Slide 1: 1Q21 Results Presentation
1Q21 RESULTS PRESENTATION MAY 27, 2021
Slide 2: Disclaimer
DISCLAIMER This presentation (the "Presentation") was prepared by VRG S.A. (the achieved by the Company may differ materially from the results presented "Company") with a due care. Still, it may contain certain inconsistencies or in this document. Many of those factors are beyond the awareness and o
Slide 3: Introduction
WISTULA WOLCZANKA DENI INTRODUCTION RG
Slide 4: Beginning of year affected by pandemic
BEGINNING OF YEAR AFFECTED BY PANDEMIC 2020 2021 Information from China about the JANUARY virus, increasing uncertainty about Shopping malls closed all month the supply chain Growing uncertainty about the FEBRUARY situation in Poland, delays in Shopping malls open all month deliveries from China Loc
Slide 5: Rebound in demand after store opening
REBOUND 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. 844% 2 Stores Sales in traditional stores affected by lock- down in January, March and April 2021. 90% Rebound of traffic in May 2021 faster t
Slide 6: Further network optimisation, growing internet
FURTHER NETWORK OPTIMISATION, GROWING INTERNET NUMBER OF STORES EOP 1Q21 YoY 148 0 115 -10 106 +4 YoY 52.5 - 2% YoY towns ths m2 127 -10 31 +1 153 31.5% +8 pp. YoY franchise +13 YoY internet share stores 140 0 561 - 19 6 | 1Q21 presentation
Slide 7: Jewellery segment more immune to pandemic
JEWELLERY SEGMENT MORE IMMUNE TO PANDEMIC APPAREL SEGMENT JEWELLERY SEGMENT favorable trends in on-line new collections adapted to sales, off-line sales affected by changing tastes of customers lock-downs development of the casual favorable trends in sales offer and ecological collections of watches
Slide 8: Stronger YoY impact of pandemic in 1Q21
STRONGER YOY IMPACT OF PANDEMIC IN 1Q21 IFRS 16 IAS 17 REVENUES EBIT EBIT PLN 172.1m PLN (15.8) m PLN (12.3) m -12.8% YoY 1Q20: PLN (11.9) m 1Q20: PLN (12.2) m GROSS PROFIT ON SALES NET LOSS NET LOSS 47.5% PLN (20.1) m PLN (11.9) m -0.1 pp. YoY 1Q20: PLN (32.0) m 1Q20: PLN (14.0) m 8 | 1Q21 presenta
Slide 9: Performance by brands
02 PERFORMANCE BY BRANDS
Slide 10: Vistula executive summary
VISTULA EXECUTIVE SUMMARY VISTULA BYTOM WOLCZANKA DENICLER =WKRUK
Slide 11: Vistula: growing on-line share
VISTULA: GROWING ON-LINE SHARE Vistula brand network Vistula brand floorspace was stable YoY at the end of 1Q21, due to 1Q20 1Q21 YoY closing down of unprofitable stores. Sales network also remained stable YoY. Number of stores 148 148 0 Both franchise floorspace and number of stores grew YoY at
Slide 12: Vistula: growing share of casual
VISTULA: GROWING SHARE OF CASUAL Vistula brand revenue split 12% 13% 13% 8% 12% 18% Significant increase in the share of casual in 1Q21 as the pandemic 45% 54% continued and lower demand for formal clothing. 80% Stable share of accessories in sales. 69% 43% 33% Increase in share of main Vistul
Slide 13: Bytom executive summary
BYTOM SZTUKA KRAWIECTWA OD 1945 — ww EXECUTIVE SUMMARY fe ees — —e = — oe —_—as + = — VISTULA BYTOM WOLC(ZANKA DENICLER WKRUK
Slide 14: Bytom: high on-line sales growth
BYTOM: HIGH ON-LINE SALES GROWTH Bytom brand network 1Q20 1Q21 r/r Number of Bytom stores decreased by 10 net YoY, while the number of franchise stores increased by 2 net YoY. Number of stores 125 115 -10 Floorspace decreased by 7% YoY. Changes in floorspace also took incl. franchise 8 10 +2 pla
Slide 15: Bytom: a growing share of casual
BYTOM: A GROWING SHARE OF CASUAL Bytom brand revenue split 8% 9% 9% 10% Growing share of casual sales in 1Q21, in line with market trends 45% 37% 44% and greater interest in casual offer while working remotely. 52% Dynamic sale of casual on-line collection. 47% 54% 46% 39% Stable share of acce
Slide 16: Wólczanka executive summary
WOLCZANKA EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 17: Wólczanka: an on-line brand
WÓLCZANKA: AN ON-LINE BRAND Wólczanka brand network Wólczanka network contracted by 10 stores net YoY. Optimisation 1Q20 1Q21 r/r affected mostly own stores – there were 3 more franchise stores Number of stores 137 127 -10 YoY. incl. franchise 50 53 +3 Brand’s floorspace fell 4% YoY, while franc
Slide 18: A growing share of new assortments
A GROWING SHARE OF NEW ASSORTMENTS Wólczanka brand revenue split Increase in sales of knitwear due to broadening the product range 9% 16% to include women's and men's trousers, polo shirts, T-shirts and 4% 1% 5% 8% 52% dresses. 68% Fall in share of shirts is the result of development of new prod
Slide 19: Deni Cler executive summary
DENI CLER MILANO EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 20: Deni Cler: stable network, shop-in-shop development
DENI CLER: STABLE NETWORK, SHOP-IN-SHOP DEVELOPMENT Deni Cler brand network 1Q20 1Q21 YoY Deni Cler network encompasses 31 monobrand stores (both own Number of stores 30 31 +1 and franchise) in top shopping malls in Poland. incl. franchise 9 8 -1 Development of shop-in-shop concept. Deni Cler co
Slide 21: Deni Cler: growing store EBIT
DENI CLER: GROWING STORE EBIT Deni Cler brand revenue split Emphasis on capsule collections. Increase in the share of 16% 22% 31% 38% accessories and complementary collections at the expense of the 7% 21% main collection. 77% 53% 40% Classic clothing is still the biggest element of the collectio
Slide 22: W.KRUK executive summary
WKRUK 1 8 4 0 EXECUTIVE SUMMARY VISTULA BYTOM = WOL(ZANKA DENICLER = WKRUK
Slide 23: W.KRUK: brand immune to pandemic
W.KRUK: BRAND IMMUNE TO PANDEMIC W.KRUK brand network 1Q20 1Q21 YoY Continuation of W.KRUK brand development. Stable number of Number of stores 140 140 0 stores net translated into a 2% YoY increase in brand’s floorspace. incl. franchise 14 18 +4 The brand had 18 franchise stores at the end of 1
Slide 24: W.KRUK: growing store EBIT
W.KRUK: GROWING STORE EBIT W.KRUK brand revenue split 33% 29% 31% Significant changes in the sales structure - growing share of 49% watches in relation to jewellery. Advantageous effect of exclusivity on sale of luxury Rolex and Patek Philippe watches. 67% 71% 69% Growing share of silver jewelle
Slide 25: Group results
VISTULA WOLCZANKA BYTOM WKRUK — DENICLER 03 GROUP RESULTS
Slide 26: Stable group floorspace
STABLE GROUP FLOORSPACE Group floorspace change YoY (ths m2) Group floorspace reached 52.5 ths m2 at the end of 1Q21, down 53.7 52.5 2.3% YoY. 0.2 10.7 1.4 10.9 The apparel segment floorspace fell 1.4 ths m2, down 3.2% YoY, due to closing down of unprofitable stores. The jewellery segment floo
Slide 27: Jewellery segment already constitutes half of sales
JEWELLERY SEGMENT ALREADY CONSTITUTES HALF OF SALES Group revenues (PLN m) Group revenues reached PLN 172.1m in 1Q21 (down 12.8% YoY), 332.5 due to a longer YoY period during which stores were closed. 270.2 251.2 249.4 232.0 214.4 125.6 197.5 86.7 174.9 172.1 Apparel segment revenues fell 30.2%
Slide 28: More favourable trends in the jewellery segment
MORE FAVOURABLE TRENDS IN THE JEWELLERY SEGMENT Gross profit on sales (PLN m) 178.5 Group gross profit on sales amounted to PLN 81.7m in 1Q21 (down 144.6 128.0 122.4 13.1% YoY). 67.6 118.9 105.0 45.9 94.0 47.1 82.1 81.7 In 1Q21 gross profit on sales of the apparel segment reached 52.9 60.8 37.5
Slide 29: Fall in operating costs/m2
FALL IN OPERATING COSTS/ M2 Monthly operating costs per m2 (PLN, excl. IFRS16) Group operating costs/ m2 (IAS17) reached PLN 587/ m2 monthly 811 and fell 10.2% YoY in 1Q21 due to cost reductions conducted 723 717 654 683 672 680 587 (rentals, HR costs). 230 520 196 196 192 169 188 203 Costs of s
Slide 30: 1Q21 IFRS16 results affected by lock-down
1Q21 IFRS16 RESULTS AFFECTED BY LOCK-DOWN Lower YoY revenues due to a stronger impact of COVID-19 PLN m, IFRS16 1Q20 1Q21 YoY pandemic and longer administrative closure of shopping malls. Revenues 197.5 172.1 -12.8% Stable YoY gross profit margin due to higher share of jewellery Gross profit on
Slide 31: More favourable result under IAS17
