Slide 1: 3Q22 Results Presentation
3Q22 RESULTS PRESENTATION NOVEMBER 17, 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
WISTULA WOLCZANKA DE! INTRODUCTION
Slide 4: 3Q22 Key Corporate Events
3Q22 KEY CORPORATE EVENTS Dividend payment Stores in new format W.KRUK new collection PLN 39.9m dividend payment Vistula store in Westfeld Arkadia Longplay collection, created by Natalia on July 29, 2022. in Warsaw in a refreshed concept Kukulska and Michał Dąbrówka, in Dividend per share at PLN 0.1
Slide 5: Improving Group Sales Dynamics
IMPROVING GROUP SALES DYNAMICS The jewellery segment showed strong Revenue dynamics (PLN m) dynamics, regardless of the pandemic and the war. Double-digit increases seen in every month from August to October. 17.4% 13.7% 14.8% Group sales increases in each month of 5.6% 7.0% 7.7% 3Q22. Month on mont
Slide 6: Growing Store Sales
GROWING STORE SALES Revenues dynamics (PLN m) 1 Group Growing Group's sales dynamics, in particular due to 17.3% customers returning to 10.2% traditional stores. 10.3% 6.4% 7.1% 0.2% 2 Stores Positive sales dynamics in traditional stores from July to -7.0% -12.7% October. VII.22 VIII.22 IX.22 X.22 3
Slide 7: Strong 9 Months 2022 with Stable Floorspace
STRONG 9 MONTHS 2022 WITH STABLE FLOORSPACE 905.0 107 PLN m +25.5% YoY +1 YoY Group revenues cities 98.5 PLN m +124.4% YoY 52.0 0% YoY Group EBIT ths m2 45.6 +72.0% YoY 535 -17 YoY PLN m stores Consistent delivery of 2022 targets. Group net profit 7 | 3Q22 presentation
Slide 8: Performance by Brands
02 PERFORMANCE BY BRANDS
Slide 9: Key Trends Impacting Brand Performance in 3Q22
KEY TRENDS IMPACTING BRAND PERFORMANCE IN 3Q22 New inventory Impact of COVID-19 management policy in rental settlements on the apparel segment 3Q21 The aim of the policy is to maintain In accordance with the so-called the highest possible share of the Covid Law, companies with stores latest collecti
Slide 10: Vistula Executive Summary
VISTULA EXECUTIVE SUMMARY
Slide 11: Vistula: Off-line Growth
VISTULA: OFF-LINE GROWTH Vistula brand network Vistula brand floorspace was stable YoY at the end of 3Q22, while 3Q21 3Q22 YoY the number of stores of the brand fell by 4 net YoY, including net loss 146 142 -4 of 2 franchise stores. Number of stores Store floorspace decreased by 1% YoY and franc
Slide 12: Vistula: Stable Sales Structure
VISTULA: STABLE SALES STRUCTURE Vistula brand revenue split 13% 13% Positive revenue dynamics in casual, accessories and other categories. 39% 39% Stable share of formal due to return to offices and celebrations. YoY growth in sales/m2 due to higher conversion in traditional stores 48% 48% and
Slide 13: Bytom Executive Summary
BYTOM SZTUKA KRAWIECTWA OD 1945 EXECUTIVE SUMMARY
Slide 14: Bytom: Double-Digit On-line Revenue Growth
BYTOM: DOUBLE-DIGIT ON-LINE REVENUE GROWTH Bytom brand network Number of Bytom stores decreased by 9 net YoY, while the number of 3Q21 3Q22 YoY franchise stores fell by 2 net YoY. Number of stores 115 106 -9 Floorspace of Bytom stores decreased by 6% YoY, while franchise incl. franchise 11 9 -2
