Slide 1: 3Q21 Results Presentation
3Q21 RESULTS PRESENTATION NOVEMBER 17, 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
WOLCZANKA = DENICLER = WKRUK BYTOM z Ss) = U I =) Qa O o~ - < WISTULA
Slide 4: More favourable trends YoY
MORE FAVOURABLE TRENDS YOY 2020 2021 Gradual recovery of demand after Faster YoY recovery of demand after JULY lock-downs, completion of lock-downs negotiations with shopping malls Gradual recovery of demand after Faster YoY recovery of demand after AUGUST lock-downs lock-downs Demand rebuilds after
Slide 5: Continuation of strong revenue dynamics
CONTINUATION OF STRONG REVENUE DYNAMICS 1 E-stores Return to growth in e-stores in the summer months. High dynamics in the autumn months with a strong reception of new collections. The first two weeks of November were an exception, due to the high base (lock-down in 2020). 2 143% Stores 58% 91% Rebo
Slide 6: Further network optimisation
FURTHER NETWORK OPTIMISATION NUMBER OF STORES EOP 3Q21 YoY 146 -1 115 -2 106 +4 YoY 52.0 - 1% YoY towns ths m2 119 - 11 29 -3 152 19.6% -4,6 pp. YoY franchise +7 YoY internet share stores 143 +3 552 - 14 6 | 3Q21 presentation
Slide 7: Better YoY results in 3Q21 and 9M21
BETTER YOY RESULTS IN 3Q21 AND 9M21 3Q21 IFRS16 9M21 IFRS16 REVENUES EBIT REVENUES EBIT PLN 305.0m PLN 43.0m PLN 721.1m PLN 43.9m 22.3% YoY 224.5% YoY 16.0% YoY 9M20: PLN (9.0) m GROSS PROFIT MARGIN NET PROFIT (LOSS) GROSS PROFIT MARGIN NET PROFIT (LOSS) 53.5% PLN 23.7m 52.2% PLN 26.5m 4.5 pp. YoY 3
Slide 8: Performance by brands
02 PERFORMANCE BY BRANDS
Slide 9: Vistula Executive Summary
VISTULA EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 10: Vistula: revenues higher than before pandemics
VISTULA: REVENUES HIGHER THAN BEFORE PANDEMICS Vistula brand network 3Q20 3Q21 r/r Vistula brand floorspace fell 1% YoY at the end of 3Q21, while the number of stores of the brand fell by 1 net YoY. Number of stores 147 146 -1 Both franchise floorspace and number of stores grew YoY at the incl.
Slide 11: Vistula: doubling of store EBIT
VISTULA: DOUBLING OF STORE EBIT Vistula brand revenue split Stable YoY share of formal in 3Q21 coupled with higher demand 14% 13% 9% 14% 8% 7% for formal clothing due to the return of ceremonies, i.e. weddings. 38% 39% A stable share of casual and accessories in sales. 77% 86% Increase in the
Slide 12: Bytom Executive Summary
BYTOM SZTUKA KRAWIECTWA OD 1945 EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 13: Bytom: growth in off-line revenues
BYTOM: GROWTH IN OFF-LINE REVENUES Bytom brand network Number of Bytom stores decreased by 2 net YoY, while the number 3Q20 3Q21 r/r of franchise stores increased by 3 net YoY. Number of stores 117 115 -2 Floorspace decreased by 2% YoY. Sizeable changes in floorspace incl. franchise 8 11 +3 also
Slide 14: Bytom: triple-digit EBIT growth
BYTOM: TRIPLE-DIGIT EBIT GROWTH Bytom brand revenue split 9% 9% 9% 9% High sales of suits and shirts. Decreasing share of formal in sales in 31% 35% 37% 3Q21, despite continuation of the wedding season, due to high 45% demand for casual clothing (knitted fabrics). 60% 57% 54% 46% Stable share of
Slide 15: Wólczanka Executive Summary
WOLCZANKA EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 16: Wólczanka: an on-line brand
