VRG (VRG) Q2 2024 earnings summary

Executive summary

• Group revenues in H1 2024 rose 2.8% YoY to PLN 618.9m, with 2Q24 revenues up 1.6% YoY to PLN 340.8m, driven by jewellery growth; apparel segment revenues declined 2.6% YoY.

• Net profit dropped 40.2% YoY to PLN 30.4m in H1 2024 and 40.8% YoY to PLN 28.2m in 2Q24, mainly due to less favorable FX results and higher SG&A costs.

• Gross profit margin remained stable at 56.3% in 2Q24; apparel margin improved to 60.6% in 2Q24 and 58.2% in H1 2024, jewellery margin at 52.3% in 2Q24 and 52.5% in H1 2024.

• Online sales surged 24.8% YoY in 2Q24 and 24.3% YoY in H1 2024, raising the internet's share of group revenues to 11.8% in 2Q24 and 22.7% of apparel segment revenue.

• Dividend of PLN 0.09/share (PLN 21.1m total) approved, payable December 2024.

Financial highlights

• EBIT in 2Q24 was PLN 40.8m, down 5.6% YoY; EBITDA reached PLN 73.9m in 2Q24 and PLN 110.0m in H1 2024, both nearly flat YoY.

• SG&A costs rose 7.9% YoY to PLN 155.0m in 2Q24; apparel segment posted a net loss of PLN -10.8m in H1 2024.

• Capex in 2Q24 was PLN 12.4m (+14.2% YoY); 2024 capex planned at PLN 50m for both segments.

• Group inventory grew 20.9% YoY in 2Q24; inventory per m2 at PLN 13,303 (+22.3% YoY) in H1 2024.

• Net cash from operating activities was PLN -22.9m in H1 2024; cash at period end PLN 21.5m.

Outlook and guidance

• Focus on revenue and margin growth in both segments, cost control, and network optimization.

• Apparel: new collections, store renovations, marketing automation, and franchise concepts to boost efficiency.

• Jewellery: further premium segment development, e-shop efficiency, expansion in Poland and Hungary.

• Continued omnichannel development and cautious international expansion.

• Dividend policy targets 20–70% payout of consolidated net profit, subject to leverage and liquidity.