Second Quarter Results 2020

TELECONFERENCE - 18 AUGUST 2020

1 Pandora Q2 2020 - Teleconference presentation

Agenda of today

EXECUTIVE SUMMARY

COVID-19 status

Update on Programme NOW

Q2 2020 financial performance

Full year 2020 guidance

DISCLAIMER

This presentation contains forward-looking statements, which include estimates of financial performance and targets. These statements are not

guarantees of future performance and involve certain risks and uncertainties. Therefore, actual future results and trends may differ materially from what

is forecast in this report due to a variety of factors.

2 Pandora Q2 2020 - Teleconference presentation

Encouraging sales recovery since March

- Sell-out growth around -10% Q3 quarter-to-date

Immense online growth of

Media spend increased and

Improvement stalling

retail adjustments made to gain

following new COVID-19

+176% in Q2 2020

early commercial momentum

surges

3 Pandora Q2 2020 - Teleconference presentation

Programme NOW still going strong

- Creating a healthy and sustainable growth company

Implementation of new

Programme NOW updated

operating model -

Good brand momentum

and re-scoped to reflect

Executive Leadership

maintained

the progress

Team in place

4 Pandora Q2 2020 - Teleconference presentation

Agenda of today

Executive summary

COVID-19 STATUS

Update on Programme NOW

Q2 2020 financial performance

Full year 2020 guidance

5 Pandora Q2 2020 - Teleconference presentation

Managing through COVID-19

6 Pandora Q2 2020 - Teleconference presentation

Being socially responsible

  • Creating safe environments for employees and consumers
  • Base pay secured for all store staff when stores are temporarily closed
  • Supporting the UNICEF campaign with donation of USD 1 million
  • Periodically closed the production in Thailand to manage working capital - 75% salary to all employees
  • Reduced salary by 20% for two months for leaders from Vice president level and above

Protecting profitability and cash

  • Immediate cost reductions mainly impacting sales & distribution costs (reducing variable costs, rent management etc.)
  • Media spend reduced when stores were temporarily closed
  • Several actions taken to improve cash flow, including reduction of CAPEX and restructuring costs
  • Healthy liquidity following the debt re-financing and sale of treasury shares in May