Slide 15: Bytom: Growing Sales per m2
BYTOM: GROWING SALES PER M2 Bytom brand revenue split 9% 7% Three revenue categories: formal, casual, accessories and other. 35% 34% Stable share of formal and casual in sales due to return to office work and celebrations. 57% 58% Increase in sales/ m2 - improved off-line sales, demand for for
Slide 16: Wólczanka Executive Summary
EXECUTIVE SUMMARY
Slide 17: Wólczanka: Balance Between On-line and Off-line
WÓLCZANKA: BALANCE BETWEEN ON-LINE AND OFF-LINE Wólczanka brand network Floorspace increased by 4% YoY due to new-concept store openings, 3Q21 3Q22 YoY while franchise floorspace decreased by 14% YoY. Number of stores 119 107 -12 Wólczanka network decreased by 12 stores net YoY. The close downs
Slide 18: Wólczanka: A Growing Share of New Assortment
WÓLCZANKA: A GROWING SHARE OF NEW ASSORTMENT Wólczanka brand revenue split Growing share of women's collection results from successful 12% 16% introduction of the extended brand assortment for female customers. 11% 6% 14% 15% 63% 62% Stable share of shirts and knitwear in sales structure. Shirt
Slide 19: Deni Cler Executive Summary
DENI CLER MILANO EXECUTIVE SUMMARY
Slide 20: Deni Cler: Strong Growth in Gross Margin on Sales
DENI CLER: STRONG GROWTH IN GROSS MARGIN ON SALES Deni Cler brand network Deni Cler brand revenues (PLN m) 3Q21 3Q22 YoY 13.7 13.0 13.0 12.0 Number of stores 29 28 -1 10.3 10.9 9.8 11.0 9.3 8.8 4.9 7.0 4.2 4.5 incl. franchise 6 6 0 3.7 3.7 4.4 2.9 3.3 3.3 2.8 Floorspace (m2) 2,835 2,799 -1% 2.5 7.2
Slide 21: W.KRUK Executive Summary
WKRUK 18 4 0 EXECUTIVE SUMMARY
Slide 22: W.KRUK: Development of the Brand's Floorspace
W.KRUK: DEVELOPMENT OF THE BRAND'S FLOORSPACE W.KRUK brand network 3Q21 3Q22 YoY Continuation of W.KRUK brand development YoY. Growth in number 143 152 +9 of stores by 9 YoY and 10% YoY increase in brand’s floorspace. Number of stores The brand already had 25 franchise stores at the end of 3Q22,
Slide 23: W.KRUK: Stable Store EBIT
W.KRUK: STABLE STORE EBIT W.KRUK brand revenue split 3% 3% 29% 28% Stable YoY share of watches in sales - favourable impact of expanded 44% 45% luxury watches offering. In the jewellery section in 3Q22, higher sales growth of gold jewellery 71% 72% than silver jewellery, favourable impact of new
Slide 24: Group Results
VISTULA BYTOM WOL(ZANKA DENICLER = WKRUK GROUP RESULTS
Slide 25: Stable Group Floorspace After 9 Months
STABLE GROUP FLOORSPACE AFTER 9 MONTHS Group floorspace change YoY (ths m2) 52.0 52.0 Group floorspace reached 52.0 ths m2 at the end of 3Q22, stable 1.1 YoY. 11.2 12.3 -1.1 The apparel segment floorspace fell net by 1.1 ths m2, i.e. 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 319.4m in 3Q22 (+4.7% YoY), due to 348.8 341.8 319.4 sales rebound in traditional stores. 305.0 249.4 232.0 244.0 243.8 Apparel segment revenues dropped by 1.1% YoY, reaching PLN 197.5 174.2 149.6 152.7 174.9 172.
