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    PNDORA   DK0060252690

PANDORA A/S

(PNDORA)
  Report
Real-time Estimate Quote. Real-time Estimate Cboe Europe - 05/06 03:16:16 am
749.4 DKK   +0.86%
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Pandora A/S : Q1 2021 Interim Report Company Announcement No_621

05/04/2021 | 04:43am EDT

INTERIM FINANCIAL REPORT

Q1 2O21

4 May 2021 | Company Announcement No. 621

Havneholmen 17-19 | DK-1561 Copenhagen V | Denmark | www.pandoragroup.com | Company reg. no.: 2850 5116

CONTENTS

Our equity story

2

HIGHLIGHTS

  1. Executive Summary
  2. Financial Highlights
  3. New Strategy

6

BUSINESS UPDATE

  1. Business Update
  2. Revenue Review

11 Profitability

  1. Cash Flow & Balance Sheet
  2. Financial Guidance
  1. Sustainability
  2. Other Events
  3. Contact

20

FINANCIAL STATEMENTS

  1. Financial Statements
  1. Accounting Notes
  1. Disclaimer

Pandora is a cross-generational brand with unmatched recognition that gives a voice to people's loves. Our jewellery is crafted and hand-finished to the highest ethical and environmental standards at our state-of-the-art crafting facilities in Thailand and made to inspire women to collect, create and combine genuine jewellery at affordable prices.

Pandora's strategy, Phoenix, focuses on delivering sustainable and profitable revenue growth building on the vast untapped opportunities within our existing core business. A strong cash generation and an attractive cash return will remain.

EXECUTIVE SUMMARY

Pandora embarks on new growth strategy

  • Strong Q1. Guidance for 2021 upgraded

Highlights

  • Pandora had a strong start to 2021. Despite 30% of the stores being closed in Q1 due to COVID-19, organic growth was -3% vs Q1 2019 where there was no COVID-19 impact (+13% vs Q1 2020)
  • Online growth was 136% in Q1 2021 vs last year and more than 200% vs 2019
  • Stimulus packages in US fuelled consumer demand
  • China performance continues to be weak, albeit in line with expectations, and remains a strategic priority
  • EBIT margin increased from 15.3% in Q1 2020 to 20.1% in Q1 2021, driven by operating leverage
  • Based on the strong performance in Q1 2021, the financial guidance for 2021 is raised
  • After two years of turnaround, Programme NOW has been completed. The key objectives of stabilising the topline, increase brand relevance and brand access and reduce cost have been achieved
  • The headlines of a new strategy is launched today. The strategy focuses on delivering sustainable and profitable revenue growth building on the vast untapped opportunities within our existing core business
  • Low financial leverage and strong liquidity position. Pandora resumes cash distribution to the shareholders. DKK 1 billion to be distributed in Q2 2021

To provide a cleaner view on the performance, Pandora is providing supplementary growth KPI's vs 2019, where there was no COVID-19 impact. Sell-out growth vs Q1 2019 was -5% in spite of 30% of the stores being temporarily closed during Q1 2021. Revenue was driven by continued strong growth in the US as well as sustained online performance. US delivered 52% sell-out growth vs. Q1 2019, with stimulus packages fuelling strong consumer demand.

Based on the strong start to 2021, the financial guidance for 2021 is upgraded to organic growth "above 12%" (previously "above 8%") and EBIT margin "above 22%" (previously "above 21%").

Alexander Lacik, President and CEO of Pandora, says:

"We have had a good start to 2021, not least considering that many of our stores have been closed. Performance in the US and online continues to be strong, and we keep investing in building brand desirability, digital capabilities and operational excellence. COVID-19 obviously remains a challenge and our priority is the safety and wellbeing of our employees and consumers. During the last two years, Programme NOW has significantly improved Pandora's foundation and I am pleased to say the turnaround is now behind us. Today, we can turn the page on the next chapter for Pandora and announce our new strategy, moving us from turnaround to sustainable growth."

