Pandora A/s · OMXCOP:PNDORA
Pandora A/s — Pandora A/S Ord — Q1 2023 Earnings Presentation
42 slides from Pandora A/s's earnings presentation, May 7, 2023
Slide 1: First Quarter Results 2023
0 3 M A Y 2 0 2 3 F I R S T Q U A R T E R R E S U L T S 2 0 2 3
Slide 2: Agenda of Today
AGENDA OF TODAY O1 Executive summary O2 Phoenix update O3 Q1 2023 financials O4 Financial guidance O5 Appendix DISCLAIMER This presentation contains forward-looking statements, which include estimates of financial performance and targets. These statements are not guarantees of future performance and
Slide 3: Resilient growth and solid margins
Resilient growth Strong profitability 1% 77.5% Organic growth Gross margin, +1.5pp Y/Y RESILIENT 0% 21.5% EBIT margin, in line GROWTH LFL with expectations AND SOLID Phoenix is delivering Attractive cash profile MARGINS 21% 6.4 LFL for Pandora ME DKK billion in total cash distribution from in Q1 202
Slide 4: CEO comment and financial guidance
”We have started 2023 well with resilient growth and solid margins. Our 2023 investments in lifting the brand are paying off with good performance in our FINANCIAL GUIDANCE Moments base business and strong results from the newer platforms, Timeless and Pandora ME. It’s clear that we are increasingly
Slide 5: Agenda of Today
AGENDA OF TODAY O1 Executive summary O2 Phoenix update O3 Q1 2023 financials O4 Financial guidance O5 Appendix Classification: Pandora Internal
Slide 6: Executing on Phoenix
EXECUTING ON PHOENIX WE GIVE A VOICE TO PEOPLE’S OBJECTIVE LOVES Be the largest and most desirable brand in the affordable jewellery market 6 Pandora Q1 2023 - Investor presentation Classification: Pandora Internal
Slide 7: Prices successfully adjusted
PRICES SUCCESSFULLY ADJUSTED Testing Implementation Next steps • Specialised pricing • Pricing adjusted in • Pandora sees team appointed Q4 2022 further internally in 2022 • Opening price opportunities for • Extensive testing of points protected regular price pricing adjustments in • Overall impact:
Slide 8: Building Moments for the long-term
BUILDING MOMENTS FOR THE LONG-TERM EVOLUTION OF THE ICONIC PANDORA BRACELET Snake chain Bangle Sliding bracelet New iconic Studded Chain bracelet, two decades after the iconic Snake Chain. It sees strong demand and highlights consumer connection with Moments given the unique story-telling propositio
Slide 9: Investments into new platforms showing encouraging results
INVESTMENTS INTO NEW PLATFORMS SHOWING ENCOURAGING RESULTS Pandora Pandora Diamonds ME Timeless by Pandora +21 +11 % LFL % LFL 34 DKK million 9 Pandora Q1 2023 - Investor presentation Classification: Pandora Internal
Slide 10: Four straight quarters of resilient LFL despite macro headwinds
FOUR STRAIGHT QUARTERS OF RESILIENT LFL DESPITE MACRO HEADWINDS Resilient growth vs. 2021/2022 despite macro headwind…… 8% Like-for-like Underling performance in Q4 2022 was 6% 0% when adjusting for the fire at the European Distribution Center • Pandora delivered it’s fourth consecutive quarter of 4
Slide 11: Our key markets | US
OUR KEY MARKETS | US • US delivered LFL at -7%, in line with the previous quarter. Performance remains in line with expectations and reflective of the macroeconomic uncertainty • Performance remains on good levels vs. 2019 at +42%, in line with 2022 • Retail channel sees sequential improvement in LF
Slide 12: Our key markets | UK, Italy, France and Germany
OUR KEY MARKETS | UK, ITALY, FRANCE AND GERMANY • Key markets in Europe in aggregate delivered 0% LFL, a sequential improvement, helped by an improvement in most markets • Germany remains very strong at 11% LFL with growth across most platforms • UK delivered another resilient quarter at 1% LFL desp
Slide 13: Our key markets | Asia Pacific and Rest of Pandora
OUR KEY MARKETS | ASIA PACIFIC AND REST OF PANDORA • Australia declined to -5% LFL impacted by low consumer confidence (26)% • China saw a clear pick-up through the quarter as the market reopened. LFL has been positive since late March, albeit off easier comparatives. LFL for Q1 ended at -26% • Rest
Slide 14: Preparing for brand re-launch in China
PREPARING FOR BRAND RE-LAUNCH IN CHINA Like-for-like in China in 2023 • Traffic trends have continued to improve Market re-opens Improvement through March Back to positive LFL in April although remain depressed vs. normalised 2019 • First step in the China Brand re-launch planned for later on in the
Slide 15: Network development shows great potential ahead
NETWORK DEVELOPMENT SHOWS POTENTIAL GREAT POTENTIAL AHEAD FUTURE IMPACT 2023 TOTAL 600 STORES 2022 AT DKK 7 MILLION PER STORE EQUALS: +3% 2021 ORGANIC GROWTH CONTRIBUTION DKK 4 BILLION +3% (TARGETED) INCREMENTAL REVENUE ORGANIC GROWTH IDENTIFIED CONTRIBUTION 50-100 DKK 1.5 BILLION 600 BEST 88 CONCEP
Slide 16: Evoke – new store concept debuts in Italy
EVOKE – NEW STORE CONCEPT DEBUTS IN ITALY • Following two years of extensive testing Pandora is moving ahead with its new store concept, Evoke • An important milestone for Pandora which will elevate the brand and ensure greater consumer engagement across all of Pandora’s platforms • Forty Evoke open
Slide 17: Agenda of Today
AGENDA OF TODAY O1 Executive summary O2 Phoenix update O3 Q1 2023 financials O4 Financial guidance O5 Appendix
Slide 18: Key financial highlights
KEY FINANCIAL HIGHLIGHTS GROSS MARGIN KEEPS STRENGTHENING – SUPPORTED BY PRICE INCREASES TOPLINE Q1 2023 Q1 2022 Revenue, DKK million 5,850 5,689 Organic growth, % 1% 21% Like-for-like* 0% 17% FINANCIAL RATIOS Gross margin, % 77.5% 76.0% EBIT margin, % 21.5% 23.0% Cash conversion incl. lease payment
Slide 19: Revenue performance
REVENUE PERFORMANCE RESILIENT REVENUE CONFIRMS BRAND STRENGTH • Pandora delivered 0% LFL growth, the fourth consecutive quarter of Q1 2023 GROWTH COMPOSITION VS Q1 2022 resilient LFL %-p growth (approximately) • Network expansion continues to support profitable growth • Organic growth impacted by -2
Slide 20: EBIT margin
EBIT MARGIN SOLID PROFITBALITY – UNDERLYING DRIVERS REMAIN STRONG • Profitability in line with expectations, helped by continued uptrend in gross margins • As expected, planned investments %-p development (approximately) and phasing of costs offset positive EBIT margin development excl. non-recurrin
Slide 21: Agenda of Today
AGENDA OF TODAY O1 Executive summary O2 Phoenix update O3 Q1 2023 financials O4 Financial guidance O5 Appendix
Slide 22: 2023 organic growth guidance
2023 ORGANIC GROWTH GUIDANCE GUIDANCE UPDATED TO -2% TO +3% GUIDANCE ASSUMPTIONS • Pandora has started the year well, but the economic outlook remains uncertain %-points approximations 1% -1% to 4% • Based hereon, Pandora lift the low 3% end of the guidance from -3% to - 2% -2% to 3% -1% to 0% • The
Slide 23: 2023 EBIT margin guidance
2023 EBIT MARGIN GUIDANCE ANOTHER YEAR OF SOLID PROFITABILITY GUIDANCE ASSUMPTIONS • The EBIT margin guidance for 2023 is unchanged at Around 25% EBIT margin guidance • Temporary and non-recurring costs from 2022 drive a tailwind of %-points approximations 0.8pp 1.1% • The EBIT margin is furthermore
Slide 24: Closing remarks
CLOSING REMARKS Good start to the Making good Well prepared Guidance year despite progress on for a potential updated to -2% macroeconomic major strategic recession with to 3% organic headwinds initiatives the business growth model highly flexible Classification: Pandora Internal
Slide 25: Save the date for our Capital Markets Day
SAVE THE DATE FOR OUR CAPITAL MARKETS DAY ON 5 OCTOBER 2023 IN LONDON More information will follow 25 Pandora Q1 2023 - Investor presentation
Slide 26: Q&A
0 3 M A Y 2 0 2 3 Q&A
Slide 27: Appendix
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Slide 28: Pandora consumer
DIRECTIONAL ONLY PANDORA CONSUMER CUSTOMER GROUPS In % Self-purchasers Female gifters Male gifters Hinted by end-user 100% ~30% Minimum 75% of all ~35% ~35% purchases are ~15% Self-purchasers ~15% Minimum 50% 5-10% ~75% ‘decided’ by women shop more frequently of all gifts are 5-10% hinted (index ~13
Slide 29: Pandora consumer purchase funnel
PANDORA CONSUMER PURCHASE FUNNEL I PANDORA – FEMALE AGE GROUPS Base: All women FEMALE OVERALL 18-24 YO 25-40 YO 41-64 YO Unaided awareness 33 35 33 33 Aided awareness 82 83 81 83 CR3 28 38 33 23 Consideration 23 31 27 19 Set1 CR4 60 59 60 60 Purchase2 14 18 16 11 Ownership 32 39 39 39 N=31,016 N=4,1
Slide 30: Revenue development by global business unit
REVENUE DEVELOPMENT BY GLOBAL BUSINESS UNIT Share of 1 DKK million Q1 2023 Q1 2022 LFL Revenue Moments incl. Collabs 4,470 4,458 -3% 76% - Moments 3,859 3,863 -3% 66% - Collabs 610 595 -4% 10% Style 1,381 1,231 9% 24% - Timeless 949 829 11% 16% - Signature 229 251 -12% 4% - ME 169 142 21% 3% - Diamo
Slide 31: Revenue development by channel
REVENUE DEVELOPMENT BY CHANNEL Organic Share of DKK million Q1 2023 Q1 2022 growth Revenue Pandora owned retail 4,391 3,925 7% 75% - of which concept stores 2,901 2,445 12% 50% - of which online stores 1,144 1,219 -6% 20% - of which other points of sale 346 261 25% 6% Wholesale 1,283 1,567 -15% 22%
Slide 32: Key markets revenue and like-for-like growth overview
KEY MARKETS REVENUE AND LIKE-FOR-LIKE GROWTH OVERVIEW Organic Share of DKK million Q1 2023 Q1 2022 LFL Growth Revenue US 1,716 1,650 -7% -4% 29% China 161 254 -26% -35% 3% UK 809 808 1% 6% 14% Italy 539 586 -5% -8% 9% Australia 220 245 -5% -9% 4% France 243 262 -5% -7% 4% Germany 269 273 11% -2% 5%
Slide 33: Store network development
STORE NETWORK DEVELOPMENT Number of other points of sale Growth Q1 2023 Growth Q1 2023 Q1 2023 Q4 2022 Q1 2022 /Q4 2022 /Q1 2022 Other points of sale (retail) 469 464 357 5 112 Other points of sale (wholesale) 3,177 3,200 3,168 -23 9 Other points of sale (third-party) 318 321 481 -3 -163 Other point
Slide 34: Consolidated income statement
CONSOLIDATED INCOME STATEMENT DKK million Q1 2023 Q1 2022 FY 2022 Revenue 5,850 5,689 26,463 Cost of sales -1,315 -1,365 -6,273 Gross profit 4,536 4,324 20,190 Sales, distribution and marketing expenses -2,718 -2,505 -11,322 Administrative expenses -562 -509 -2,125 Operating profit 1,256 1,310 6,743
Slide 35: Working capital and cash management
WORKING CAPITAL AND CASH MANAGEMENT Share of preceding 12 months’ revenue Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Inventories 16.3% 15.9% 20.1% 16.9% 14.4% Trade receivables 3.2% 4.8% 3.4% 2.6% 3.2% Trade payables -8.2% -11.8% -10.4% -9.5% -10.2% Other net working capital elements -2.4% -4.7% -4.3%
Slide 36: Hedging policy and cost of goods sold break down
HEDGING POLICY AND COST OF GOODS SOLD BREAK DOWN Commodity hedging policy is to hedge at least an average Cost of goods sold break down of 70% of future 12 months use in production For illustrative purposes Other Gold Production labour & overheads Customs & Freight Other raw materials Silver OEM/ODM
Slide 37: Capital structure
CAPITAL STRUCTURE | Continued low leverage in Q1 2023, despite pay out of DKK 2.8 billion in cash distribution to its shareholders CASH PRIORITISATION Q1 2023 RESULTS FINANCIAL STABILITY Credit Rating of BBB (Stable) from S&P 1 Cash to meet leverage and Baa2 (Stable) from Moodys 1.2x Maintain invest
Slide 38: Sustainability ambitions position us as leader
SUSTAINABILITY AMBITIONS POSITION US AS LEADER 38 Pandora Q4 2022 - Investor presentation 1 Gender parity in leadership refers to an equal number (50/50) of men and women in leadership positions from Vice President and up (incl. Board) with +/- 5 percentage points variation.
Slide 39: Sustainability at a glance
SUSTAINABILITY AT A GLANCE A score for transparency and 100% renewable energy and 100% recycled #3 out of 30 performance on climate silver and gold used in our companies in DK on documenting change by CDP. Diamonds by Pandora collection. respect for human rights.* 6% reduction in total greenhouse ga
Slide 40: Investor relations contact details
INVESTOR RELATIONS CONTACT DETAILS Investor Relations team Share information Trading symbol PNDORA Bilal Aziz Identification number/ISIN DK0060252690 VP, Investor Relations & Treasury GICS 25203010 +45 3137 9486 biazi@pandora.net Number of shares 89,000,000 Sector Apparel, Accessories & Luxury Goods
Slide 41: Disclaimer
DISCLAIMER This Company announcement contains forward-looking statements, including, but not limited to, guidance, expectations, strategies, objectives and statements regarding future events or prospects with respect to the Company’s future financial and operating results. Forward-looking statements
Slide 42: C) PANDORA ‘ri
Ad NY C) PANDORA ‘ri