Vrg S.a. · GPW:VRG
Vrg — Q1 2019 Earnings Presentation
71 slides from Vrg's earnings presentation, May 21, 2019
Slide 1: 1Q19 Results Presentation
WKRUK —DENICLER BYTOM WOLCZANKA VISTULA VRG VISTULA RETAIL GROUP 1Q19 RESULTS PRESENTATION MAY 21, 2019 of &
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 DENI CLER VRG VISTULA RETAIL GROUP
Slide 4: Three key events influencing 1Q19
Three key events influencing 1Q19 S U N D AY S BY TO M IFRS16 IQ19 Shopping malls open only 1 Consolidation of Bytom brand IFRS16 applied for Sunday per month. 8 trading results for the whole quarter. the first time. days fewer YoY. IQ18 Partial trade ban on Sundays No Bytom brand impact. Lack of IF
Slide 5: Sunday trade ban affects revenues
Sunday trade ban affects revenues Y O Y D I F F E R E N C E I N L F L S A L E S I N I N D I V I D U A L B R A N D S O N S U N D AY S I N 1 Q 1 9 (PLN M) 8 trading days fewer in 1Q19 vs 1Q18 resulted in sizeable falls in LFL stores. -4.2 -3.2 -1.3 -0.3 1Q19 presentation 5
Slide 6: 1Q19 excluding IFRS16
1Q19 excluding IFRS16 REVENUES PLN 214.4m +33.5% NET LOSS PLN (1.2)m vs PLN 0.1m GROSS PROFIT MARGIN 49.0% +0.5 pp. EBITDA PLN 4.4m EBIT -27.0% PLN (1.1)m N/M 1Q19 presentation 6
Slide 7: 1Q19 under IFRS16
1Q19 under IFRS16 REVENUES PLN 214.4m +33.5% NET LOSS PLN (2.4)m vs PLN 0.1m GROSS PROFIT MARGIN 49.0% +0.5 pp. EBITDA PLN 24.8m EBIT +307.3% PLN (1.2)m N/M 1Q19 presentation 7
Slide 8: Group development continues
Group development continues NUMBER OF STORES EOP 1Q19 152 +16 36,660 m2 +9% YoY 139 +8 31 -1 15,761 +9% m2 YoY 132 +15 121 +121 575 +159 52,421 m2 +56% YoY Organic growth +43 1Q19 presentation 8
Slide 9: Further dynamic group floorspace growth
Further dynamic group floorspace growth Group floorspace growth YoY (ths m2) Group floorspace reached 52.4 ths m2 at the 52.4 end of 1Q19, up 56% YoY. 17.6 1.2 Excluding Bytom brand floorspace grew 9% 10.0 YoY. 33.6 15.8 The apparel segment added 17.6 ths m2. 8.8 Excluding Bytom floorspace gre
Slide 10: Vistula
VISTULA PUTTATTTAITTTTVT TITTY TTT i
Slide 11: Vistula: 1/5 of revenues on-line
Vistula: 1/5 of revenues on-line Vistula brand network Vistula brand floorspace grew 11% YoY at the end of 1Q19, while the sales network 1Q18 1Q19 YoY expanded by 14 stores net. Number of stores 136 152 + 16 Dynamic franchise development continued: 46 58 + 12 12 new franchise stores net and 27%
Slide 12: Vistula: stable share of casual in revenues
Vistula: stable share of casual in revenues Vistula brand revenue split Higher share of Vistula Red and Lantier sub- 10% lines. 12% 12% 14% 14% 16% Lower share of the main line in revenues 42% 41% due to reduction in occasional lines. Stable YoY share of casual clothing in 1Q19. 74% 70% 48% 47
Slide 13: Wolczanka
WOLCZANKA
Slide 14: Wólczanka: a high internet share
Wólczanka: a high internet share Wólczanka brand network Wólczanka network grew by 8 stores net YoY (9 are franchise stores). 1Q18 1Q19 YoY Brand’s floorspace increased 5% YoY versus Number of stores 131 139 +8 22% YoY growth in franchise store incl. franchise 39 48 +9 floorspace. Floorspace (m2
Slide 15: Wólczanka: growth in women collection
Wólczanka: growth in women collection Wólczanka brand revenue split Return to growths in Lambert brand due to 7% 7% favourable sale of women collection. 4% 4% 37% 41% 1Q19 revenues/ m2 lower YoY due to less 25% 27% favourable trends in men’s collections. 63% 59% 65% 62% 1Q18 1Q19 1Q18 1Q19 Wólcz
Slide 16: Bytom
TATAT TTT TTT BYTOM SZTUKA KRAWIECTWA OD 1945
Slide 17: Bytom: development of own stores
Bytom: development of own stores Bytom brand network Bytom’s network grew YoY by 5 stores net. All new stores were own stores. 1Q18 1Q19 YoY Brand’s floorspace grew 9% YoY due to Number of stores 116 121 +5 opening of increasingly large stores and incl. franchise 6 6 0 expansions of existing sto