Financial overview (excl. Programme NOW restructuring costs in 2020)

Q1 2021

Q1 2020

FY 2020

Organic growth, %

13%

-14%

-11%

Sell-out growth incl. temporarily closed stores, %

21%

-17%

-12%

Sell-out growth incl. temporarily closed stores, % vs 2019

-5%

n/a

n/a

Revenue, DKK million

4,500

4,172

19,009

Gross margin, %

76.3%

77.4%

76.5%

EBIT margin, %

20.1%

15.3%

20.4%

Executive

Financial

New

Business

Revenue

Profitability

Cash Flow &

Financial

Sustainability

Other events

Financial

Accounting

summary

highlights

strategy

update

review

Balance sheet

guidance

& Contact

statements

notes

4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page 2 | 33

FINANCIAL HIGHLIGHTS

DKK million

Q1 2021

Q1 2020

FY 2020

FY 2021 guidance

Key financial highlights

Organic growth, %

13%

-14%

-11%

"Above 12%"

Organic growth, % vs 20195

-3%

n/a

n/a

Sell-out growth incl. temporarily closed stores, %

21%

-17%

-12%

Sell-out growth incl. temporarily closed stores, %, vs 20195

-5%

n/a

n/a

Gross margin1, %

76.3%

77.4%

76.5%

EBIT margin1, %

20.1%

15.3%

20.4%

"Above 22%"

Consolidated income statement (reported)

Revenue

4,500

4,172

19,009

Earnings before interest, tax, depreciation and amortisation (EBITDA)

1,416

733

4,999

Operating profit (EBIT)

903

204

2,684

Net financials

-92

-234

-190

Net profit for the period

628

-24

1,938

Financial ratios

Revenue growth DKK, %

8%

-13%

-13%

Revenue growth, local currency, %

13%

-14%

-11%

Gross margin (reported), %

76.3%

75.4%

75.6%

EBITDA margin (reported), %

31.5%

17.6%

26.3%

EBIT margin (reported), %

20.1%

4.9%

14.1%

Effective tax rate, %

22.5%

22.5%

22.3%

Equity ratio, %

41%

19%

37%

NIBD to EBITDA excl. restructuring costs, x

0.6

1.3

0.5

Return on invested capital (ROIC), %

29%

22%

25%

Cash conversion incl. lease payments, %

-65%

-134%

183%

Net working capital, % of last 12 months revenue

-0.4%

0.0%

-7.6%

Stock ratios

Total pay-out ratio (incl. share buyback) 2, %

-

n/a

65%

Dividend per share, DKK3

-

-

-

Quarterly dividend per share, DKK4

-

-

-

Earnings per share, basic, DKK

6.3

-0.3

20.0

Earnings per share, diluted, DKK

6.3

-0.3

19.9

Consolidated balance sheet

Total assets

19,211

19,529

19,984

Invested capital

11,675

13,810

10,540

Net working capital

-76

10

-1,447

Net interest-bearing debt (NIBD)

3,735

10,178

3,151

Equity

7,940

3,632

7,389

Consolidated statement of cash flow

Cash flow from operating activities

-316

55

5,975

Capital expenditure - total

88

129

491

Capital expenditure - property, plant and equipment

35

94

369

Free cash flow incl. lease payments

-586

-272

4,908

12020 numbers are excluding Programme NOW restructuring costs.

  1. Excluding sale of Treasury shares amounting to DKK 1.8 billion in Q2 2020.
  2. Proposed dividend per share for the year.
  3. Paid quarterly dividend per share for the period.
  4. Revenue performance compared with 2020 is heavily distorted by COVID-19 impacts, as both years are impacted by store closures, making performance difficult to interpret. For this reason, the performance vs 2020 need to be interpreted with care and Pandora has therefore added two supplementary growth KPI's vs 2019 to provide a cleaner view on the performance: Organic growth vs 2019 and Sell-out growth vs 2019.

Pandora has removed the Total like-for-like KPI from the financial overview and instead included it in the Excel appendix uploaded to the investor website. Currently, the Total like-for-like provide little insights to the performance of Pandora, as the KPI do not take store closures into account. Pandora has replaced the KPI with "Sell-out growth incl. temporarily closed stores" and will continue with this until store closures no longer impact Total like-for-like.

