favourable trends in revenues/m2
FAVOURABLE TRENDS IN REVENUES/M2 Group revenues (PLN m) Group revenues reached PLN 369.0m in 4Q22 (+5.8% YoY), due to sales rebound in traditional stores. 348.8 341.8 369.0 319.4 305.0 Apparel segment revenues dropped by 0.3% YoY, reaching PLN 197.5 249.4 232.0 244.0 243.8 149.6 194.9 174.2 152.
Slide 27: Growing gross profit on sales
GROWING GROSS PROFIT ON SALES Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 201.3m in 4Q22 (+4.8% YoY). 201.3 192.0 193.2 163.3 165.5 In 4Q22 gross profit on sales in apparel segment reached 122.4 118.9 131.1 91.8 123.2 78.7 100.8 PLN 100.5m, stable YoY due comparable
Slide 28: SG&A/m2 costs affected by marketing
SG&A/M2 COSTS AFFECTED BY MARKETING Monthly operating costs per m2 (PLN, IAS17) Group operating costs/m2 (IAS17) reached in 4Q22 PLN 1,041/m2 per month, up 13.3% YoY. 1,041 880 Costs of stores at PLN 731/m2 (+13.8% YoY), while HQs costs/m2 877 654 672 712 726 918 774 310 at PLN 310/m2, +12.2% Yo
Slide 29: Net profit growth in 4Q22
NET PROFIT GROWTH IN 4Q22 PLN m, IFRS16 4Q21 4Q22 YoY Revenues 348.8 369.0 5.8% Gross profit on sales 192.0 201.3 4.8% Gross profit on sales margin 55.1% 54.5% -0.5pp. Sales higher YoY due to favourable trends in both segments. SG&A costs 139.4 157.1 12.7% Gross margin influenced by lower YoY sa
Slide 30: High growths on all revenue lines
HIGH GROWTHS ON ALL REVENUE LINES PLN m, IFRS16 2021 2022 YoY Revenues 1,069.9 1,274.0 19.1% Gross profit on sales 568.2 683.1 20.2% Gross profit on sales margin 53.1% 53.6% 0.5pp. Sales and gross profit on sales higher YoY due to favourable trends in both segments. SG&A costs 464.4 539.9 16.3% EB
Slide 31: Growing contribution of apparel to net income
GROWING CONTRIBUTION OF APPAREL TO NET INCOME Net profit by segments Net profit by segments (PLN m, IFRS16) (PLN m, IFRS16) 60.0 47.3 50.0 39.8 50.0 93.0 39.3 23.7 40.0 66.3 83.7 30.0 21.4 20.5 9.2 30.2 25.0 30.0 5.7 20.0 65.9 0.2 16.2 19.7 10.0 14.8 16.1 18.9 17.0 17.1 7.8 11.1 6.7 5.1 5.3 10.0 3.9
Slide 32: Inventory growth for planned network expansion
INVENTORY GROWTH FOR PLANNED NETWORK EXPANSION Change in inventories (PLN m) Inventories up 10.8% YoY to PLN 553.3m in 4Q22. 499.2 71.2 553.3 Apparel segment inventory declines continued, with a 7.0% YoY decline in 4Q22 due to order optimisation and further run-off of -17.1 253.7 324.9 collectio
Slide 33: 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 180 142.5 reverse factoring and financial leases, yet excluding leases from 87.9 106.5 140 79.3 53.7 IFRS16. Financial leases under IFRS16 at PLN 302.
Slide 34: Stable operating cash flow
STABLE OPERATING CASH FLOW Net working capital (PLN m) PLN 369.4m Inventories increasing YoY: decrease in the apparel segment, PLN 318.9m 14.4 12.8 growth in the jewellery segment (level before seasonal sell-offs). YoY increase in receivables due to higher YoY prepayments 499.2 553.3 Spring/Summ
Slide 35: 2023+ Outlook
04 2023+ OUTLOOK
Slide 36: Key trends in 1Q23
CONTINUATION OF GOOD REVENUES IN KEY TRENDS IN 1Q23: Positive Group sales STORES IN 1Q23 growth - stronger growth in the jewellery segment than in the apparel segment. Group floorspace at 51.9 ths m2, -1.2% YoY. Share of on-line sales lower YoY, due to customer preference. PLN m 1Q22 1Q23 YoY Revenu
Slide 37: Development of apparel collections
DEVELOPMENT OF APPAREL COLLECTIONS Wide range of formal clothing for events for men and women Development of a casual offer in Spring and Summer - supporting Marketing campaigns customers' everyday supporting major brand needs and making collections brands' revenue potential more flexible 37 | 4Q22
Slide 38: Actions towards omnichannel in 2023
ACTIONS TOWARDS OMNICHANNEL IN 2023 In-depth integration of offline and online channels, aiming to increase on-line sales conversion and customer convenience wherever the purchase is made Inventory consolidation increasing the efficiency of its omnichannel sales; collection management using AI proce
Slide 39: Continuation of ESG-oriented actions
CONTINUATION OF ESG-ORIENTED ACTIONS Eco-friendly apparel Responsible supply Participation in the and jewellery for chain „Ubrania do years Oddania” campaign From the Spring/Summer We have a comprehensive Wólczanka brand and Deni 2023 collection onwards, a Code for Suppliers and Cler Milano brand su