Slide 27: Stable Gross Profit on Sales
STABLE GROSS PROFIT ON SALES Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 165.5m in 3Q22 (+1.3% YoY). 192.0 193.2 163.3 165.5 In 3Q22 gross profit on sales in apparel segment reached 122.4 118.9 131.1 91.8 123.2 78.7 PLN 85.9m, drop by 6.9% YoY due to increased sell-
Slide 28: SG&A/m2 QoQ Costs Stabilization
SG&A/M2 QOQ COSTS STABILIZATION Monthly operating costs per m2 (PLN, IAS17) Group operating costs/m2 (IAS17) reached in 3Q22 PLN 880/m2 per month, up 21.3% YoY. 918 877 880 712 726 774 654 672 680 276 225 225 Costs of stores at PLN 655/m2 (+28.9% YoY), while HQs costs/m2 520 169 188 587 199 218
Slide 29: Significant Impact of FX Losses on 3Q22
SIGNIFICANT IMPACT OF FX LOSSES ON 3Q22 PLN m, IFRS16 3Q21 3Q22 YoY Revenues 305.0 319.4 4.7% Gross profit on sales 163.3 165.5 1.3% Gross profit on sales margin 53.5% 51.8% -1.7pp. Revenues higher YoY due to favorable trends in both segments. SG&A costs 119.2 132.6 11.3% EBIT 43.0 33.3 -22.5% G
Slide 30: High Growth at All Profit Levels
HIGH GROWTH AT ALL PROFIT LEVELS PLN m, IFRS16 9M21 9M22 YoY Revenues 721.1 905.0 25.5% Gross profit on sales 376.2 481.9 28.1% Sales and gross sales margin higher YoY due to favorable trends in both segments. Gross profit on sales margin 52.2% 53.2% 1.1pp. More favorable YoY balance of other op
Slide 31: Inventory Increase for an Expected Strong 4Q22
INVENTORY INCREASE FOR AN EXPECTED STRONG 4Q22 Change in inventories (PLN m) Increase in inventories by 10.4% YoY to PLN 562.8m in 3Q22 due to 562.8 preparations for a strong 4Q22. 509.6 73.0 Apparel segment inventory declines continued - a 7.8% YoY -19.8 329.0 decrease in 3Q22 due to order opti
Slide 32: Safe Debt Level
SAFE DEBT LEVEL 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 87.9 106.5 79.3 53.7 IFRS16. Financial leases under IFRS16 at PLN 328.8m in 3Q22. 74.2 39.0
Slide 33: Cash Flow Influenced by Dividend
CASH FLOW INFLUENCED BY DIVIDEND Net working capital (PLN m) PLN 397.6m Inventories increasing YoY: decrease in the apparel segment, PLN 350.2m growth in the jewellery segment (preparation for key 4Q22). 22.6 18.6 YoY increase in receivables due to higher YoY prepayments (Autumn/Winter collectio
Slide 34: 2022+ Outlook
ISTULA BYTOM WOL(ZANKA DENICLER WKRUK 2022+ OUTLOOK
Slide 35: Strong Year-End Expected
STRONG YEAR-END EXPECTED • Group sales increased to PLN 89.9m, +7.7% YoY 10.22 • revenues of the apparel segment at PLN 46.1m, +1.7% YoY • revenues of the jewellery segment at PLN 43.8m, +14.8% YoY • Black Friday and Cyber Monday crucial for November results 11.22 • on-line and off-line stores prepa
Slide 36: Vistula - Official Tailor of the Representation
VISTULA - OFFICIAL TAILOR OF THE REPRESENTATION Vistula brand, an official partner of the Polish Football Association, designed and made the formal attire for the Polish national football team for the World Cup in Qatar. A minimalist, modern navy-blue suit paired with a shirt in the same color and s
Slide 37: Focus on Customer Convenience
FOCUS ON CUSTOMER CONVENIENCE Omnichannel solution implementation: ability to pick up and return on-line purchases in off-line stores. Preparation for the high season: express deliveries on offer, particularly before public holidays. Improved website functionality and enhanced sales applications. 37
Slide 38: Preparations for December in the Jewellery Segment
PREPARATIONS FOR DECEMBER IN THE JEWELLERY SEGMENT JEWELLERY ACCESSORIES WATCHES The new LONGPLAY ambassador collection A wide range of watches from different price created by Natalia Kukulska and Michal W.KRUK accessories are made with the highest levels. Continued development of the luxury Dabrowk
Slide 39: 2022 Targets Maintained
