Pandora A/s · OMXCOP:PNDORA
Pandora A/s — Pandora A/S Ord — Q4 2020 Earnings Presentation
43 slides from Pandora A/s's earnings presentation, Feb 5, 2021
Slide 1: Fourth Quarter Results 2020
Teleconference presentation 04 February 2021 FOURTH QUARTER RESULTS 2020
Slide 2: Agenda of Today
AGENDA OF TODAY 1. Executive summary 2. Business update incl. Programme NOW 3. Q4 2020 Financials 4. Financial guidance 5. Appendix DISCLAIMER This presentation contains forward-looking statements, which include estimates of financial performance and targets. These statements are not guarantees of f
Slide 3: Continued Brand Momentum Drives Strong Performance
CONTINUED BRAND MOMENTUM DRIVES STRONG PERFORMANCE • COVID-19 creates elevated uncertainty about 2021 Solid execution of Digital initiatives Sell-out growth social distancing battle continue to drive positive in 5 out of 7 plan pays off strong online growth key markets (+104% in Q4) 3 Pandora Q4 202
Slide 4: Programme NOW Nearing Its Conclusion
PROGRAMME NOW NEARING ITS CONCLUSION AND CONTINUE TO IMPROVE THE FOUNDATION OF PANDORA • Later in 2021, Pandora will communicate a new strategy, changing focus from transformation to growth The new operating model Brand momentum Cost reset delivering has proven successful – continues to improve - sa
Slide 5: Agenda of Today
AGENDA OF TODAY 1. Executive summary 2. Business update incl. Programme NOW 3. Q4 2020 Financials 4. Financial guidance 5. Appendix 5 Pandora Q4 2020 - Teleconference presentation
Slide 6: Programme NOW Approaching Completion
PROGRAMME NOW APPROACHING COMPLETION Turnaround objectives Initiatives • Digital spend optimised and increased to reach a targeted audience Data-driven growth • Step-changing data-driven e-mail marketing – material performance improvement both in terms of and personalisation traffic and conversion r
Slide 7: Programme NOW Timeline
PROGRAMME NOW TIMELINE Nov 2018 May 2019 Q4 2019 Q2 2020 Q4 2020 Programme NOW Early initiatives Step-change in like-for- Reorganisation Back to positive initiated unfolding like trajectory completed growth Programme NOW rescoped Diagnosis concluded – Initiatives of Programme Brand relaunch Positive
Slide 8: Maintaining Our Industry-Leading Brand Position
MAINTAINING OUR INDUSTRY-LEADING BRAND POSITION Global Share of Search – Google Global unaided brand awareness Q4 2020 Q4 2020 1/3 of all Google Number 1 in 5 out of searches for branded 7 key markets jewellery globally was for PANDORA #2 in the US • Two closest global competitors both • Number 1 in
Slide 9: Positive Sell-Out Growth in 5 out of 7 Key Markets
POSITIVE SELL-OUT SELL-OUT Q4 Temp. closed stores due to GROWTH IN 5 OUT DEVELOPMENT 2020 COVID-19, %* OF 7 KEY MARKETS US +22% 5% IN Q4 2020 UK +1% 24% Italy -12% 8% (30%)1 • Programme NOW is yielding visible results continuing the positive France 1% 30% trajectory and momentum in Q4 2020 – China i
Slide 10: Social Distancing Battle Plan Proved Successful
SOCIAL DISTANCING BATTLE PLAN PROVED SUCCESSFUL – CERTAIN INITIATIVES TO CONTINUE Increased online Virtual try on Remote shopping capacity Enabled customers to virtually assistant inspect items outside of the Operational effectiveness was Allowed consumers to call in store: using simulated try-on ke
Slide 11: Data-Driven Growth Initiatives Drives Traffic and Conversion
