Pandora A/s · OMXCOP:PNDORA
Pandora A/s — Pandora A/S Ord — Q2 2022 Earnings Presentation
41 slides from Pandora A/s's earnings presentation, Aug 16, 2022
Slide 1: Second Quarter Results 2022
SECOND QUARTER RESULTS 2022 16 AUGUST 2022
Slide 2: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. PHOENIX UPDATE 3. Q2 2022 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 future performance and
Slide 3: Record Revenue in Q2
RECORD REVENUE IN Q2 $ Sustainable growth Execution of Phoenix Profitable growth progressing well 17% vs Q2 2019 Strong EBIT margin ending – China dragging down 7pp Initiatives like network at 22.1% in Q2 2022 expansion, new store concept development and introducing new customer loyalty program are
Slide 4: 2022 Guidance
2022 GUIDANCE ORGANIC EBIT GROWTH MARGIN 4-6% (Unchanged) 25.0-25.5% (Unchanged) For assumptions behind the guidance, please refer to slide 20-21 4 Pandora Q2 2022 - Investor presentation 4 Pandora Q2 2022 - Investor presentation
Slide 5: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. PHOENIX UPDATE 3. Q2 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 5 Pandora Q2 2022 - Investor presentation
Slide 6: Phoenix Strategy Execution Is Progressing Well
PHOENIX STRATEGY EXECUTION IS PROGRESSING WELL GROWTH PILLARS INITIATIVES Most recognisable jewellery brand in the world • Brand strength intact BRAND • Investments in the brand remain and will continue Drive higher brand penetration • Pandora Moments continues to grow Drive the core (Moments platfo
Slide 7: Create New Platforms Next to Moments
PANDORA PLATFORMS Growth pillars DESIGN CREATE NEW PLATFORMS NEXT TO MOMENTS Other platforms 2020 Strategic reorganisation in place supporting the GBU structure Moments 2021 Test launched Diamonds by Pandora and relaunched Pandora ME 2022 Sequential global roll-out of Diamonds by Pandora starting wi
Slide 8: Driving the Core: Moments Continue to Deliver
DRIVING THE CORE Growth pillars DESIGN MOMENTS CONTINUE TO DELIVER 75% Share of business in Q2 2022 4% Sell-out growth vs Q2 2021 8 Pandora Q2 2022 - Investor presentation
Slide 9: Fuel with More Diamonds by Pandora
FUEL WITH MORE Growth pillars DESIGN DIAMONDS BY PANDORA “Diamonds are not just forever, they are for everyone.” Tapping into the DKK ~600 billion global diamond market First collection with 100% recycled silver & gold, and “With original, meaningful design lab-created diamonds combined with sustain
Slide 10: Growing Core Markets: Solid Growth in Europe
GROWING CORE MARKETS Growth pillars CORE MARKETS SOLID GROWTH IN EUROPE • US Down vs 2021 as stimulus checks Organic growth implemented last year supported Q2 2021 closed stores 2021 demand. Organic growth vs vs due to continues at strong levels vs 2019 Q2 2022 2021 2019 COVID-19* • European key mar
Slide 11: Rest of Pandora Opportunities for Growth
REST OF PANDORA Growth pillars CORE MARKETS OPPORTUNITIES FOR GROWTH Rest of Pandora organic growth of +26% in Q2 2022 representing 28% of total revenue. The biggest markets are: Spain Mexico Canada DKK 240 million DKK 185 million DKK 165 million revenue in Q2 2022 revenue in Q2 2022 revenue in Q2 2
Slide 12: Network Development: Significant Opportunity Ahead
NETWORK DEVELOPMENT Growth pillars CORE MARKETS SIGNIFICANT OPPORTUNITY AHEAD DKK 190 million incremental revenue in Q2 2022 from network development: NETWORK EXPANSION FORWARD INTEGRATION INCL. TAKEOVERS DKK 45 million in Q2 2022 DKK 145 million in Q2 2022 ** • Roughly 600 locations have been ident
Slide 13: New Store Concept Well Underway
NEW STORE CONCEPT WELL UNDERWAY Growth pillars PERSONALISATION - TESTING IN FIVE KEY MARKETS 12 Sell-out growth +40% stores opened is slightly higher dwell time at perimeter walls across five key markets* vs comparable stores vs comparable stores • 35 more stores to be added in the second half of 20