Commercial comeback and preparing for the peak Q4 trading season

7 Pandora Q2 2020 - Teleconference presentation

MEDIA SPEND

ONLINE TRADING

Build on the brand momentum

Leverage the momentum

• Media spend increased early in the re-opening

• Online supply chain running at full capacity

phase to win market share

• Capacity being expanded with new satellite

• Increased media spend focus on Digital but

warehouses preparing for peak trading season

allocated to all channels towards the end of Q2

SOCIAL DISTANCING

Redefine best retail practises

Example of an initiative piloted in the US: Basic curb side delivery

1

2

3

Store receives an email

Identifying

Customer finds a

Customer hits a

to the designated

store on the locator

landing page

email address

best practice

that shows availability

explaining the process

configured to show

of this service

and completes a form

alerts on the device

for social

distancing

4

5

Customer calls upon arrival at

Store Associate brings order

agreed pickup location &

to pickup location. Customer

store arranges to meet

confirms items and

customer

transaction is finalised

~90% stores open, but COVID-19 continues to present challenges

Current situation

COVID-19

STORES REOPEN

NEW SURGES OF

OUTBREAKS

COVID-19

Opened stores, % of all concept stores*

95%

85%

90%

90%

50%

30%

15%

End February

End March

End April

End May

End June

End July

Now

Q1 2020

Q2 2020

Currently

• Physical stores are being temporarily

•

Physical

store

network reopened

faster than

•

New surges of COVID-19 leading to

closed due to COVID-19

initially expected

temporary

closures

in

Victoria,

Australia

• China was the first market to close

•

Last of the markets to open were the US, Italy and

•

Many

stores still closed

in Latin

UK

America

• Store

opening hours

reduced in

*Rounded to nearest 5-pp for all concept stores

some markets, including the US

8

Pandora Q2 2020 - Teleconference presentation

Agenda of today

Executive summary

COVID-19 status

UPDATE ON PROGRAMME NOW

Q2 2020 financial performance

Full year 2020 guidance

9 Pandora Q2 2020 - Teleconference presentation

Programme NOW rescoped to reflect the progress

- several initiatives embedded in day-to-day operations

Turnaround objectives

Initiatives

Data-driven growth and

• Leverage data to build personal relationships and enhance media

personalisation

efficiency - amongst others by optimising which customers to

target and tailor the content to match the customer profile

Brand Relevance

Programme NOW timeline

Nov

•

Programme NOW

2018

initiated

•

Diagnosis concluded -

Feb

Win in China

Omnichannel

capabilities

Brand Access

  • Pandora has a low market share compared to other key markets
  • Fix fundamentals and relaunch the Pandora brand
  • Roll-outomnichannel capabilities beyond the US market to create an improved consumer journey

2019

Initiatives of Programme

NOW revealed

2019May

•

Early initiatives unfolding

Aug

•

Brand relaunch

2019

effectuated

•

Step-change in like-for-

Q4

New store concept

• Evaluate and rethink the concept store design

Cost Reset

Cost Reset continuation

• Continue reducing costs across all cost buckets to fund

commercial initiatives and drive top line performance

10 Pandora Q2 2020 - Teleconference presentation

2019

like trajectory

Jan

•

Positive LFL before

Feb

2020

COVID-19 implications

  • Strategic reorganisation
    Q2 completed

2020 • Programme NOW

rescoped

Brand momentum still strong despite less media spend due to COVID-19

Key brand metrics still stronger than before the

brand relaunch in August 2019…

1

Q: Name jewellery brands that come to mind

Unaided brand

>6%

awareness

Q2 2019,

Q2 2020,

pre Brand Relaunch

post Brand Relaunch

2

Q: Name jewellery brands that you can remember having seen an ad for in the past 3 months

Unaided

>10%

advertisement

recall

Q2 2019,

Q2 2020,

pre Brand Relaunch

post Brand Relaunch

3

>22%

Google searches

Q2 2019,

Q2 2020,

pre Brand Relaunch

post Brand Relaunch

…Despite significantly less media spend

due to COVID-19

Media spend vs last year and vs planned spend

-5%>-30%

Q2 2020

Q2 2019

Planned

spend

Brand momentum to be re-accelerated as

stores reopen

  • Media spend was materially increased towards the end of Q2 2020 as stores began to reopen
  • Higher media spend across channels to continue in H2 2020 compared with H1 2020 to drive brand relevance and traffic

Source: Pandora brand tracker surveys

Note: Pre brand relaunch period is 12 months before brand relaunch. Post brand relaunch period is from September 2019 to December 2019. Google searches are measured through +20,000 key words related to Pandora. 1China not included

11 Pandora Q2 2020 - Teleconference presentation

KEY DRIVERS FOR THE Q2 2020 ONLINE PERFORMANCE

Exceptional online growth of +176%

Brand relevance strong enough to take consumers from offline to online as physical stores closed down

12 Pandora Q2 2020 - Teleconference presentation

Traffic significantly

increased

  • Traffic increase of almost 100% supported by increased digital media spend and stores being temporarily closed in most markets
  • Sites running smoothly despite heavy traffic increase
  • Encouraging test results from new e-mail marketing campaigns with stronger focus on personalisation
    - sales up more than 150% vs last year

Strong conversion rate

development

  • +60% growth in conversion rate despite material traffic increase
  • Still supported by brand relaunch initiatives such as
    • Improved inspirational content incl. better imagery
    • Faster load time and easier-to- navigate consumer journey