Slide 18: Bytom: a growing share of casual
Bytom: a growing share of casual Bytom brand revenue split A growing YoY share of smart casual clothing in 1Q19. Share of casual clothing in revenues was 55% 52% 57% 55% higher in 1Q19 than in the whole 2018. Knitwear and coats were behind a higher share of casual in 1Q19. 45% 48% 43% 45% 1Q18
Slide 19: Deni Cler
fH DENI GLER
Slide 20: Deni Cler: development of shop-in-shop concept
Deni Cler: development of shop-in-shop concept Deni Cler brand network Deni Cler network encompasses 31 stores in 1Q18 1Q19 YoY top shopping malls in Poland. Number of stores 32 31 -1 There are 8 franchise stores in the network. incl. franchise 8 8 0 Development of shop-in-shop concept. Deni C
Slide 21: Deni Cler: high sales/m2 growth
Deni Cler: high sales/ m2 growth Deni Cler brand revenue split Main collection encompasses coats, suits, jackets and trousers, while complementary 16% 16% 16% 16% collection is among others made up of 8% 8% 8% 8% blouses, dresses and T-shirts. Emphasis on capsule collections. Growth in sales/
Slide 22: W.KRUK
Slide 23: W.KRUK: franchise development continues
W.KRUK: franchise development continues W.KRUK brand network Dynamic YoY growth in W.KRUK brand stores. Opening of 15 stores net translated into a 1Q18 1Q19 YoY 14% YoY increase in brand’s floorspace. Number of stores 117 132 + 15 The brand had 11 franchise stores at the end incl. franchise 4
Slide 24: W.KRUK: dynamic EBIT growth
W.KRUK: dynamic EBIT growth W.KRUK brand revenue split Watches continued to increase their share in revenues. 22% 28% 35% 35% Stable jewellery revenue structure in 1Q19. Strong reception of a new OHELO collection by Ewa Chodakowska both in traditional and 78% on-line stores. 72% 65% 65% Sale
Slide 25: 1Q19 brand's results summary
1Q19 brand’s results summary RESULTS INFLUENCED BY SUNDAY TRADE BAN. STRONG SALES in W.KRUK and Deni Cler brands. FORMAL BRANDS dynamic growth in on-line sales. STORE EBIT YoY growth in store EBIT. 1Q19 presentation 25
Slide 26: Group Results
GROUP RESULTS |
Slide 27: Comparable periods
Comparable periods L I M I T E D Y O Y C O M PA R A B I L I T Y 1Q19 1Q19 1Q18 reported excl. IFRS16 The results encompass only The results include VRG The results include VRG VRG Group, i.e. they do not Group with Bytom – the Group with Bytom – the include Bytom S.A. brand’s impact took place for b
Slide 28: Revenues/m2
Dynamics/ m2 explained 2018 2018 PRO-FORMA REVENUES/ m2 EXCL. BYTOM PLN 1,680/ m2 PLN PLN 1,910/ m2 1,153/ m2 -12% vs VRG 2018 2018 PRO-FORMA EXCL. BYTOM SG&A/ m2 PLN 720/ m2 PLN PLN 813/ m2 508/ m2 -11% vs VRG 1Q19 presentation 28
Slide 29: Higher revenues in both segments
Higher revenues in both segments Group revenues (PLN m) Group revenues reached PLN 214.4m in 1Q19 272.1 (up 33.5% YoY). 223.1 214.4 Bytom added PLN 41.1m to revenues for 1Q19. 192.9 171.9 157.4 160.6 180.1 110.2 There would be 8% YoY growth excluding 136.2 95.0 72.8 Bytom. 73.8 63.1 61.9 76.7 61
Slide 30: Higher YoY gross margin in both segments
Higher YoY gross margin in both segments Gross profit on sales (PLN m) Group gross profit on sales amounted to PLN 105.0m in 1Q19 (up 35% YoY). 143.8 In 1Q19 gross profit on sales of the apparel 120.2 100.6 105.0 segment reached PLN 67.5m, up 46% YoY. 90.5 80.7 90.1 59.7 77.8 Gross profit on s
Slide 31: Fall in costs/m2
Fall in costs/ m2 Operating costs, monthly per m2 Group operating costs/ m2 fell 10% YoY in (PLN m, excl. IFRS16) 883 1Q19 to PLN 683/m2 per month. 729 744 741 852 761 802 784 Lower costs of stores/ m2 (down 6% YoY) and 292 683 fall in HQs costs/ m2 (down 20% YoY), impact 249 245 221 242 229 220