WÓLCZANKA: AN ON-LINE BRAND Wólczanka brand network 3Q20 3Q21 r/r Wólczanka network contracted by 11 stores net YoY. Optimisation Number of stores 130 119 -11 affected mostly own stores – there was 1 more franchise store YoY. incl. franchise 50 51 +1 Brand’s floorspace fell 7% YoY, while franchi
Slide 17: 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 9% 7% 12% assortment due to a wider range of trousers (for men and women) 3% 11% 14% and introduction o
Slide 18: Deni Cler Executive Summary
DENI CLER MILANO EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 19: Deni Cler: dynamic revenue growth
DENI CLER: DYNAMIC REVENUE GROWTH Deni Cler brand network 3Q20 3Q21 r/r Deni Cler network encompasses 29 monobrand stores (both own Number of stores 32 29 -3 and franchise) in top shopping malls in Poland. incl. franchise 9 6 -3 Development of shop-in-shop concept. Deni Cler collections availabl
Slide 20: Deni Cler: triple digit growth in store EBIT
DENI CLER: TRIPLE DIGIT GROWTH IN STORE EBIT Deni Cler brand revenue split Emphasis on capsule collections. Stable share of accessories and growth in complementary collections - products that used to be 19% 19% 27% 6% 9% 36% more of a supplement are growing stronger. 76% 45% 53% Classic clothing
Slide 21: W.KRUK Executive Summary
WKRUK 1 8 4 0 EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 22: W.KRUK: record high brand revenues
W.KRUK: RECORD HIGH BRAND REVENUES W.KRUK brand network 3Q20 3Q21 YoY Continuation of W.KRUK brand development. Growth in number of net stores by 3 YoY translated into a 4% YoY increase in brand’s Number of stores 140 143 +3 floorspace. incl. franchise 16 21 +5 The brand had 21 franchise stores
Slide 23: W.KRUK: doubling of store EBIT
W.KRUK: DOUBLING OF STORE EBIT W.KRUK brand revenue split 28% 29% Growing share of watches in relation to jewellery. Advantageous 38% 45% influence of exclusivity on the sale of luxury Rolex and Patek Philippe watches, but also a rebound in jewellery sales. 72% In the jewellery section, in 3Q21
Slide 24: Group Results
03 GROUP RESULTS
Slide 25: Stable group floorspace
STABLE GROUP FLOORSPACE Group floorspace change YoY (ths m2) 52.6 52.0 Group floorspace reached 52.0 ths m2 at the end of 3Q21, down 0.4 1.2% YoY. 10.8 11.2 1.0 The apparel segment floorspace fell 1.0 ths m2, down 2.5% YoY, due to closing down of unprofitable stores. 41.9 stable YoY 40.9 The j
Slide 26: Record high revenues/m2 in jewellery segment
RECORD HIGH REVENUES/M2 IN JEWELLERY SEGMENT Group revenues (PLN m) Group revenues reached PLN 305.0m in 3Q21 (up 22.3% YoY), due 332.5 305.0 to rebound in traditional stores of both segments. 251.2 244.0 125.6 197.5 249.4 232.0 Apparel segment revenues grew 15.2% YoY, reaching PLN 168.6m, 174.9
Slide 27: Rebound in apparel segment margin
REBOUND IN APPAREL SEGMENT MARGIN Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 163.3m in 3Q21 (up 178.5 163.3 33.4% YoY). 128.0 122.4 118.9 131.1 67.6 94.0 71.0 In 3Q21 gross profit on sales of the apparel segment reached 47.1 82.1 81.7 53.0 52.9 60.8 PLN 92.3m, up 3
Slide 28: 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 726/ m2 monthly and up 8.0% YoY in 3Q21. Growth in costs/m2 was lower than 811 726 revenues/m2 growth among other due to lower rentals/m2 – 717 672 712 654 520 680 587