Supply chain running at full

capacity

  • Smooth operation in Q2 even though online orders increased by +200% putting pressure on the current set-up
    • Generally, no impact on operations
    • Very low out-of-stock-situation despite demand spike in products
  • New satellite eCommerce warehouses being set-up for H2 2020 trading

Significant increase in full-price sales reflects improved brand health

FULL-PRICE SALES MATERIALLY UP DURING END-OF-SEASON SALES PERIOD

Clearance sales vs. Full-price sales as share of business, week 22-30*

Total sales

Online sales

During the period of week 22-30, Pandora has been able to

Clearance Full-price

25%

-57%

materially increase the share of business coming from full-price

37%

-49%

19%

75%

58%

42%

2019

2020

Concept store sales

+78%

sales by 29%

•

End-of-season clearance sales

accounted for 19% of revenue

compared to 37% last year

•

Online outperforming concept

81%

63%

+29%

2019 2020

32%

14%

68%86%

20192020

-56%

+27%

stores - revenue from end-of-

season sale being slightly down,

but full-price sales growing by

nearly 300%

Note: Some stores still being temporarily closed due to COVID-19

13 Pandora Q2 2020 - Teleconference presentation

Product development anchored with the newly established Global Business Units

GLOBAL BUSINESS UNITS TO DRIVE CONCEPT AND PRODUCT DEVELOPMENT

NEW PRODUCT DEVELOPMENT STRATEGY IN THE MAKING

Moments,

Charms and

Collaborations

Style, new pillar development & upstream innovation

Key objectives

  1. Protect the core and rejuvenate the Moments platform
  2. Refresh the base assortment
  3. Amplify key collaborations (Disney, Harry Potter) and plan for future collaborations

Key objectives

  1. Identify future growth engines such as new concepts like Pandora Me and Reflexions (Re)-activate and build concepts in other
  2. adjacent categories (rings, necklaces and earrings)
  1. Leverage other style collections such as Pandora Signature and Pandora Garden

Early takeaways from the strategy

Change operating model to be data-driven,collection- focused and consumer- centric

Cater for entry-price points

Maintain product assortment at current level (# of DVs)

14 Pandora Q2 2020 - Teleconference presentation

Successful collaborations since

Timeline of key product introductions since the Brand Relaunch in August 2019

the brand relaunch

Star Wars x Pandora to enter the line-up from 1 October 2020

15 Pandora Q2 2020 - Teleconference presentation

O-carrier launched in Aug 2019, Brand Relaunch day

Pandora ME

introduced in Oct

2019

Launched jewellery to support UNICEF in Oct 2019

Harry Potter

launched in Nov

2019

More Harry

Potter

launched in June 2020

New

Pandora ME

jewellery in

July 2020

Star Wars jewellery to launch from Oct 2020

Fixing the fundamentals in China to build the foundation for growth

LARGE GROWTH POTENTIAL FOR PANDORA IN CHINA - CURRENT MARKET SHARE IS LESS THAN 1%

FIXING THE FUNDAMENTALS

STEP-CHANGE FUNCTIONAL EXECUTION

INITIATE THE CREATION OF A

UNIQUE BRAND POSITION

  • Organisational strengthening headed by new general manager, Jacques Roizen
  • Enhance performance culture and update store level incentive structure
  • Exploit key trading periods
  • Increase marketing efficiency through rigorous tracking and

optimisation

16 Pandora Q2 2020 - Teleconference presentation

Compelling marketing

  • Reset brand message
  • Consistency across channels
  • Upgrade agencies capabilities

Digital & online experience

  • Operate a consistent digital ecosystem
  • Branding through digital marketing and SoMe
  • Reactivation through CRM

Customer-centric

merchandising

  • Improved inventory allocation and assortment management
  • Revamp store merchandising

Retail experience

  • Personalise the retail experience
  • Emphasise the brand story
  • Engage with digital tools
  • Develop a social community around each store
  • Change consumer perception from mainstream jewellery brand to focus on Pandora's key brand strengths; collectability, affordability and self- expression
  • Create an edge by unique retail experience for consumers offline and online