Slide 14: Loyalty Programme Off to a Strong Start
LOYALTY PROGRAMME OFF TO A STRONG Growth pillars PERSONALISATION START – MORE MARKETS TO COME IN 2023 • Strengthens consumers’ emotional connection to the Pandora brand • Drives repeat purchase and encourage collectability • Captures consumer data for more effective and relevant targeting • Further
Slide 15: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. PHOENIX UPDATE 3. Q2 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 15 Pandora Q2 2022 - Investor presentation
Slide 16: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS GROWTH JOURNEY CONTINUES - RECORD REVENUE COMMENTARY TOPLINE Q2 2022 Q2 2021 • Performance in Q2 was strong, and in line Revenue, DKK million 5,655 5,155 with the guidance, delivering yet another record-breaking quarterly revenue Organic growth 3% 84% Sell-out growth 2% 62%
Slide 17: Revenue Performance
REVENUE PERFORMANCE GROWTH CONTINUES – NETWORK EXPANSION STARTS CONTRIBUTING COMMENTARY • Reported revenue growth of 10% led to another Q2 2022 GROWTH COMPOSITION VS Q2 2021 record high quarterly revenue %-p growth (approximately) • Compared to 2019, organic growth continues the DKK million strong m
Slide 18: EBIT Margin
EBIT MARGIN STRONG PROFITABILITY COMMENTARY • Strong EBIT margin – in line with guidance %-p development (approximately) Underlying EBIT margin development • Underlying EBIT margin expansion vs Q2 25.2% 2021driven by operating leverage and further supported by tailwinds from gross -1.4% margin effic
Slide 19: Agenda of Today
AGENDA OF TODAY 1. EXECUTIVE SUMMARY 2. BUSINESS UPDATE 3. Q2 2022 FINANCIALS 4. FINANCIAL GUIDANCE 5. APPENDIX 19 Pandora Q2 2022 - Investor presentation
Slide 20: 2022 Organic Growth Guidance
2022 ORGANIC GROWTH GUIDANCE UNCHANGED GUIDANCE OF “4-6%” ORGANIC GROWTH IN 2022 GUIDANCE ASSUMPTIONS • Q2 2022 ended in line with expectations Organic growth guidance DKK billion %-points approximations 5.7% 25.9-26.4 • The overall guidance is unchanged, while we now see 2% growth from network expa
Slide 21: 2022 EBIT Margin Guidance
2022 EBIT MARGIN GUIDANCE EBIT MARGIN GUIDANCE UNCHANGED AT “25-25.5%” – UP FROM 25.0% IN 2021 EBIT MARGIN GUIDANCE 2022 OTHER GUIDANCE PARAMETERS 25.0%-25.5% • CAPEX: for the year is unchanged and expected at around 6% share of revenue • Store network: • Pandora maintains the guidance • Concept sto
Slide 22: Rest of Year – Implied Guidance
REST OF YEAR – IMPLIED GUIDANCE Implied organic growth vs 2021 ORGANIC GROWTH • The implied rest of year organic growth of - 1% to +2% corresponds to 12-16% vs 2019 11% • Like H2 2021, organic growth vs 2019 will expectedly be lower in Q3 2022 and pick up 4-6% in Q4 2022 -1% to 2% H1 actual Implied
Slide 23: Closing Remarks
CLOSING REMARKS
Slide 24: Closing Remarks
CLOSING REMARKS Execution of Phoenix Diamonds by Pandora - 17% organic growth Full year guidance of continues at high speed tapping into a new part of vs 2019 despite 4-6% organic growth and the jewellery market 7pp drag from China 25-25.5% EBIT margin (unchanged) 24 Pandora Q2 2022 - Investor prese
Slide 25: Q&A
Q&A 25 Pandora Q2 2022 - Investor presentation
Slide 26: Appendix
APPENDIX 26 Pandora Q2 2022 - Investor presentation
Slide 27: 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 28: Pandora Consumer: Female Funnel by Age Group
PANDORA CONSUMER PANDORA FEMALE FUNNEL SPLIT BY AGE GROUPS Base: All women FEMALE OVERALL 18-24 YO 25-40 YO 41-64 YO Unaided awareness 33 38 34 32 Aided awareness 84 85 83 83 CR3 25 32 28 20 Consideration 21 27 23 17 Set1 CR4 58 57 59 58 Purchase2 12 16 14 10 Ownership 30 41 33 26 N=31,016 N=4,128 N