Slide 29: 3Q21 results sizeably better YoY
3Q21 RESULTS SIZEABLY BETTER YOY PLN m, IFRS16 3Q20 3Q21 YoY Revenues 249.4 305.0 22.3% Gross profit on sales 122.4 163.3 33.4% Higher YoY revenues due to favorable sales trends in both Gross profit on sales margin 49.1% 53.5% 4.5pp. segments. Gross margin increase YoY due to lower YoY promotions
Slide 30: 9M21 results sizeably better YoY
9M21 RESULTS SIZEABLY BETTER YOY PLN m, IFRS16 9M20 9M21 YoY Higher YoY revenues: sales growth in the jewellery segment higher Revenues 621.7 721.1 16.0% than in the apparel segment. Gross margin increase YoY due to Gross profit on sales 298.5 376.2 26.0% lower YoY promotions in all brands. Gross
Slide 31: Inventory for the key season
INVENTORY FOR THE KEY SEASON Change in inventories (PLN m) Increase in inventories by 3.3% YoY to PLN 509.6m in 3Q21 results 509.6 from higher inventories in the jewellery segment and the impact of 493.1 2.1 14.5 write-downs on inventories in the apparel segment. Apparel segment inventory increa
Slide 32: Record low net debt
RECORD LOW NET DEBT 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 142.5 79.3 87.9 106.5 IFRS16. Financial leases under IFRS16 at PLN 355.2m in 3Q21. 91.3 53.7 1
Slide 33: High and growing operating cash flows
HIGH AND GROWING OPERATING CASH FLOWS Net working capital (PLN m) PLN 350.2m YoY growth in inventories due to higher inventory in the jewellery PLN 349.1m 18.6 segment. 18.8 Stable YoY receivables due to comparable prepayments for goods 493.1 509.6 purchased on Asian markets (using reverse facto
Slide 34: 2021+ Outlook
04 2021+ OUTLOOK
Slide 35: Strong group results in October 2021
STRONG GROUP RESULTS IN OCTOBER 2021 Group revenues PLN 82.9m 55.8% YoY OCTOBER 2021 Key trends • favorable dynamics both in the Apparel segment apparel and jewellery segment, revenues PLN 44.8m • on-line share at 11.7% of sales, 1.8 pp. lower YoY, 54.8% YoY • 55.1%, +0.8 pp. higher gross margin on
Slide 36: Group prepared for 4Q21
GROUP PREPARED FOR 4Q21 Jewellery • new ambassador's collection: Magda segment Mołek • a wide range of jewellery, gold and silver • extended range of watches Apparel • extended women's offer (under the segment Vistula and Wólczanka brands) • a balanced formal and casual offer for all apparel brands
Slide 37: Stable floorspace in 2021
STABLE FLOORSPACE IN 2021 2021 former 2020 2021 target YoY target In 2021, floorspace of traditional APPAREL stores 427 416 410 -17 stores should be stable YoY. SEGMENT m2 42,021 41,591 41,419 -1% stores 149 150 147 -2 VISTULA m2 18,695 18,805 18,731 0% stores 129 122 118 -11 Floorspace of franchise
Slide 38: 2021 targets maintained
2021 TARGETS MAINTAINED YoY growth in Gross profit margin Maintaining cost revenues, both higher YoY. efficiency. off-line and on-line. E-commerce share Sizeably better YoY Maintaining a safe at around 20%. financial results. liquidity position. 38 | 3Q21 presentation
Slide 39: Risk and opportunities for 2021
RISK AND OPPORTUNITIES FOR 2021 OPPORTUNITIES RISKS new collections with a broader another wave of COVID-19 casual offer and stronger sanitarily restrictions development of jewellery offer lowering consumer demand further optimisation in promotional policy disruptions in supply chain and resultant g
Slide 40: Further omnichannel development in 2022