Cost savings 2020 run-rate target of DKK 1.4 billion is confirmed

COST CATEGORIES

COST INITIATIVES & IMPROVEMENTS

ANNUAL RUN RATE TARGET

SAVINGS ACHIEVED

BY END 2020 (DKK billion)

(RUN RATE END 2020, DKK billion)

• Additional savings being materialised through manufacturing efficiencies

Cost of sales

• Structured review of high-running products being done to drive targeted

savings on high volume designs

0.35-0.4

• New and more efficient organisation implemented in connection with the

strategic re-organisation

• Continued improvement in productivity per labour hour

Retail expenses

• Dedicated global Network management function established as part of the

0.35

strategic re-organisation. Further lease cost reductions expected

Administrative

• A new level for travel spending is planned

0.2-0.25

expenses

IT

• Cost savings realised from transition and transformation of IT setup across

0.2

service desk, cloud services, application development and maintenance

Other

• Continued good progress on media tenders yielding savings

0.2-0.3

17 Pandora Q2 2020 - Teleconference presentation

Agenda of today

Executive summary

COVID-19 status

Update on Programme NOW

Q2 2020 FINANCIAL PERFORMANCE

Full year 2020 guidance

18 Pandora Q2 2020 - Teleconference presentation

Positive EBIT margin and strong cash flow despite significant COVID-19 impact

Q2 2020 results

Revenue

DKK 2.9 billion

(-38% YoY growth in local currency)

Sell-out growth incl.

temporarily closed stores

-39%

(-10% in Q2 2019)

Organic growth

-38%

(-7% in Q2 2019)

EBIT margin excluding restructuring costs

1.1%

(22.9% in Q2 2019)

Free cash flow

DKK 0.9 billion

(DKK 1.1 billion in Q2 2019)

Q2 2020 key highlights

  • Organic growth was significantly down at -38% as the majority of physical stores were temporarily closed in the quarter due to COVID-19
  • Online growth accelerated to 176% supported by an improved site and increased digital media spend
  • Total sell-out growth incl. temporarily closed stores was -39% dragged down by physical stores and partly offset by the positive online development
  • Traffic into physical stores has steadily recovered since the reopening across markets, but remains at a low level compared with pre-COVID-19
  • Positive EBIT margin despite the significant decline in revenue due to COVID-19
  • Immediate cost reductions measures effectuated - 15% decrease in total OPEX
  • Limited impact on the gross margin due to COVID-19
  • Programme NOW cost initiatives progressing as planned
  • Run-ratesavings target of DKK 1.4 billion is confirmed
  • Strong free cash flow due to COVID-19 related cash management measures and return of excess tax paid in 2019
  • 44% decrease in trade receivables during the quarter

19 Pandora Q2 2020 - Teleconference presentation

Encouraging revenue recovery as stores reopen during the quarter

Organic growth down -38% with clear improvement through the quarter

DKK million, %-p growth (approximately)

4,693

0%

-39%

1%

-38%

0%

-38%

-1%

-39%

Revenue,

Network

Sell-out

Channel mix

Organic

Forward

Total

FX

Total

Q2 2019

expansion

growth incl.

and other

growth,

integration

revenue

revenue

temporary

Q2 2020

growth in LC,

growth

store

Q2 2020

in DKK,

closures

Q2 2020

20

Pandora Q2 2020 - Teleconference presentation

Commentary

Organic growth of -38% impacted by COVID-19

  • Contribution from Network expansion was limited. Net 17 stores were closed compared to same quarter last year
  • Sell-outgrowth incl. temporarily closed stores was -39% in Q2 2020 with continued improvement during the quarter
    • The negative revenue impact from physical stores closed due to COVID-19 was partly offset by a material acceleration in organic growth in the Online stores of 176%
  • Positive impact on organic growth from channel mix due to the change of sales-out from Wholesale to Retail as Pandora benefits from the higher average selling price in Retail sell-out

Positive EBIT despite significant revenue shortfall due to COVID-19

EBIT margin excluding restructuring costs of 1.1%

%-p growth (approximately)

22.9%

-18%

-3%

-1%

1.1%

-8%

-6.9%

EBIT margin,

Deleverage

Non-recurring

FX

EBIT margin excl.