Slide 40: New concept of W.KRUK stores
NEW CONCEPT OF W.KRUK STORES Store in Westfeld Mokotów opened after refurbishment - the first W.KRUK store in Poland in the latest ROLEX brand concept. A store with an area of c. 180 m2, quadrupled in size compared to the previous one. The store offers only the most The Tudor brand is presented in a
Slide 41: Jewellery and accessories for every day
JEWELLERY AND ACCESSORIES FOR EVERY DAY Wide range of accessories Novelties in the dedicated jewellery offer The accessories offered by the • W.KRUK: the next instalment of the bestselling brand include bags, wallets and dedicated Flowers of the Night collection. Gold cases as well as silk scarves a
Slide 42: Growth of floorspace in both segments in 2023
GROWTH OF FLOORSPACE IN BOTH SEGMENTS IN 2023 2022 2023 target YoY APPAREL stores 382 376 - 6 SEGMENT m2 39,833 41,259 + 4% JEWELLERY stores 152 160 +8 SEGMENT m2 12,150 13,014 + 7% stores 534 536 +2 TOTAL m2 51,983 54,273 4% Return to floorspace growth in the apparel segment in 2023 (new gross floo
Slide 43: Plans for 2023
PLANS FOR 2023 Growth drivers Diversified capital group VRG's Management Board is continuously monitoring the sales and margin performance of all brands and will flexibly adapt its actions to the market situation. Apparel segment: new formal and 2023 targets casual collections, • continuing revenue
Slide 44: We maintain our dividend policy
WE MAINTAIN OUR DIVIDEND POLICY The objective of the management board is to share the profit generated with the shareholders in line with the dividend policy • The Management Board intends to recommend annually to the General Meeting a distribution of between 20% and 70% of the consolidated net prof
Slide 45: Q&A
05 Q&A
Slide 46: Back-up
VISTULA WOL(ZANKA BYTOM WKRUK DENI BACK-UP
Slide 47: New collections in all brands in 4Q22
NEW COLLECTIONS IN ALL BRANDS IN 4Q22 INCREASING SHARE HIGHEST SHARE GROWING SHARE OF OF WOMEN'S OF INTERNET. INTERNET IN SALES. COLLECTION IN SALES. THE FASTEST THE HIGHEST GROSS FLOORSPACE PROFIT MARGIN. GROWTH. 47 | 4Q22 presentation
Slide 48: Vistula: Executive summary
VISTULA: EXECUTIVE SUMMARY VISTULA (FASHION FOR SPRING SUMMER 2023 COLLECTION MEN AND WOMEN) - Traditional tailoring and global trends – modern, original and - Spring 2023 collection: simple, basic, high-quality garments can be individual style put together in a multitude of ways, building a wardrob
Slide 49: Vistula: growing store EBIT
VISTULA: GROWING STORE EBIT Bytom brand revenues (PLN m) 261.8 Vistula brand revenues amounted to PLN 261.8m in 2022, growing by 221.8 18.1% YoY. The brand's stores generated PLN 168.3m, +26.9% YoY, 33.1 due to a recovery in demand in shopping centres. 34.3 +18% 38.0 30.8 Franchise revenues amou
Slide 50: Bytom: Executive summary
BYTOM: EXECUTIVE SUMMARY SPRING SUMMER 2023 COLLECTION BYTOM - The Supreme Comfort collection is the first part of the Spring (FASHION FOR MEN) campaign. The colour palette of rooibos (a warm and rich shade - A Polish brand with a tradition of that is a mix of timeless brown and red), beiges, cool b
Slide 51: Bytom: high double-digit growth in store EBIT
BYTOM: HIGH DOUBLE-DIGIT GROWTH IN STORE EBIT Bytom brand revenues (PLN m) 185.4 Bytom brand revenues amounted to PLN 185.4m in 2022, growing by 160.6 33.0 15.4% YoY. The brand's stores generated PLN 144.9m, +23.6% YoY. 36.2 7.5 7.2 15% Franchise revenues amounted to PLN 7.5m in 2022, +5.1% YoY.
Slide 52: Wólczanka: Executive summary
WÓLCZANKA: EXECUTIVE SUMMARY WÓLCZANKA (FASHION SPRING/SUMMER 2023 FOR MEN AND WOMEN) - „Close to you" is the latest campaign by the Wólczanka brand, - Polish chain of own and franchise which talks about closeness in a multidimensional way: the boutiques and stores with closeness that fabrics create
Slide 53: Wólczanka: highest share of on-line in sales
WÓLCZANKA: HIGHEST SHARE OF ON-LINE IN SALES Wólczanka brand revenues (PLN m) Wólczanka brand revenues amounted to PLN 124.0m in 2022, 124.0 growing by 7.2% YoY. The brand's stores generated PLN 47.9m, 115.7 +17.8% YoY. 61.4 +7% 62.6 Franchise revenues amounted to PLN 13.5m in 2022, stable YoY.