Slide 32: 1Q19 results under IFRS16
1Q19 results under IFRS16 Revenue growth above floorspace growth. Higher YoY gross profit margin due to 1Q19 1Q19 favourable trends in both segments. PLN m 1Q18 YoY IFRS16 IAS17 Seasonal EBIT loss due to a sizeable portion Revenues 160.6 214.4 33.5% 214.4 of fixed costs. Gross profit on IFRS
Slide 33: Impact of IFRS16 on 1Q19
Impact of IFRS16 on 1Q19 BALANCE as of 01.01.2019 BALANCE as of 31.03.2019 Depreciation of the right of use asset ASSETS PLN 299.6m PLN 284.9m shown in Income New right of use asset New right of use asset Statement (instead of rentals) as well as in cash flow. The liability is initially valued in EQ
Slide 34: Stable inventory/m2
Stable inventory/ m2 Change in inventory (PLN m) Inventory up 55% YoY due to network 488.9 development, opening of new stores and +52.9 +120.7 merger with Bytom brand (PLN 93.8m impact). 315.3 209.2 93.8 Apparel segment inventory increased 76% YoY, but 17% YoY excluding Bytom. 156.3 Impact of
Slide 35: Safe indebtedness levels
Safe indebtedness levels Net debt (PLN m, excl. IFRS16) Consistent YoY long-term debt reduction. Long-term and short-term indebtedness shown together with financial leases, yet 51.4 47.4 71.3 69.3 109.7 excluding the leases from IFRS16. Financial 33.5 53.4 45.0 48.5 leases under IFRS16 at PLN286
Slide 36: Seasonal usage of cash
Seasonal usage of cash Change in net working capital Data for 1Q18 shows VRG Group excluding (PLN m) Bytom, while 1Q19 results include Bytom. -0.1 Engagement of cash into inventories -2.5 -8.7 results mainly from higher inventory in -20.3 -22.9 jewellery segment and growth in scale. -28.1 -30.2
Slide 37: Development Plan
VISTULA WOLCZANKA BYTOM WKRUK DENI CLER VRG VISTULA RETAIL GROUP
Slide 38: Growth to continue in 2019
Growth to continue in 2019 2019 VRG 2018 target YoY stores 440 467 27 APPAREL SEGMENT 2019 should be another year m2 42,072 44,753 6% of dynamic organic group stores 148 159 11 VISTULA floorspace growth (c. 8% YoY). m2 18,230 19,596 7% stores 139 147 8 WÓLCZANKA m2 4,979 5,180 4% 122 129 7 Franchise
Slide 39: Merged entity growth to continue
Merged entity growth to continue Group YoY floorspace development (ths m2) Merged entity’s floorspace should reach 55.7 55.7 ths m2 at the end of 2019, up 8% YoY. 51.6 2.7 1.4 The apparel segment should add 2.7 ths m2 11.0 net, growing 6% YoY. 9.6 +6% YoY +15% YoY The jewellery segment should
Slide 40: Continuation of e-commerce growth
Continuation of e-commerce growth PLN PLN 56 m 97 m 14% 12% 8% 2019 2017 2018 target DYNAMIC GROWTH HIGH SHARE Our aim is a further 50% YoY growth in 2019 Our aim is for e-commerce to exceed of e-commerce revenues. some 14% share in 2019 revenues. 1Q19 presentation 40
Slide 41: Development of product offering in 2019
Development of product offering in 2019 COOPERATION OF TWO RETAIL BRANDS men’s formalwear with a streetwear brand. Star collections, A growing share A broader offer A growing share new products in A growing share of casual, new for men – chinos of casual, modern jewellery, a of casual. pieces in tro
Slide 42: 2019 targets
2019 targets RISKS REVENUES EBIT NET PROFIT Further restrictions on Sunday trade. Continuation of double- 1pp. higher gross profit Further YoY group results digit revenue growth. margin due to first margin improvement. synergies. Floorspace development Our aim is to obtain OPPORTUNITIES and improvem
Slide 43: Retail sales tax
Retail sales tax A risk that the tax will be introduced since 2020 – a possible cost of c. PLN 4m. Revenues taxed at 1.4% Revenues taxed at 0.8% A tax free amount – above PLN 170m between PLN 17m to PLN 17m monthly. monthly in traditional PLN 170m monthly. stores in Poland. Does not apply to interne
Slide 44: Synergy