Restructu-

Reported

Q2 2019

(COVID-19)

adjustment of

restructuring

ring costs

EBIT margin,

production

costs,

Q2 2020

volumes

Q2 2020

Commentary

EBIT margin of 1.1% excluding restructuring costs

  • Cost saving measures implemented in the beginning of the quarter mitigated the significant deleverage effect due to stores being temporarily closed due to COVID-19
  • Profitability impacted by approx. DKK 0.1 billion from non-recurring production adjustments in Thailand
    • Production was periodically paused during the second quarter to manage production volumes. Pandora decided to pay salary to all employees during the period
  • As stores started to reopen across markets, media spend was increased to win market shares

Restructuring costs of DKK 0.2 billion

  • Restructuring costs were primarily related to the execution of cost reduction initiatives and consultants
  • Total restructuring costs in H2.2020 expected to be lower than in H1.2020 - reflecting that Programme NOW is going into the final stages and a stronger organisation less reliant on external support

21 Pandora Q2 2020 - Teleconference presentation

Considerations on surge of silver and gold price

AROUND 30% OF COST OF SALES* IS COMPRISED OF GOLD AND SILVER..

Gold Silver Rest of Cost of sales

DKK million

AT A SILVER PRICE OF USD 25/OZ, THE ISOLATED IMPACT ON GROSS MARGIN IS SLIGHTLY MORE THAN -3PP COMPARED WITH 2019

• The silver price expensed in the P&L for 2019 was around USD 16 per ounce. Current

silver price is more than 55% higher

4,949

6%

25%

69%

FY 2019

Around DKK 1.5 billion in gold and silver exposure

•

Pandora is hedging around 70% of future 12 months use in production

•

With an additional 2-4 months time lag from production to sale of the product and

effect on the income statement, the impact of the recent increase in metal prices

will not be seen until mid-2021

OTHER FACTORS IMPACTING THE RUN-RATE GROSS MARGIN

  • Cost of sales is excluding restructuring costs
  • AND AROUND 50% IS PAID IN THAI BAHT

Sensitivity analysis on

Change in

EBIT

EBIT

Thai Baht vs Danish

exchange

impact,

margin

kroner

rate

DKKm

impact

THB/DKK

-10%

265

1.2%

  • Mitigating factors - including product mix, product design etc.
  • THB/DKK depreciation
  • Production efficiency gains
  • Channel mix development

22 Pandora Q2 2020 - Teleconference presentation

Strong cashflow generation reflecting the resilient business model

Positive free cash flow and healthy leverage ratio

Commentary

Q2 2019

Q2 2020

150%

1,1

0,9

n/a

Cash conversion

Free cash flow excl. IFRS 16

excl. IFRS 16

(DKK billion)

1.4x

1.1x

NIBD to EBITDA excl. restructuring costs

4.4%

4.2%

CAPEX

(% of revenue)

Cash initiatives paying off

  • Positive free cash flow of DKK 0.9 billion supported by strict cash management measures and return of excess tax paid in 2019
    • CAPEX was reduced to DKK 0.1 billion (41% below Q2 2019)
  • NIBD to EBITDA excl. restructuring costs well below the covenant threshold and well within the capital structure policy