Slide 29: Revenue Development by Global Business Unit
REVENUE DEVELOPMENT BY GLOBAL BUSINESS UNIT Moments incl. Collabs 4,223 3,722 4% 75% - Moments 3,680 3,376 1% 65% - Collabs 543 346 34% 10% Style 1,432 1,433 -4% 25% - Timeless 895 886 -7% 16% - Signature 368 447 -13% 7% - ME 159 82 72% 3% - Diamonds by Pandora 10 18 -22% 0% Total revenue 5,655 5,15
Slide 30: Revenue Development by Channel
REVENUE DEVELOPMENT BY CHANNEL Pandora owned1 retail 4,101 3,399 10% 3% 73% - of which concept stores 2,724 2,027 21% 48% - of which online stores 1,098 1,222 -16% 19% - of which other points of sale 279 150 75% 5% Wholesale 1,406 1,599 -13% 1% 25% - of which concept stores 767 912 -13% 14% - of whi
Slide 31: Key Markets Revenue and Sell-out Growth Overview
KEY MARKETS REVENUE AND SELL-OUT GROWTH OVERVIEW US 1,841 1,771 -12% -10% 33% China 179 390 -58% -62% 3% UK 665 569 15% 7% 12% Italy 595 515 15% 16% 11% Australia 246 226 3% 3% 4% France 237 210 13% 16% 4% Germany 285 241 18% 42% 5% Total top-7 markets 4,048 3,922 -5% -5% 72% Rest of Pandora 1,607 1
Slide 32: Store Network Development
STORE NETWORK DEVELOPMENT Other points of sale (retail) 382 357 257 25 125 Other points of sale (wholesale) 3,141 3,168 3,274 -27 -133 Other points of sale (third-party) 478 481 483 -3 -5 Other points of sale, total 4,001 4,006 4,014 -5 -13 US 394 391 389 3 5 227 3 48 China 219 209 216 10 3 201 10 -
Slide 33: Income Statement
Revenue 5,655 5,155 11,344 9,655 Cost of sales -1,337 -1,180 -2,702 -2,244 Gross profit 4,318 3,975 8,642 7,410 Sales, distribution and marketing expenses -2,615 -2,186 -5,120 -4,234 Administrative expenses -454 -488 -964 -972 Operating profit 1,249 1,301 2,559 2,204 Finance income 132 65 221 82 Fin
Slide 34: Working Capital and Cash Management
WORKING CAPITAL AND CASH MANAGEMENT DKK million Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021 Inventory 4,239 3,534 2,991 3,197 2,557 - Share of revenue (last 12 months) 16.9% 14.4% 12.8% 14.4% 11.8% Trade receivables 663 790 1,009 801 691 - Share of revenue (last 12 months) 2.6% 3.2% 4.3% 3.6% 3.2% Trade
Slide 35: Hedging Policy and Raw Materials Share of Production Costs
HEDGING POLICY AND RAW MATERIALS SHARE OF PRODUCTION COSTS Commodity hedging policy is to hedge at least an average Raw material share of cost of goods sold of 70% of future 12 months use in production For illustrative purposes Other Other raw materials Gold Silver Hedged Realised 100% 70% to 100% 5
Slide 36: Sustainability at Pandora: Low-Carbon Business
SUSTAINABILITY AT PANDORA LOW-CARBON BUSINESS As the world's largest jewellery maker, we are We believe high-quality jewellery, superior determined to reduce our climate footprint and business performance and high ethical help set an example for the wider industry. standards go hand in hand, and we
Slide 37: Circular Innovation; Inclusive, Diverse & Fair Culture
CIRCULAR INNOVATION INCLUSIVE, DIVERSE & we strive to ensure that our use of raw materials in both the crafting and sales of our jewellery has the FAIR CULTURE lowest impact possible on the environment, We want everyone – from our customers, employees people and communities. and suppliers to our bus
Slide 38: Key ESG Ratings | Pandora Performance
KEY ESG RATINGS | PANDORA PERFORMANCE RATING PERFORMANCE Methodology note, low score = good 12/100 – Pandora ranked 10th (out of 177 companies) in Textiles & Apparel sector Methodology note, AAA = top score Top “AAA” rating – 6th straight year Methodology note, A = top score C rating – Top 20% of In
Slide 39: 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 40: 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 41: C) PANDORA ‘ri
Ad NY C) PANDORA ‘ri