VISTULA WOLCZANKA BYTOM WKRUK DENI CLER SYNERGY VRG VISTULA RETAIL GROUP
Slide 45: Synergies in progress
Synergies in progress REVENUE/MARGIN OPERATING COSTS Our aim is to increase revenues and improve gross profit margin of Our aim is to benefit from the the combined group through more favourable purchasing terms combined management experience and improved market segmentation. to lower SG&A costs. TAR
Slide 46: Revenue/margin synergies
Revenue/ margin synergies Identified In progress Completed PURCHASES Development of a common policy for strategic fabrics suppliers Creation of a list of strategic suppliers - complementary goods: pants, shirts, knitwear, accessories Development of an approach to optimise costs of transporting raw m
Slide 47: Cost synergies
Cost synergies Identified In progress Completed LOGISTICS/ TRANSPORTATION Lower rates for courier parcels No more minimum transportation quotas RENTALS Renegotiation of rental rates Renting stores with a larger area for several brands STORES Consolidation of packaging suppliers Unification of suppli
Slide 48: Synergies – time horizon
Synergies – time horizon SS 2019 AW 2019 SS 2020 Higher margin, lower REVENUE/ Implementation of new cost of purchase MARGIN pricing policy Logistics/ COST Rentals transportation 1Q19 presentation 48
Slide 49: Q&A
VISTULA WOLCZANKA BYTOM WKRUK DENI CLER Q&A VRG VISTULA RETAIL GROUP
Slide 50: Back-up
VISTULA WOLCZANKA BYTOM WKRUK BACK-UP VRG VISTULA RETAIL GROUP
Slide 51: 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 52: 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 2019 collection Men’s collection mostly encom
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 assortment. ”Made to Measure” – personalised men’s tailoring offered in selected stores. Spring/Summer 2019 collection Continuation of the lead
Slide 54: 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 year of age who value high quality and elegance. Collections created from highest quality fabrics with superior accessories an
Slide 55: W.KRUK: executive summary
W.KRUK: executive summary The oldest jewellery brand in Poland The jewellery offer includes gold, silver and platinum jewellery, diamonds, precious stones and original collections. W.KRUK's offer also includes global watches brands, such as Rolex (exclusivity), Hublot, Omega, Longines, TAG Heuer
Slide 56: Summary of brands' 1Q19 results
Summary of brands’ 1Q19 results DYNAMIC NETWORK CASUAL OFFER D E V E L O P M E N T. D E V E L O P M E N T. S U C C E S S O F S TA R COLLECTION. FURTHER GROWTH IN SALES OF W AT C H E S . HIGH INTERNET HIGHEST SALES/ M2 SHARE. GROWTH. 1Q19 presentation 56
Slide 57: 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 1 9 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., BTM 2 sp. z o.o. Jewellery, watches, accessories Vistula,
Slide 58: Growing number of stores
Growing number of stores NUMBER OF STORES 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 APPAREL total 265 274 281 295 299 300 304 440 443 SEGMENT franchise 65 71 76 88 93 94 100 117 120 total 117 122 126 134 136 138 141 148 152 VISTULA franchise 30 33 35 42 46 47 50 56 58 total 116 119 122 129 131 13
Slide 59: Higher floorspace
Higher floorspace FLOORSPACE (M2) 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 APPAREL total 22,433 23,179 23,721 24,613 24,822 24,864 25,163 42,072 42,429 SEGMENT franchise 4,600 4,957 5,226 6,006 6,389 6,487 6,820 8,394 8,621 total 14,899 15,503 15,963 16,719 16,855 17,176 17,429 18,230 18,727 VIS
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. 7.2 5.4 Our aim is to develop on-line stores of own brands (monoshops). 4.3 4.1 4.8 5.5 Revenues and costs of on-line stores are 3.1 26.6 27.9 allocated directly to the brands. 2.9 2.