FURTHER OMNICHANNEL DEVELOPMENT IN 2022 TRADITIONAL STORES OWN E-STORES New formats of Vistula stores (from Sales applications for all brands. December 2021) and Wólczanka (from May 2021) - larger and Merging of off-line and on-line greener, allowing for the display of loyalty systems. the entire ex
Slide 41: Growth in 2022 floorspace
GROWTH IN 2022 FLOORSPACE 2021 target 2022 target YoY In 2022, floorspace of traditional APPAREL stores 410 399 -11 stores should increase by 4% YoY. SEGMENT m2 41,419 42,442 + 2% stores 147 143 -4 VISTULA m2 18,731 18,495 -1% stores 118 113 -5 Floorspace of franchise stores at the WÓLCZANKA end of
Slide 42: Further development of external platforms
FURTHER DEVELOPEMENT OF EXTERNAL PLATFORMS Entry on external • Zalando: Vistula, Wólczanka, Bytom, Deni Cler platforms in Poland (cooperation in Poland) and abroad • Modivo: Vistula, W.KRUK (cooperation in Poland, Greece, Slovakia, Czechia, Romania) • Huluki: Vistula, Wólczanka, Bytom, Deni Cler (co
Slide 43: Targets for 2022
TARGETS FOR 2022 Continuation of double-digit Group sales 1 RISKS growth. aggravation of the Increase in floorspace due to opening of larger pandemic situation 2 stores (extended product offer). Further gross profit margin improvement - 3 more effective discount policy. Increase in operating margin
Slide 44: Vistula Bytom Wólczanka Deni Cler W.KRUK
VISTULA BYTOM WOL(ZANKA DENICLER = WKRUK
Slide 45: Back-up
06 BACK-UP
Slide 46: Summary of brands' 3Q21 results
SUMMARY OF BRANDS’ 3Q21 RESULTS DOUBLING OF STORE DOUBLE-DIGIT THE HIGHEST SHARE EBIT. REVENUE GROWTH. OF INTERNET. SIZEABLE GROSS RECORD HIGH PROFIT MARGIN REVENUES IN THE GROWTH. QUARTER. 46 | 3Q21 presentation
Slide 47: 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 48: Vistula: double-digit store EBIT growth
VISTULA: DOUBLE-DIGIT STORE EBIT GROWTH Vistula brand revenues (PLN m) Revenues of Vistula brand amounted to PLN 156.4m in 9M21, up 2.2% YoY. The brand's stores generated PLN 91.3m, + 6.5% YoY, 153.1 156.4 despite shopping centers being closed for over 2 months due to COVID-19. 38.2 34.3 +2% 29.1
Slide 49: 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 50: Bytom: improvement in gross profit margin
BYTOM: IMPROVEMENT IN GROSS PROFIT MARGIN Bytom brand retail revenues (PLN m) Revenues of the Bytom brand amounted to PLN 109.5m in 9M21, falling by 2.7% YoY. The brand's stores generated PLN 78.4m, 112.6 +4.7% YoY, despite shopping centers being closed for more than 2 109.5 months due to the COVI
Slide 51: 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 52: The highest share of on-line in sales
THE HIGHEST SHARE OF ON-LINE IN SALES Wólczanka brand revenues Revenues of the Wólczanka brand amounted to PLN 78.6m in (PLN m) 9M21, +8.1% YoY. The brand's stores generated PLN 24.9m, +3.2% 72.7 78.6 YoY, despite shopping centers being closed for more than 2 months due to COVID-19. +8% 44.7 Int
Slide 53: 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 54: Deni Cler: doubling of store EBIT
DENI CLER: DOUBLING OF STORE EBIT Deni Cler brand revenues (PLN m) Revenues of the Deni Cler brand amounted to PLN 31.7m in 9M21, 31.7 growing by 12.0% YoY. The brand's stores generated PLN 16.6m, 28.3 +12.3% YoY, despite shopping centers were closed for more than 2 4.8 months due to the COVID-19