2022 TARGETS MAINTAINED Continuation of double-digit Group sales 1 growth. YoY improvement in gross margin - more 2 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 liquidity position. 39 |
Slide 40: Growth of Floorspace in Both Segments in 2023
GROWTH OF FLOORSPACE IN BOTH SEGMENTS IN 2023 2021 2022 target 2023 target YoY stores 404 384 376 - 8 APPAREL SEGMENT m2 40,930 39,999 41,259 + 3% stores 146 153 160 +7 JEWELLERY SEGMENT m2 11,394 12,336 13,014 + 6% stores 550 537 536 - 1 TOTAL m2 52,324 52,334 54,273 + 4% Return to floorspace growt
Slide 41: 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 Apparel segment: market situation. new formal and casual collections, new store formats 2023 targets Jew
Slide 42: Q&A
05 Q&A
Slide 43: Back-up
06 BACK-UP
Slide 44: New Collections in All Brands in 3Q22
NEW COLLECTIONS IN ALL BRANDS IN 3Q22 INCREASED SALES GROWING SHARE HIGHEST SHARE OF IN TRADITIONAL OF INTERNET THE INTERNET. STORES. IN SALES. HIGHEST GROSS FASTEST GROWTH IN MARGIN. FLOORSPACE. 44 | 3Q22 presentation
Slide 45: Vistula: Executive Summary
VISTULA: EXECUTIVE SUMMARY AUTUMN/WINTER COLLECTION 2022/23 - The campaign under the slogan VISTULA ON THE GO. Find what VISTULA (FASHION FOR defines you. encourages customers to explore and define their style. MEN AND WOMEN) The campaign is conducted on-line and in the press. - Traditional tailorin
Slide 46: Vistula: Double-Digit Increases in Store EBIT
VISTULA: DOUBLE-DIGIT INCREASES IN STORE EBIT Vistula brand revenues (PLN m) Vistula brand revenues amounted to PLN 196.0m in 9M22, growing 196.0 by 25.3% YoY. The brand's stores generated PLN 124.9m, +36.9% YoY, 156.4 33.1 due to demand recovery in shopping centers. 34.3 +25% 38.0 Franchise rev
Slide 47: Bytom: Executive Summary
BYTOM: EXECUTIVE SUMMARY BYTOM AUTUMN/WINTER COLLECTION 2022/23 (FASHION FOR MEN) - The brand's new campaign under the slogan Woven Stories is a nod - A Polish brand with a tradition of to art, culture and history. The inspiration and leitmotif of the tailoring craftsmanship dating campaign is the a
Slide 48: Bytom: High Double-Digit Growth in Store EBIT
BYTOM: HIGH DOUBLE-DIGIT GROWTH IN STORE EBIT Bytom brand revenues (PLN m) 135.3 Bytom brand revenues amounted to PLN 135.3m in 9M22, growing 109.5 21.6 by 23.5% YoY. The brand's stores generated PLN 108.0m, +37.8% YoY. 5.7 26.6 24% Franchise revenues amounted to PLN 5.7m in 9M22, +23.6% YoY. Th
Slide 49: Wólczanka: Executive Summary
WÓLCZANKA: EXECUTIVE SUMMARY WÓLCZANKA (FASHION AUTUMN/WINTER COLLECTION 2022/23: FOR MEN AND WOMEN) - The new collection's leitmotif is the energy of the city and the - Polish chain of own and franchise surrounding nature. stores with women's and men's - Comfortable clothes are essential in the cit
Slide 50: Wólczanka: Highest Share of On-line
WÓLCZANKA: HIGHEST SHARE OF ON-LINE Wólczanka brand revenues (PLN m) Wólczanka brand revenues amounted to PLN 87.0m in 9M22, growing by 10.7% YoY. The brand's stores generated PLN 33.0m, 87.0 78.6 +32.3% YoY. 44.7 +11% 44.3 Franchise revenues amounted to PLN 9.7m in 9M22, up 8.7% YoY. The 9.7 fr
Slide 51: Deni Cler: Executive Summary
DENI CLER: EXECUTIVE SUMMARY DENI CLER (WOMEN’S FASHION) - Women’s fashion brand established in Italy in 1971 - Addressed to women over 35 who value high quality and elegance AUTUMN/WINTER 2022 „Viaggio in città” - Superior quality fabrics with superior - The latest collection is inspired by a journ
Slide 52: 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 36.0m in 9M22, growing 36.0 by 13.8% YoY. The brand's stores generated PLN 19.7m, +19.2% YoY. 31.7 3.6 4.8 Franchise and multibrand revenues amounted to PLN 12.7m in 9M22, 14% 12.7
Slide 53: W.KRUK: Executive Summary