DATA-DRIVEN GROWTH INITIATIVES DRIVES TRAFFIC AND CONVERSION Example | e-mail marketing delivers significant growth rates proving the opportunities within data-driven growth A combination of utilising the Pandora Club data, intensifying the focus and optimising the ways of working, e-mail marketing
Slide 12: Q4 2020 Digital Results
Q4 2020 DIGITAL RESULTS Global median page Online conversion rate Completed the roll out of Click & loading time Collect stores in UK & US in Q4 2.7sec 3.2% 7% (-42% since the start of the year) (+30% YoY) (of online sales in US) 12 Pandora Q4 2020 - Teleconference presentation
Slide 13: Q4 Performance - COVID-19 Lockdowns Blur the Picture
Q4 PERFORMANCE - COVID-19 LOCKDOWNS BLUR THE PICTURE • Sell-out growth in Q4 2020 ended in positive territory Q4 illustrative performance • Sell-out growth was impacted by two opposing COVID-19 factors: 1. Lockdown of stores dragging down revenue 2. A shift in general consumer demand away from trave
Slide 14: Managing Uncertainty as Lockdowns Continue
PREPARING FOR ANOTHER UNCERTAIN QUARTER • Pandora will continue to be socially responsible by creating safe environments for store staff and consumers • Three important trading events, Valentines, Mothers Day in UK and Chinese New Year lies ahead, and are instrumental for a successful Q1 • Pandora w
Slide 15: Cost Savings Run-Rate Target of DKK 1.6B Delivered
COST SAVINGS RUN-RATE TARGET OF DKK 1.6B DELIVERED ANNUAL RUN RATE TARGET SAVINGS ACHIEVED COST CATEGORIES COST INITIATIVES & IMPROVEMENTS BY END 2020 (DKK billion) (RUN RATE END 2020, DKK billion) • Continued incremental savings through optimisation of production Cost of sales of existing assortmen
Slide 16: Agenda of Today
AGENDA OF TODAY 1. Executive summary 2. Business update incl. Programme NOW 3. Q4 2020 Financials 4. Financial guidance 5. Appendix 16 Pandora Q4 2020 - Teleconference presentation
Slide 17: Solid Financial Results Despite Continued Negative COVID-19 Impact
SOLID FINANCIAL RESULTS DESPITE CONTINUED NEGATIVE COVID-19 IMPACT Revenue Sell-out growth incl. Organic growth EBIT margin excluding Free cash flow incl. temporarily closed stores restructuring costs lease payments 7.9 1% 4% 31.8% 3.8 DKK billion (-5% in Q4 2019) (-1% in Q4 2019) (35.3% in Q4 2019)
Slide 18: Back to Positive Growth in Q4 - First Time Since Q4 2017
BACK TO POSITIVE GROWTH IN Q4 – Commentary Network expansion has a 1pp negative impact FIRST TIME SINCE Q4 2017 • due to net 80 store closures • Sell-in to Wholesale partners was boosted by Organic growth supported by phasing of sell-in and shift in channel mix the phasing from Q3 to Q4 (equivalent
Slide 19: Strong EBIT Margin in a Difficult Environment
STRONG EBIT MARGIN IN A DIFFICULT Commentary Adverse foreign exchange development ENVIRONMENT • impacted the EBIT margin by -1pp driven by depreciation of the USD and GBP against the Danish krone, partly offset by a positive EBIT margin at strong level despite COVID-19 headwind impact from weakening
Slide 20: Continued Strong Free Cash Flow in Q4
CONTINUED STRONG FREE CASH FLOW IN Q4 Commentary Strong free cash flow • Strong free cash flow again in Q4 2020 closing the quarter better than Q4 2019, coming from Free cash flow increased from last year and leverage at low end of policy range a continued solid development in operating working capi
Slide 21: Agenda of Today
AGENDA OF TODAY 1. Executive summary 2. Business update incl. Programme NOW 3. Q4 2020 Financials 4. Financial guidance 5. Appendix 21 Pandora Q4 2020 - Teleconference presentation