Lowest ever recorded operating working capital ratio of 2.8%

Q2 2019

Q2 2020

%, last 12 months rolling revenue

9.4%

-11.9%

11.7%

11.6%

-7.3%

2.8%

5.0%

3.1%

Working capital

Trade receivables

Trade payables

Inventories

23

Pandora Q2 2020 - Teleconference presentation

Working capital significantly reduced from 9.4% last year to 2.8%

  • Low working capital among others driven by a reduction of receivables following the drop in revenue
  • The inventory level has been managed tightly and production was temporarily stopped during Q2. An increase in inventories is still planned during the rest of 2020
  • Limited risk of material inventory write-downs despite of COVID-19

Agenda of today

Executive summary

COVID-19 status

Update on Programme NOW

Q2 2020 financial performance

FULL YEAR 2020 GUIDANCE

24 Pandora Q2 2020 - Teleconference presentation

Financial guidance 2020 has been reinstated

ORGANIC GROWTH

FINANCIAL GUIDANCE CONDITIONED BY

-14% to -20%

• No material, new lockdowns

o There may be some temporary local lockdowns of physical

(Guidance pre COVID-19:"-3% to -6%")

stores as currently experienced in Victoria, Australia

• Number of open stores will gradually improve from 90% by end

EBIT MARGIN EXCL. RESTRUCTURING COSTS

July to 100% by end Q3 2020

16% to 19%

• No material deterioration of the general macro environment

and consumer spending

• Social distancing requirements will have a negative impact on

(Guidance pre COVID-19: "Above 23%")

revenue, mainly in Q4 2020

25 Pandora Q2 2020 - Teleconference presentation

Implications for second half and updated key assumptions for FY 2020

Implied

Organic

Growth

H2 2020

Implied

EBIT

margin H2

2020

IMPLIED H2 2020 GUIDANCE

-5% to -15%

-14% to -20%

-26%

H1 2020, actual H2 2020, implied FY 2020 guidance

20% to 24%

16% to 19%

10%

H1 2020, actual H2 2020, implied FY 2020 guidance

BUILDING BLOCKS UPDATED

Building blocks updated to reflect the uncertain situation prompted by COVID-19

  • Total sell-outgrowth similar range as the Organic Growth guidance of "-14% to -20%"
  • Net concept store openings changed from previously "25-50 closures" to "around net 50 closures"
  • Restructuring costs maintained at "around DKK 1 billion"
  • Reduction of CAPEX by around DKK 0.1 billion from previously "DKK 0.7 billion" to "DKK 0.6 billion"
  • Effective tax rate remains at "22-23%"
  • Cash distribution continues to be suspended

26 Pandora Q2 2020 - Teleconference presentation

Closing remarks

Encouraging recovery in Q2 and

Programme NOW rescoped

July - development now

to reflect the progress since

impacted by new lockdowns

launch

Positive EBIT despite revenue

Financial guidance

shortfall and strong working

for the full year 2020

capital - very healthy liquidity

reinstated

27 Pandora Q2 2020 - Teleconference presentation

Q&A

28 Pandora Q2 2020 - Teleconference presentation

APPENDIX

29 Pandora Q2 2020 - Teleconference presentation

Pandora is the world's most recognised jewellery brand

36%

43%

Aided brand awareness development

80%

83%

85%

86%

63%

67%

73%

50%

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019*

Aided brand awareness across selected jewellery companies

85%86%

72%

79%

64%

74%

77%

66%

2018

2019*

2018

2019*

2018

2019*

2018

2019*

Source: Pandora Brand Tracker 2019 (n=5,874) Markets include AU, CN, FR, IT, UK, US

*Research methodology was changed in 2019 to focus on key markets

30 Pandora Q2 2020 - Teleconference presentation

Pandora consumers are across generations and stay loyal

Age distribution of our consumers who have purchased Pandora

Pandora owners highly consider to buy Pandora jewellery unrelated to

within the last 12 months

time of ownership

18

65

Q: Would you, as a Pandora owner, consider buying Pandora jewellery?