MORE FAVOURABLE RESULT UNDER IAS17 Lower YoY revenues due to a stronger impact of COVID-19 PLN m, IAS17 1Q20 1Q21 YoY pandemic and longer administrative closure of shopping malls. Revenues 197.5 172.1 -12.8% Stable YoY gross profit margin due to higher share of jewellery Gross profit on sales 94
Slide 32: Reduction in inventories
REDUCTION IN INVENTORIES Change in inventories (PLN m) 547.1 Inventory down 5.6% YoY to PLN 516.5m in 1Q21 due to 516.5 continuation of optimisation trends in the apparel segment. 12.1 42.7 235.8 247.9 Apparel segment inventory fell 13.7% YoY, due to lower orders and conducted promotions/ sell-o
Slide 33: 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 163.0 179.9 reverse factoring and financial leases, yet excluding leases from 149.8 142.5 87.9 IFRS16. Financial leases under IFRS16 at PLN 369.7m in 1Q21. 91.
Slide 34: Seasonal engagement of cash
SEASONAL ENGAGEMENT OF CASH Net working capital (PLN m) YoY decline in inventories due to earlier reductions in orders for PLN 408.9m PLN 368.1m collections. 30.8 17.3 Significant YoY decrease in receivables due to lower prepayments 547.1 516.5 for goods purchased on Asian markets (using reverse
Slide 35: 2021 Outlook
WISTULA M WOLCZANKA DE 2021 OUTLOOK
Slide 36: Stable floorspace in 2021
STABLE FLOORSPACE IN 2021 2021 former 2020 2021 target YoY target In 2021, floorspace of traditional APPAREL stores 427 411 415 -12 stores should be stable YoY. SEGMENT m2 42,021 41,262 41,400 -1% stores 149 149 149 0 VISTULA m2 18,695 18,807 18,653 0% stores 129 120 121 -8 Floorspace of franchise s
Slide 37: Success of new Wólczanka store concept
SUCCESS OF NEW WÓLCZANKA STORE CONCEPT The highest turnover of all Wólczanka brand stores in May 2021. Favorable adoption of new elements of the collection - a higher share of women's and casual clothing than average in the brand's revenues. Functional design and modern solutions ensure a friendly s
Slide 38: More casual in offer
MORE CASUAL IN OFFER Vistula - growing share of casual offer, development of VISTULA MOVE sports offer Growing assortment of the Wólczanka brand: jeans, sweatpants, dresses, jackets, T-shirts Bytom: growing share of sweaters, polos, T-shirts and other casual clothing New products from the casual off
Slide 39: Eco collections in the offer
ECO COLLECTIONS IN THE OFFER FIRST ECO COLLECTIONS IN BRANDS: sweatshirts blouses t-shirts trousers Further collections in shirts dresses preparation for the Autumn/Winter 2021 sweaters skirts season ECO MATERIALS 39 | 1Q21 presentation
Slide 40: Increased interest in formal
INCREASED INTEREST IN FORMAL In April and May we note an increased interest in formal clothing. We expect a growing interest in suits with the season of communion and weddings. Synergies within the Group - new products in the offer of wedding rings. 40 | 1Q21 presentation
Slide 41: Broader W.KRUK offer
Prośba o poprawki graficzne BROADER W.KRUK OFFER Celebrations: BROADEDNED W.KRUK Mother’s Day OFFER in the field of jewellery: dedicated collections for children (gold and silver) Children’s Day Father’s Day The return of communion and weddings supports the sale of jewellery. 41 | 1Q21 presentation
Slide 42: More activity in social media
MORE ACTIVITY IN SOCIAL MEDIA Increasingly stronger emphasis on promotion of selected brands in social media: Wólczanka: Use of influencer continuation of campaigns in Customer photo sessions with VISTULA brand both communication company during the Autumn/ channels used: employees as Winter 2020 and
Slide 43: Strengthening of omnichannel
STRENGHENING OF OMNICHANNEL OWN E-STORES GROWING PRESENCE ON EXTERNAL OF ALL BRANDS PLATFORMS Sales application available in Vistula and Wólczanka. + Consistent on-line and off-line marketing and promotions. Further logistics improvements. + Deferred on-line payments for customers since May 2021. +
Slide 44: 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 Sizeably better YoY Maintenance of safe at 20% +. financial results. liquidity position. 44 | 1Q21 presentation
Slide 45: Risk and possibilities for 2021
RISK AND POSSIBILITIES FOR 2021 POSSIBILITIES RISK new collections with a broader another wave of COVID-19 casual offer, development of and stronger sanitarily restrictions jewellery offer lowering consumer demand on-line growth disturbances in supply chain further working capital improvements volat
Slide 46: Q&A
05 Q&A
Slide 47: Back-up
06 BACK-UP
Slide 48: 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 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. SPRING/SUMMER 2021 COLLECTION - The latest of
Slide 50: 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 Lamb
Slide 51: Deni Cler: executive summary
Zdjecia do zmiany 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 supe
Slide 52: 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 53: Summary of brands' 1Q21 results
SUMMARY OF BRANDS’ 1Q21 RESULTS GROWING SHARE GROWTH OF OF CASUAL. ON-LINE SALES. GROWING STORE EBIT. THE HIGHEST SHARE THE HIGHEST GROSS OF INTERNET. PROFIT MARGIN. 53 | 1Q21 presentation
Slide 54: 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 1 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 55: Optimisation of number of stores continues
OPTIMISATION OF NUMBER OF STORES CONTINUES NUMBER OF STORES 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 total 443 452 451 451 440 427 426 427 421 APPAREL SEGMENT franchise 120 126 129 132 126 126 129 136 135 total 152 154 152 154 148 145 147 149 148 VISTULA franchise 58 60 60 62 59 60 62 65 64 tota
Slide 56: Stable YoY floorspace
STABLE YOY FLOORSPACE M2 OF FLOORSPACE 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 total 42,429 43,207 43,461 43,731 42,962 41,953 41,891 42,021 41,564 APPAREL SEGMENT franchise 8,621 9,223 9,322 9,590 9,123 9,195 9,368 9,882 31,775 total 18,727 19,007 19,058 19,320 18,650 18,291 18,508 18,695 18,5
Slide 57: 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 9.1 eObuwie, while Deni Cler and Wól
Slide 58: 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. 1,510 The jewellery segment is characterised by higher revenues and 1,143 1,177 1,226 1,248 costs/ m2 than these of the apparel segment. 1,142
Slide 59: Off-line marketing replaced by on-line
OFF-LINE MARKETING REPLACED BY ON-LINE Off-line marketing costs by segments (PLN m) Marketing costs are part of group selling costs. 5.7 These encompass: recurring advertising spending (catalogues, 2.7 photoshoots) and nationwide marketing campaigns in editorial, 3.0 internet and TV with celebri
Slide 60: 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. CHF, 7% CHF, 16% USD; 39% The group is a beneficiary of strengthening of zloty versus foreign EUR; USD, 36% currencies. 15% 1Q20 1Q21 EUR, 15% YoY shift in purchases
Slide 61: Historical quarterly results, IFRS16
HISTORICAL QUARTERLY RESULTS, IFRS16 PLN m 2Q19 2Q20 YoY 3Q19 3Q20 YoY 4Q19 4Q20 YoY 1Q20 1Q21 YoY Revenues 270.2 174.9 -35.3% 251.2 249.4 -0.7% 332.5 232.0 -30.2% 197.5 172.1 -12.8% Gross profit on sales 144.6 82.1 -43.2% 128.0 122.4 -4.4% 178.5 118.9 -33.4% 94.0 81.7 -13.1% Gross profit on sales m
Slide 62: A safe indebtedness level
A SAFE INDEBTEDNESS LEVEL PLN m 1Q20 4Q20 1Q21 Long-term debt 57.9 48.6 45.3 Interest bearing indebtedness includes: bank loans, finance leases and reverse factoring (taken over with Bytom S.A. merger). Bank loans 55.7 47.2 44.1 Bank loans include: overdrafts and investment bank loans. Bank Fina
Slide 63: Shareholder structure
SHAREHOLDER STRUCTURE Shareholder structure as at 27.05.2021 (share in equity and votes) IPOPEMA TFI Other free-float 21.34% Number of % share 32.10% shares/votes 1. IPOPEMA TFI 50,034,306 21.34% 2. PZU OFE and DFE 36,042,345 15.37% PZU OFE and 3. NN OFE 32,750,000 13.97% DFE 4. Jerzy Mazgaj with re
Slide 64: 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 65: Thank you
THANK YOU VRG S.A. Pilotów 10 31-462 Cracow