Good start of the year for VRG in the jewellery segment.
The company hopes demand will recover in the second half of the year
VRG to focus on e-commerce and expand its range of brands
Kraków, 19 April 2021 VRG has come out of the pandemic more powerful: financially stable, more agile, stronger and ready for further growth, says the Group in its just-published annual report. COVID-19 has accelerated many changes at VRG, contributing to the company’s greater stability in the long term. Despite the lockdown of its brick-and-mortar store network instituted twice in the first quarter, VRG had a satisfactory start of the year. It is performing particularly well in the jewellery segment. The company’s management board have announced further investments in customer service in the omni-channel model.
The board's ambition is to improve the 2021 bottom line compared to 2020. “We believe the Polish economy will rebound dynamically as the effect of COVID-19 eases off. From our perspective, further revival of the socio-economic life means demand for clothing and accessories can potentially increase” – says Andrzej Jaworski, VRG’s president of the board. “We hope we can return to business as usual, not disturbed by epidemic restrictions, in the second half of 2021. We will be ready to benefit from that growth,” he adds.
March was good, despite the lockdown
For most of the first quarter of 2021, the VRG Group only sold in the online channel because of two periods of administrative lockdown in shopping malls. After a significant decline in year-on-year sales in January, the Group was able to generate an increase in turnover in February (when both sales channels were working), but importantly also in March.
Despite the progressing regional lockdown and the complete closure of shopping malls from 20 March, the month turned out to be the best in the quarter (with a 40% increase in sales and a 5.7 pp margin growth yoy). The Group managed to successfully launch new collections before the lockdown, which helped stabilize margins throughout the quarter. Sales grew more in the jewellery segment, where retail sales dynamics reached almost 16 percent.
The Group is not slowing down the pace in the online channel. In the first quarter, it accounted for as much as 31.6% of the sales, largely due to previous investments in an online store engine and functionalities, as well as efficient e-commerce logistics.
Priorities for 2021
This year, VRG's board has hopes for year-on-year revenue growth in both the brick-and-mortar and online networks, as well as improved financial performance. The Group will continue to be cautious about costs, looking after liquidity.
VRG will continue to expand in e-commerce. The management board want that channel to have at least a 20% share in sales. “Continued e-commerce sales growth is one of the board's strategic goals for 2021. We are investing in e-store technology infrastructure and processes, consistently approaching the vision of comprehensive customer service under the omni-channel model, for all our brands” declares Ernest Podgórski, PhD, VRG board member responsible for e-commerce.
The Group has announced its capital expenditures in the current year will reach 18 million, with higher expenditures on IT yoy. Among other things, VRG has announced the launch of a mobile sales app for all brands, marketing and promotion expenditures in both channels and the development of online store functionalities. Already in May, e-store customers will be offered deferred payments.
For the first time in VRG's history, the company’s brands have become available on third-party e-commerce platforms. Modivo offers clothing and accessories from Vistula. Deni Cler, on the other hand, is now offered on Zalando. “We think opening up sales to external partners is a natural step in an omni-channel strategy. In this way, we get another channel to reach our customers and a large group of new customers, and thus we increase our coverage and sales market” says Radosław Jakociuk, vice-president of VRG’s management board in charge of operational activity and brand divisions. Jakociuk declares the company is working to launch more brands to those platforms and is open to new partnerships.
New arrivals from the Group’s brands
Across VRG’s brand portfolio, Vistula and Wólczanka are in for the most interesting changes in the coming months. The Group's biggest brand will be developing Vistula Black (its most classic line), Vistula MOVE sports line and Vistula RED, a line characterized by very fashion-conscious styling. As part of portfolio reorganization, the company has decided to discontinue the Lantier brand (its product range to become part of the Vistula BLACK line). In the second half of the year, more items will be added to the women's line (which debuted in the 2020 autumn/winter season).
Most new arrivals will be seen in the product range of Wólczanka, as the brand consistently develops towards total look. The product range, expanded with new products for both men and women (including jeans, tracksuit bottoms, dresses, jackets and t-shirts), will be available in a new format of stores. “Wólczanka stores to open this year will be bigger, so that the customer can look through the brand’s entire range. We also focus on modern and eco-friendly solutions as far as store design is concerned” says Jakociuk. Wólczanka’s first store in the new format is to be opened in the Bonarka shopping mall in Kraków.
2020 from a non-financial perspective
VRG S.A. Capital Group is aware of its impact on the environment and the importance of its operations on present and future generations’ ability to achieve their goals. Along with the annual report summarizing its activities in 2020, VRG - the third largest non-food retail group listed on the Warsaw Stock Exchange - also published a non-financial report.
Despite intensive work to maintain the financial stability of the Capital Group and adapt its activities to the pandemic reality, VRG and its subsidiaries continued the activities written down in its 2020-22 Sustainable Development Strategy. The strategy covers objectives in three main areas: Product, People and Place. The group strives to make its products as safe, environmentally friendly and ethical as possible. It also promotes responsible consumption. It aims to create the best possible workplaces for its team to grow. VRG has set itself the goal of making its network stores as environmentally-friendly as possible, and it wants its activities to have a beneficial impact on the local community. The Group also carries out a number of actions in an effort to meet the UN Sustainable Development Goals.
The annual report summarizing the activity of the VRG Group in 2020 can be found here.
The report with non-financial information is available here: LINK
VRG S.A. (formerly Vistula Group S.A.) has been listed on the Warsaw Stock Exhange since 1993. The VRG S.A. Capital Group specializes in the design and distribution of high-quality fashion collections for men and women and jewellery. It owns very well-known trademarks in five main product lines: Vistula, Bytom, Wólczanka, Deni Cler Milano and W.KRUK. The VRG S.A. Capital Group focuses on brand management, clothing and jewellery design and the development of its own sales network in both of its core segments (clothing and jewellery). Since 2000, VRG S.A.’s strategy has relied on following the House of Brands model and being a distributor in the retail market.
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