90%

87%

88%

85%

25%

28%

23%

15%

8%

18-24

25-34

35-44

45-54

55-64

Last 12 months

1-2 years

3-5 years

More than 5 years

Source: Pandora Brand Tracker 2019 (n=957| n=1416)

Note: Markets include AU, CN, FR, IT, UK, US

*Survey-data allows for the possibility that share of repurchasers can be slightly higher than previous years active owner-base

**Deviation in Awareness from funnel-slides caused by different market filters in order to compare to 2014 (excludes CN, CZ, JP, SG and AE)

31 Pandora Q2 2020 - Teleconference presentation

Pandora consumers have a wide-range of purchase criteria

Development 2017-2019,%-point

Pandora top 5 purchase drivers

Share of Active Pandora Owners* (n=1,092), %

Pandora top 5 purchase barriers

Women that consider buying Pandora for themselves but haven't bought in 2019 (n=1,573), %

56

37

4544

48

39

13

10

10

10

I like the design

Offers

Pandora allows

Has a variety of

Is affordable

Too expensive

Not interested

I already own

I don't know

There are no

jewellery I can

me to customise

different types

in charms &

enough C&B

the collections

stores in my area

wear everyday

my look

of jewellery

bracelets

enough

+5

+1

+4

-1

+7

-3

+6

+2

+3

+2

Source: Pandora Brand Tracker 2019

Note: Markets include AU, CN, FR, IT, UK, US

*Active Owners include owners who have purchased past 12 monthsand/or received past 12 months

32 Pandora Q2 2020 - Teleconference presentation

Pandora's online business & presence

Online store development

DKK million

Online store % of Group Revenue

Online store revenue

%

1.500

55

1.400

50

52%

1.300

45

1.200

1.100

40

1.000

35

900

30

800

1,487

700

25

1,307

600

20

500

1,019

13%

16%

15

400

812

12%

9%

9%

10%

10%

15%

300

527

8%

543

621

10

200

69

7%

6%

6%

438

447

477

455

3%

373

4%

400

3%

304

298

5

100

2%

190

264

187

141

92

98

4%

5%

0

3%

0

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 201920202020

176%

52%

20

SINGLE

STRONG

ORGANIC

REVENUE SHARE OF

GROWTH IN

GROUP REVENUE IN

MARKETS

DIGIT RETURN

PROFITABILITY

Q2 '20

Q2 '20

RATES

33 Pandora Q2 2020 - Teleconference presentation

Online platforms

Pandora online stores available in 20 markets across all regions, incl. China (own and Tmall distribution), Australia, Italy, the UK, the US etc.

More than 320 million visits on the Pandora online stores in 2019

More than 13 million Pandora club members worldwide

16.4 million Facebook followers

8 million followers on Instagram

Unleash the pandora.net growth potential through digital initiatives

2019 FOCUS

2020 FOCUS

NEW AND IMPROVED PANDORA.NET SITE WENT LIVE 29 AUGUST 2019

Examples:

3 KEY DIGITAL STRATEGIC INITIATIVES SET TO DRIVE SUSTAINABLE LIKE-FOR-LIKE SALES THROUGH IMPROVING THE DIGITAL CUSTOMER EXPERIENCE ON PANDORA.NET

Digital strategic initiatives

Sub-initiatives (examples)

Desired outcome

  • Streamlined the customer journey
  • Better and higher quality of imagery
  • Content is more inspiring
  • Cleaned up the base for higher speed
  • Reduced site load-time by 40%

1

• Make it easy to find products

Remove barriers to shop

• Faster loading time and speed

• Better planning and forecasting to avoid

stockouts

  • Improve customer satisfaction
  • Increase conversion rate

Conversion rate

+7%

Traffic, m

+23%

Old site,

New site,

Sep-Dec 2018

Sep-Dec 2019

34 Pandora Q2 2020 - Teleconference presentation

2

Make pandora.net a place for

inspiration

3

Attract new consumers online

  • Make charms collection more compelling
  • Encourage fans to visit more often through more targeted comms with dynamically created content
  • Content integration with social media (Instagram and Youtube)
  • Launch online stores in new markets in a profitable and sustainable way
  • Use our retail footprint to recruit new digital customers
  • Be accessible at selected online marketplaces
  • Maintain high engagement rate
  • Increase frequency of shopping
  • Grow the consumer base in current online markets
  • Expand online presence to more markets