W.KRUK: EXECUTIVE SUMMARY NOVELTIES IN THE COLLECTIONS THE OLDEST JEWELLERY BRAND - 3Q22 highlight was the Autumn premiere of the latest ambassador collection by W.KRUK, created by life IN POLAND partners - Natalia Kukulska and Michał Dąbrówka. - The jewellery offer includes gold and silver - LONGPL
Slide 54: W.KRUK: Double-Digit Increases in Store EBIT
W.KRUK: DOUBLE-DIGIT INCREASES IN STORE EBIT W.KRUK brand revenues (PLN m) 428.9 Retail revenues of the W.KRUK brand amounted to PLN 428.9m in 9M22, growing by 32.8% YoY. The brand's stores generated PLN 323.1 373.7m in revenue, +36.3% YoY. 26.7 33% 31.1 Franchise revenues amounted to PLN 28.4m
Slide 55: 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 3 Q 2 2 JEWELLERY SEGMENT SEGMENT ODZIEŻOWY 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,
Slide 56: 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 total 440 427 426 427 421 415 409 404 398 391 383 APPAREL SEGMENT franchise 126 126 129 136 135 135 131 127 126 123 119 total 148 145 147 149 148 148 146 145 145 144 142 VISTULA fra
Slide 57: Stable YoY Floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 total 42,962 41,953 41,891 42,021 41,564 41,337 40,864 40,930 40,891 40,385 39,778 APPAREL SEGMENT franchise 9,123 9,195 9,368 9,882 9,789 9,794 9,577 31,468 9,425 9,236 9,019 total 18,650 18,291 18,508 18,
Slide 58: Stabilisation of the Group's Floorspace in 2022
STABILISATION OF THE GROUP'S FLOORSPACE IN 2022 2021 2022 target YoY Stabilization of floorspace in the apparel stores 404 384 -20 segment - changes to stores, introduction APPAREL SEGMENT of new concepts adequate to the expanded m2 40,930 39,999 -2% collections. stores 145 143 -2 VISTULA m2 18,531
Slide 59: 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 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 brands
Slide 60: 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. 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 1,158 1
Slide 61: 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, 6.8 photoshoots) and nationwide marketing campaigns in editorial, internet and TV with celebr
Slide 62: Historical Quarterly Results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 4Q20 4Q21 YoY 1Q21 1Q22 YoY 2Q21 2Q22 YoY 3Q21 3Q22 YoY Revenues 232.0 348.8 50.3% 172.1 243.8 41.6% 244.0 341.8 40.1% 305.0 319.4 4.7% Gross profit on sales 118.9 192.0 61.5% 81.7 123.2 50.8% 131.1 193.2 47.3% 163.3 165.5 1.3% Gross profit on sales margin
Slide 63: Results under IAS17
RESULTS UNDER IAS17 PLN m, IAS17 3Q21 3Q22 YoY PLN m, IAS17 9M21 9M22 YoY Revenues 305.0 319.4 4.7% Revenues 721.1 905.0 25.5% Gross profit on sales 163.3 165.5 1.3% Gross profit on sales 376.2 481.9 28.1% Gross profit on sales margin 53.5% 51.8% -1.7pp. Gross profit on sales margin 52.2% 53.2% 1.1p
Slide 64: 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, 15% CHF, 18% since 2Q16. Hedging only relates to the apparel segment. USD, 31% USD, 29% The group is a beneficiary of strengthening of zloty versus foreign currencies. 9M21 EU
Slide 65: Safe Debt Level
SAFE DEBT LEVEL PLN m 3Q21 4Q21 3Q22 Long-term debt 39.4 34.6 26.8 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 38.1 33.7 25.8 Bank loans include: overdrafts and investment bank loans. Bank loan collatera
Slide 66: Shareholder Structure
SHAREHOLDER STRUCTURE Shareholder structure as at 16.11.2022 (share in equity and votes) PZU OFE and Number of DFE % share shares/votes Other free-float 19.30% 1. PZU OFE and DFE 45,251,894 19.30% 27.78% 2. Jerzy Mazgaj 38,332,632 16.35% 3. IPOPEMA TFI 36,038,137 15.37% Jerzy Mazgaj 4. NN OFE 32,750
Slide 67: 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 68: Thank You
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow