After record results, VRG wants to keep growing

The VRG Group generated more than PLN 92 million in net profit last year. The Board of Directors announces a dividend recommendation and, despite the difficult environment, hopes for further earnings improvement in 2023.

VRG Group achieved its historically highest results in 2022 in terms of sales and profit generated. The VRG Group's consolidated revenues in 2022 amounted to PLN 1.27 billion, 19.1 percent higher than in 2021. What is important, the company noted an increase in revenues while maintaining a high level of profitability. Consolidated net profit amounted to PLN 92.9 million, compared to PLN 66.3 million profit in 2021. VRG also noted sales growth in both segments in the first three months of this year. The company's Board of Directors announces that it will recommend dividend payments to shareholders, in line with the policy adopted last year. It also announces investments in the development and modernization of the stationary stores network, and further focus on sales and margin growth.

VRG Group's apparel segment generated revenues of PLN 648.2 million (up 13.8 percent year-on-year). The increase in sales was influenced by the recovery in demand for formal wear, the good reception of the brands' collections by customers and the development of the casual offer. Representing the jewelry segment, the W.KRUK brand, offering very good product collections and developing its sales network, successfully took advantage of the good economic situation and generated record results. The brand's revenues amounted to PLN 625.7 million, up 25 percent year-on-year.

- The most important challenges for the Group last year were to support sales growth and improve profitability. Despite higher costs of doing business, we managed to meet the Group's strategic goals for 2022. The company is in good shape in terms of its liquidity and financial position, maintaining a safe level of debt, and this is despite the payment of its first dividend in 23 years - says Janusz Płocica, CEO of VRG.

VRG's good start of year despite cooling in consumption

In the first three months of this year, the VRG Group recorded PLN 267 million in sales, up 9.5 percent compared to 2022, according to preliminary sales results reported by the Group. Gross margin on sales at the time was 51.6 percent (up 0.8 p.p. compared to 2022). VRG achieved revenue and margin growth, despite cooling consumer sentiment.

The Group's jewelry segment had a strong first quarter, with sales of PLN 142 million (10.5 percent more year-on-year). Growth was also reported by the apparel segment, which is more sensitive to consumer sentiment (PLN 125 million in revenue, up 8.4 percent year-on-year).

- The jewelry segment performed very well in the first quarter. We are also satisfied with the behavior of the apparel segment, including the first reactions to the brands' collections for the spring-summer season. We reported an increase in revenue, while maintaining a high margin level. This is a result of our price management strategy and policy of limiting promotions - comments Janusz Plocica.

Goals and plans for 2023

The main goal of VRG's Board of Directors for 2023 is to continue revenue growth in both segments and by each brand, and to achieve enhanced financial results. The company's CEO points to the Group's strengths and announces investments in growth.

– Our strength is diversification and basing our business on two segments in which the brands we own are characterized by high recognizability and a very good image. Therefore, our goal of achieving better results year-on-year and continuing to increase the revenues of the entire Group and each of the brands, even in the conditions of slowing economic growth and high inflation, seems realistic - adds Janusz Płocica.

In 2023, VRG announced investments in the development of its stationary sales network. Next year, the Group's retail space as a whole should increase by about 4 percent year-on-year, which would mark the first net increase in retail space since the pandemic. The Group plans to further evolve its network toward revised store concepts in the Vistula and Wólczanka brands, operating on larger spaces and allowing for adequate display of the increasingly wide assortment of brands. In the jewelry segment, new locations will be opened for its own and franchised stores.

The Group is diversifying the fashion brands' positioning in the fashion segment. The result is, among other things, an increasingly clear differentiation of the Vistula and Bytom brand offerings. Vistula is evolving into a premium total look brand for men and women, with an emphasis on high-quality formal collections, while Bytom remains a brand offering men's fashion collections grounded in the best traditions of tailoring.

As part of its omnichannel strategy, VRG is enhancing its delivery and returns capabilities (including express delivery) and developing the functionality of its sales pages and applications by introducing more intuitive tools. The company is also working on programming its own solutions to enable interactive sizing in e-commerce stores. The Group continues to sell on the Zalando platform and is working on starting cooperation with more platforms.

The VRG Group's planned capital expenditures for 2023 are approximately PLN 42 million.

The Board of Directors upholds the dividend policy

During an earnings press conference for investors, VRG Group's Board of Directors upheld the dividend policy. It assumes an annual payout recommendation in the range of 20-70 percent of consolidated net profit, assuming that the net debt/EBITDA ratio at the end of the fiscal year will be less than 2.5. Each time before making a recommendation to the general meeting, the Board of Directors will take into account the Group's financial situation, investment needs, liquidity situation, growth prospects in a given market and macroeconomic situation, acquisition plans and bank covenants.

- One of the main goals of the Board of Directors is to increase the investment attractiveness of VRG, and thus the value of our shares. In order to do this, we need business growth and to share the profit generated by the Group with shareholders. In the near future, after appropriate analyses, we will make a recommendation on the payment of dividends for 2022 - says Janusz Płocica.

VRG S.A. last shared its profit with shareholders in July last year. At that time, the company allocated PLN 39.8 million, which meant a payout of PLN 0.17 per share.

The annual report summarizing the VRG Group's activities in 2022 can be found here:

Investor relations » Periodic reports - VRG S.A.

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VRG S.A. (former name Vistula Group S.A.) is a company listed on the Warsaw Stock Exchange S.A. since 1993. VRG Group S.A. specializes in the design and distribution of high-quality fashion collections for men and women and jewelry. It owns highly recognizable trademarks in five major lines: Vistula, Bytom, Wólczanka, Deni Cler Milano and W.KRUK. The VRG S.A. Group focuses on brand management, apparel and jewelry design and the development of its own sales network in both main segments (apparel and jewelry).