Slide 22: Official 2021 Guidance
OFFICIAL 2021 GUIDANCE Including impact from COVID-19 STABILISING THE TOP-LINE: ORGANIC REVENUE • In 2021, Pandora expects to reach an important GROWTH milestone: returning to top-line growth after three years of decline Above 8% (Above -3% vs 2019) • In the absence of COVID-19 impact, Pandora would
Slide 23: Full Year 2021 Organic Growth Guidance Bridge
FULL YEAR 2021 ORGANIC GROWTH GUIDANCE BRIDGE GUIDANCE 2021 vs 2020 ASSUMPTIONS 2021 >14% Above 14% ~-6% Above 8% • The guidance is based on the assumption that ~0% approximately 25% of the stores will be temporarily closed during the first half of 2021 and that organic growth will be negatively imp
Slide 24: Full Year 2021 EBIT Margin Guidance Bridge
FULL YEAR 2021 EBIT MARGIN GUIDANCE BRIDGE EBIT MARGIN GUIDANCE 2021 %-points approximations • As illustrated on the left there is significant positive operating leverage in the business model 2021 expectations before COVID-19 impact • In the EBIT margin guidance this is not directly ~5.5% visible d
Slide 25: Cash Distribution Is Suspended Due to Uncertainty Around COVID-19
CASH DISTRIBUTION IS SUSPENDED DUE TO UNCERTAINTY AROUND COVID-19 Ending 2020 with solid financials • Pandora continues to be highly cash generative and has ample liquidity to initiate cash Ample liquidity NIBD to EBITDA ratio distribution to shareholders • By the end of 2020, financial leverage was
Slide 26: Exciting Product Line-up for Key Trading Events in Q1 2021
EXCITING PRODUCT LINE-UP FOR KEY TRADING EVENTS IN Q1 2021 January 2021 February 2021 March 2021 26 Pandora Q4 2020 - Teleconference presentation
Slide 27: Closing Remarks
CLOSING REMARKS Material improvement in Pandora is making Positive underlying Cash distribution to be Q4 – positive growth preparations for the growth in 2021 excluding resumed once COVID-19 despite COVID-19 transition from COVID-19 is under control lockdowns transformation to growth 27 Pandora Q4 2
Slide 28: Q&A
Q&A 28 Pandora Q4 2020 - Teleconference presentation
Slide 29: Appendix
APPENDIX 29 Pandora Q4 2020 - Teleconference presentation
Slide 30: Pandora Consumers Are Across Generations
PANDORA CONSUMERS ARE ACROSS GENERATIONS Age distribution of our consumers who have purchased Pandora within the last 12 months 18 65 31% 25% 25% 19% 18-24 25-34 35-44 45-65* Source: Pandora Brand Tracker 2020 (n=2508) Note: Markets include IT, ES, FR, UK, DE, RU, CA, CN, AU *Age range stops at 54 i
Slide 31: Pandora's Online Business & Presence
PANDORA’S ONLINE BUSINESS & PRESENCE Online store development Online platforms DKK million Online store % of Group Revenue Online store revenue % Pandora online stores available in 20 markets 2,600 55 across all regions, incl. China (own and Tmall 2,400 50 52% distribution), Australia, Italy, the UK
Slide 32: Revenue Development by Channel and by Product Category
REVENUE DEVELOPMENT BY CHANNEL AND BY PRODUCT CATEGORY Channel development Product category development Growth, Q4 2020 Growth, FY 2020 Growth, Q4 2020 Growth, FY 2020 Q4/Q4, share of FY/FY, share of Q4/Q4, share of FY/FY, share of DKK million Q4 2020 LC revenue FY 2020 LC revenue DKK million Q4 202
Slide 33: Store Network Development
STORE NETWORK DEVELOPMENT Net openings Number of points of sale Q4 2020 Q4 2020 vs Q3 2020 Q4 2020 vs Q4 2019 Concept stores 2,690 1 -80 - of which Pandora owned 1,382 3 -15 - of which franchise owned 797 -12 -59 - of which third-party distribution 511 10 -6 Other points of sale 4,402 -61 -255 - of
Slide 34: Key Markets Revenue and Sell-Out Growth Overview
KEY MARKETS REVENUE AND SELL-OUT GROWTH OVERVIEW Sell-out growth Share of Sell-out growth Share of Organic Growth incl. temporarily revenue, Organic Growth incl. temporarily revenue, DKK million Q4 2020 Q4/Q4 closed stores Q4 2020 FY 2020 FY/FY closed stores FY 2020 UK 1,345 9% 1% 17% 2,960 6% -2% 1
Slide 35: Concept Stores per Market
CONCEPT STORES PER MARKET Growth Growth Growth O&O stores Growth O&O stores Number of concept stores Number of concept stores Number of concept stores Q4 2020 Q4 2020 Number of O&O Number of O&O Number of O&O Q4 2020 Q4 2020 Q4 2020 Q3 2020 Q4 2019 /Q3 2020 /Q4 2019 Q4 2020 Q3 2020 Q4 2019 /Q3 2020
Slide 36: Profitability Development
PROFITABILITY DEVELOPMENT Q4 2020 Q4 2020 excl. DKK million Q4 2020 reported Restructuring costs restructuring costs Q4 2019 reported Revenue 7,891 - 7,891 7,956 Cost of sales -1,941 -21 -1,920 -1,924 Gross profit 5,950 -21 5,971 6,032 Gross margin 75.4% - 75.7% 75.8% Operating expenses (incl. D&A)
Slide 37: Working Capital and Cash Management
WORKING CAPITAL AND CASH MANAGEMENT DKK million Q4 2020 Q3 2020 Q2 2020 Q1 2020 Q4 2019 Inventory 1,949 2,619 2,250 2,155 2,137 - Share of revenue (last 12 months) 10.3% 13.7% 11.6% 10.1% 9.8% Trade receivables 870 607 602 1,081 1,643 - Share of revenue (last 12 months) 4.6% 3.2% 3.1% 5.1% 7.5% Trad
Slide 38: Hedging Policy and Raw Materials Share of Production Costs
HEDGING POLICY AND RAW MATERIALS SHARE OF PRODUCTION COSTS Commodity hedging policy is to hedge Raw material share of cost of goods sold around 70% of future 12 months use in production For illustrative purposes Other Other raw materials Gold Silver Hedged Realised 100% 70% to 100% 51% 58% 59% 54% 7
Slide 39: Overview of the Global Jewellery Market
OVERVIEW OF THE GLOBAL JEWELLERY MARKET Fine jewellery market 2020-2024 Jewellery market development 10 largest jewellery markets Jewellery eCOM development 10 years, EUR billion 2020, EUR million EUR billion Costume Jewellery Fine Jewellery E-commerce COVID- China 78,324 CAGR DEVELOPMENT CAGR USA 5
Slide 40: Sustainability
SUSTAINABILITY We believe high-quality jewellery, superior business performance and Climate and As the world's largest jewellery maker, we are determined to reduce our climate footprint and high ethical standards go hand in hand, and we craft our jewellery with environment help set an example for th
Slide 41: Sustainable Products
SUSTAINABLE PRODUCTS WORKPLACE AND SOCIETY From 60%1 recycled in Partnering with UNICEF to 99.8% 2020 to 100% in 2025 empower young people of all stones are By 2025, 100% of products will Pandora and UNICEF have man-made be made from recycled silver and gold launched a global partnership to support
Slide 42: Investor Relations Contact Details
INVESTOR RELATIONS CONTACT DETAILS Investor Relations team Share information ADR information Trading symbol PNDORA ADR trading symbol PANDY John Bäckman Identification Sponsored level 1 VP, Investor Relations, Tax & Treasury DK0060252690 Programme type number/ISIN programme (J.P. Morgan) +45 5356 69
Slide 43: Pandora Q4 2020 - Teleconference presentation
Pandora Q4 2020 - Teleconference presentation