Slide 61: Costs of own stores under control
Costs of own stores under control Operating costs per month/m2 (PLN, excl. IFRS16) Differences between SG&A costs/ m2 between segments result from different business models. The jewellery segment is characterised by 1,380 1,376 1,094 1,131 1,139 higher revenues and costs/ m2 than these of 1,003
Slide 62: Discipline in marketing costs
Discipline in marketing costs Marketing costs by segments (PLN m) Marketing costs are part of group selling costs. These encompass: recurring advertising 4.7 spending (catalogues, photoshoots) and 4.2 1.7 nationwide marketing campaigns in editorial, 1.7 internet and TV with celebrities. 1.3 1.1
Slide 63: 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. 1Q18 1Q19 The group is a beneficiary of strengthening of CHF, CHF, 4% zloty versus foreign currencies. USD, 7% 27% USD, Higher YoY share of CHF in 2018 purchases EUR,
Slide 64: Historical quarterly results
Historical quarterly results 1Q19 1Q19 PLN m 2Q17 2Q18 3Q17 3Q18 4Q17 4Q18 1Q18 IFRS16 r/r IAS17 Revenues 171.9 192.9 157.4 180.1 223.1 272.1 160.6 214.4 33.5% 214.4 Gross profit on sales 90.5 100.6 80.7 90.1 120.2 143.8 77.8 105.0 35.0% 105.0 Gross profit margin 52.7% 52.1% 51.3% 50.0% 53.9% 52.9%
Slide 65: Safe indebtedness level
Safe indebtedness level PLN m 1Q18 4Q18 1Q19 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring Long-term debt 83.6 74.4 73.8 (taken over with Bytom S.A. merger). Bank loans include: overdrafts and Bank loans 82.0 70.8 70.5 investment bank loans. Bank loan c
Slide 66: Monthly sales data
Monthly sales data APPAREL SEGMENT REVENUES (VISTULA, WÓLCZANKA, DENI CLER, BYTOM from XII 2018) 90 70% 78 80 60% 70 50% 52 60 52 50 42 40% 44 47 40 31 40 40 4039 40 37 35 37393538 34 34 3434 34 30% 31 33 31 33 33 33 32 32313333 33 33 29 28 27 29 28 27 272729 26 25 29 27 29 30 24 23 24 2325 25 20% 1
Slide 67: Monthly sales data
Monthly sales data JEWELLERY SEGMENT REVENUES 70 40% (W.KRUK) 65 60 51 51 30% 50 44 40 20% 27 30 26 28 27 27 27 27 26 23 23 26 22 22 22 22 22 21 22 20 20 22 18 20 20 20 20 20 1818 19 19 20 17 17 17 18 18 17 17 18 17 17 18 18 17 17 18 15 16 10% 1515 14 14 15 15 10 0 0% revenues -1 year (PLN m) revenu
Slide 68: Monthly sales data
Monthly sales data REVENUES OF THE CAPITAL GROUP 160 45% 147 140 40% 35% 120 107 107 30% 100 92 25% 69 80 71 57 67 69 67 69 69 69 67 63 61 56 63 61 62 20% 57 60 57 57 57 57 56 56 60 55 53 52 53 52 53 50 52 53 52 56 53 50 47 4549 47 46 48 45 47 49 44 45 43 48 44 15% 40 39 40 40 10% 20 5% 0 0% revenue
Slide 69: Shareholder structure
Shareholder structure Shareholder structure as of 1Q19 publication Sources of information regarding holdings of (share in equity and votes) VRG S.A. shares 1. Information on the number of shares given in accordance with the notification received by the Company pursuant to art. 69 par. 1 point 2, par
Slide 70: 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 71: Thank you
THANK YOU VRG S.A. Pilotów 10 St. 31-462 Cracow