Slide 54: Deni Cler: Executive summary
DENI CLER: EXECUTIVE SUMMARY SPRING/SUMMER COLLECTION DENI CLER (WOMEN’S FASHION) - Deni Cler's collection for the Spring/Summer 2023 - Women’s fashion brand established in Italy season was called "THE MAGIC OF CINEMA". It was in 1971 inspired by film and the icons of world cinema. It consists of 6
Slide 55: Deni Cler: continued gross margin growth
DENI CLER: CONTINUED GROSS MARGIN GROWTH Deni Cler brand revenues (PLN m) Deni Cler brand revenues amounted to PLN 52.7m in 2022, growing 52.7 by 16.3% YoY. The brand's stores generated PLN 29.3m, +22.2% YoY. 45.3 5.0 6.2 16% 18.4 Franchise and multibrand revenues amounted to PLN 18.4m in 2022,
Slide 56: W.KRUK: Executive summary
W.KRUK: EXECUTIVE SUMMARY THE OLDEST JEWELLERY BRAND IN POLAND NOVELTIES IN THE COLLECTIONS - The jewellery offer includes gold and silver jewellery, diamonds, gemstones and original collections. - W.KRUK welcomes the new season with another part of - W.KRUK's offer also includes global watch dedica
Slide 57: W.KRUK: double-digit store EBIT
W.KRUK: DOUBLE-DIGIT STORE EBIT W.KRUK brand retail revenues (PLN m) Retail revenues of the W.KRUK brand amounted to PLN 626.2m in 626.2 2022, growing by 25.8% YoY. The brand's stores generated PLN 543.9m in revenue, +28.7% YoY. 497.7 39.4 45.4 26% Franchise revenues amounted to PLN 42.9m in 202
Slide 58: 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 4Q22 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, acce
Slide 59: 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 3Q22 4Q22 total 440 427 426 427 421 415 409 404 398 391 383 382 APPAREL SEGMENT franchise 126 126 129 136 135 135 131 127 126 123 119 116 total 148 145 147 149 148 148 146 145 145 144 14
Slide 60: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 total 42,962 41,953 41,891 42,021 41,564 41,337 40,864 40,930 40,891 40,385 39,778 39,833 APPAREL SEGMENT franchise 9,123 9,195 9,368 9,882 9,789 9,794 9,577 9,462 9,425 9,236 9,019 8,798 total 18,650
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 online stores of own brands (monoshops). 16.8 13.4 12.2 14.2 12.7 Revenues and costs of on-line stores are allocated directly to the 7.9 10.6 9.1 9.1 8.3 9.3 8.3 b
Slide 62: 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. 1,970 The jewellery segment is characterised by higher revenues and 1,766 1,411 costs/m2 than these of the apparel segment. 1,395 1,248 1
Slide 63: 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 64: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 1Q21 1Q22 YoY 2Q21 2Q22 YoY 3Q21 3Q22 YoY 4Q21 4Q22 YoY Revenues 172.1 243.8 41.6% 244.0 341.8 40,1% 305.0 319.4 4.7% 348,8 369.0 5.8% Gross profit on sales 81.7 123.2 50.8% 131.1 193.2 47,3% 163.3 165.5 1.3% 192,0 201.3 4.8% Gross profit on sales margin 47
Slide 65: Results under IAS17
RESULTS UNDER IAS17 PLN m. IAS17 4Q21 4Q22 YoY PLN m. IAS17 2021 2022 YoY Revenues 348.8 369.0 5.8% Revenues 1,069.9 1,274.0 19.1% Gross profit on sales 192.0 201.3 4.8% Gross profit on sales 568.2 683.1 20.2% Gross profit on sales margin 55.1% 54.5% -0.5pp. Gross profit on sales margin 53.1% 53.6%
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, 16% CHF, 19% since 2Q16. Hedging only relates to the apparel segment. USD, 28% USD, 30% The group is a beneficiary of strengthening of zloty versus foreign currencies. 2021 EU
Slide 67: Safe debt level
SAFE DEBT LEVEL PLN m 4Q21 2Q22 4Q22 Long-term debt 34.6 29.6 20.7 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 33.7 28.7 19.5 Bank loans include: overdrafts and investment bank loans. Bank loan collatera
Slide 68: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 04.04.2023 (share in equity and votes) Other free- PZU OFE and Number of float DFE % share shares/votes 19.30% 22.77% 1. PZU OFE and DFE 45,251,894 19.30% 2. Jerzy Mazgaj 38,332,632 16.35% Shareholders' 3. IPOPEMA TFI 36,038,137 15.37% agreement Jerz
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