Slide 55: 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 56: W.KRUK: doubling of store EBIT
W.KRUK: DOUBLING OF STORE EBIT W.KRUK brand retail revenues W.KRUK brand's retail revenues amounted to PLN 323.1m in 9M21, (PLN m) growing by 37.0% YoY. The brand's stores generated PLN 274.2m, 323.1 +45.3% YoY, despite shopping centers being closed for more than 235.7 2 months due to COVID-19. 31
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 3 Q 2 1 JEWELLERY SEGMENT APPAREL SEGMENT OTHER ACTIVITY VRG S.A. W.KRUK S.A. WSM Factory sp. z o.o. (formerly WSM parent company Sp. z o.o.), VG Property sp. z o.o. Jewellery, watches, accessor
Slide 58: Optimisation of number of stores continues
OPTIMISATION OF NUMBER OF STORES CONTINUES NUMBER OF STORES 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 total 451 451 440 427 426 427 421 415 409 APPAREL SEGMENT franchise 129 132 126 126 129 136 135 135 131 total 152 154 148 145 147 149 148 148 146 VISTULA franchise 60 62 59 60 62 65 64 64 63 tota
Slide 59: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 total 43,461 43,731 42,962 41,953 41,891 42,021 41,564 41,337 40,864 APPAREL SEGMENT franchise 9,322 9,590 9,123 9,195 9,368 9,882 9,789 9,794 9,577 total 19,058 19,320 18,650 18,291 18,508 18,695 18,586 18,593 18,39
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 Revenues and costs of on-line stores are allocated directly to the 9.4 7.9 10.6 9.1 8.3 brands. 7.0 48.9 4
Slide 61: 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 higher revenues and 1,510 costs/ m2 than these of the apparel segment. 1,226 1,142 1,113 1,248 1,158
Slide 62: Stable marketing costs
STABLE MARKETING COSTS 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, 5.7 internet and TV with celebrities. 3.0 1.3 1
Slide 63: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 4Q19 4Q20 YoY 1Q20 1Q21 YoY 2Q20 2Q21 YoY 3Q20 3Q21 YoY Revenues 332.5 232.0 -30.2% 197.5 172,1 -12.8% 174.9 244.0 39.5% 249.4 305.0 22.3% Gross profit on sales 178.5 118.9 -33.4% 94.0 81,7 -13.1% 82.1 131.1 59.8% 122.4 163.3 33.4% Gross profit on sales mar
Slide 64: Results under IAS17
RESULTS UNDER IAS17 PLN m, IAS17 3Q20 3Q21 YoY PLN m, IAS17 9M20 9M21 YoY Revenues 249.4 305.0 22.3% Revenues 621.7 721.1 16.0% Gross profit on sales 122.4 163.3 33.4% Gross profit on sales 298.5 376.2 26.0% Gross profit on sales margin 49.1% 53.5% 4.5pp. Gross profit on sales margin 48.0% 52.2% 4.2
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, 10% CHF, 15% since 2Q16. Hedging only relates to the apparel segment. USD, 31% USD, 35% The group is a beneficiary of strengthening of zloty versus foreign EUR, 19% currencies
Slide 66: A safe indebtedness level
A SAFE INDEBTEDNESS LEVEL PLN m 3Q20 4Q20 3Q21 Long-term debt 53.2 48.6 39.4 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 51.7 47.2 38.1 Bank loans include: overdrafts and investment bank loans. Bank Fina
Slide 67: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 16.11.2021 (share in equity and votes) IPOPEMA TFI Other free- Number of 22.21% % share float shares/votes 31.70% 1. IPOPEMA TFI 52,066,678 22.21% 2. PZU OFE and DFE 36,470,100 15.56% PZU OFE and 3. NN OFE 32,750,487 13.97% DFE Forum TFI 4. Jerzy Maz
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