Executive

Financial

New

Business

Revenue

Profitability

Cash Flow &

Financial

Sustainability

Other events

Financial

Accounting

summary

highlights

strategy

update

review

Balance sheet

guidance

& Contact

statements

notes

4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page 3 | 33

NEW STRATEGY

Phoenix: Pandora embarks on new growth strategy

Introduction

Today, we provide a high-level overview of the key components of our new growth strategy, Phoenix. The details of the strategic pillars will be revealed at a Capital Markets Day in September.

The headlines of the new strategy are announced today for two reasons. First of all, Pandora wants to provide an overall understanding of the key drivers of the business going forward, following the completion of Programme NOW. And secondly, Pandora is ready to announce, today, the first, significant initiative under the new strategyPandora Brilliance - sustainably lab-created diamonds.

Background

Since its foundation, Pandora has grown rapidly and in a short time build the world's largest jewellery brand. The company sells three pieces of jewellery every second and has the largest network in the industry with almost 7,000 points of sale and a strong online business.

For a couple of years, Pandora did not do enough to stay relevant and keep its place in the heart of consumers. And as a result, the brand lost some of its appeal. That is why Pandora launched Programme NOW in 2018 - a turnaround programme to strengthen the relevance and reach of the brand, optimise costs, and improve operational excellence across the company. Over the past two years, Pandora has renewed every part of the consumer experience and is now offering more impactful products and marketing concepts for consumers across markets.

The turnaround is now complete and a new growth journey can begin. Pandora's new strategy is called Phoenix. It

builds on Pandora's unique brand promise and the significant potential to attract new consumers to the brand. Like

the mythological bird Phoenix, Pandora has transformed and is rising for a new chapter of growth.

The strategy launched today is focused on the vast opportunities to grow within - or close to - Pandora's existing core business. In the longer term, Pandora also sees opportunities to extend the unique advantages which Pandora possesses - manufacturing capabilities, global distribution network and a well-known brand - into other categories (including M&A).

THE FOUR GROWTH PILLARS

The new strategy has four pillars aiming at delivering sustainable and profitable revenue growth: Brand, Design, Personalisation and Core Markets.

Brand: Fuel our brand desirability and reach

Pandora is a global affordable luxury brand that enjoys a high level of consumer awareness, strong brand equity, and a loyal customer base. To ensure Pandora also wins the hearts of the new generations, the company will continue efforts to increase brand desirability by creating an iconic visual world with authentic and culturally relevant communication. Pandora will drive holistic communication that reaches across all the consumer touchpoints.

Design: Create customer-centric innovation

Pandora sees significant potential to both grow its biggest platform, Moments, and launch new complementary platforms around our core proposition of collectability and self-expression. Designs will be crafted by fusing robust consumer insights and strong creative expression. To ensure new product platforms become successful and add incremental volume, Pandora will use these insights to design for different needs and target groups.

Executive

Financial

New

Business

Revenue

Profitability

Cash Flow &

Financial

Sustainability

Other events

Financial

Accounting

summary

highlights

strategy

update

review

Balance sheet

guidance

& Contact

statements

notes

4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page 4 | 33

Disclaimer

Pandora A/S published this content on 04 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 May 2021 08:42:06 UTC.


© Publicnow 2021
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Financials
Sales 2021 21 872 M 3 529 M 3 529 M
Net income 2021 3 837 M 619 M 619 M
Net Debt 2021 1 736 M 280 M 280 M
P/E ratio 2021 18,8x
Yield 2021 2,10%
Capitalization 74 060 M 11 951 M 11 951 M
EV / Sales 2021 3,47x
EV / Sales 2022 3,12x
Nbr of Employees 26 000
Free-Float 94,9%
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 13
Average target price 728,33 DKK
Last Close Price 743,00 DKK
Spread / Highest target 21,1%
Spread / Average Target -1,97%
Spread / Lowest Target -46,2%
EPS Revisions
Managers and Directors
NameTitle
Alexander Lacik President & Chief Executive Officer
Anders Boyer-Søgaard Chief Financial Officer & Executive Vice President
Peter Arne Ruzicka Chairman
David Walmsley Chief Digital & Technology Officer
Thomas Touborg Senior Vice President-Group Operations
Sector and Competitors