Omnichannel capabilities ready to be scaled globally

OMNICHANNEL FEATURES HAVE NOW ROLLED OUT IN THE US AND CHINA; 2020 FOCUS ON DEEPENING THESE AND EMEA ROLL-OUT

Online View of

Inventory

Endless aisle

Buy Online,

Return in Store

Click & Collect

Ship from Store

Across all stores (already live) O&O concept stores (planned) Pilot (planned)

Objective of implementing omnichannel capabilities is to enhance the customer journey by creating a seamless link between online and physical stores

Omnichannel capabilities being prioritised

  • Focus on rolling out "Online View of Inventory" and "Endless aisle" across key markets
  • "Click & Collect" being trialled in the US and in Shanghai concept stores in China
    • The feature will be piloted in the UK during 2020
  • Besides the roll-out of omnichannel features in US and China in 2019, a new customer service platform (US) was implemented and order management technology

35 Pandora Q2 2020 - Teleconference presentation

Revenue development by sales channel and by product category

Channel development

Q2

Growth,

2020

Growth,

FY 2019

Q2/Q2,

share of

FY/FY,

share of

DKK million

Q2 2020

LC

revenue

FY 2019

LC

revenue

Pandora owned retail

2,480

-20%

86%

14,181

8%

65%

- of which concept

924

-61%

32%

10,619

5%

49%

stores

- of which online stores

1,487

176%

52%

2,782

18%

13%

- of which other points

68

-61%

2%

780

22%

4%

of sale

Wholesale

365

-73%

13%

6,725

-24%

31%

- of which franchise

126

-84%

4%

3,843

-25%

18%

concept stores

- of which other points

239

-57%

8%

2,882

-22%

13%

of sale

Third-party distribution

32

-85%

1%

962

-26%

4%

Total revenue

2,876

-38%

100%

21,868

-6%

100%

36 Pandora Q2 2020 - Teleconference presentation

Product category development

Q2

Growth,

2020

Growth,

FY 2019

Q2/Q2,

share of

FY/FY,

share of

DKK million

Q2 2020

LC

revenue

FY 2019

LC

revenue

Charms

1,524

-40%

53%

11,395

-8%

52%

Bracelets

537

-41%

19%

4,216

-6%

19%

Rings

407

-31%

14%

3,113

-4%

14%

Earrings

189

-37%

7%

1,487

-1%

7%

Necklaces & Pendants

219

-34%

8%

1,658

0%

8%

Total revenue

2,876

-38%

100%

21,868

-6%

100%

Key markets revenue and total like-for-like overview

Sell-out growth

Share of

Share of

Growth Q2/Q2,

incl.temporarily

revenue,

Growth FY/FY,

Like-for-like

revenue,

DKK million

Q2 2020

LC

closed stores

Q2 2020

FY 2019

LC

FY 2019

FY 2019

EMEA

1,366

-36%

-

48%

10,740

-4%

-7%

49%

- of which the UK

409

-11%

-25%

14%

2,861

2%

-7%

13%

- of which Italy

261

-48%

-45%

9%

2,272

-8%

-7%

10%

- of which France

197

-21%

-17%

7%

1,169

-7%

-11%

5%

- of which Germany

185

-6%

-10%

6%

963

-8%

-5%

4%

AMERICAS

826

-44%

-

29%

6,772

-5%

-5%

31%

- of which the US

687

-35%

-35%

24%

4,677

-9%

-5%

21%

ASIA PACIFIC

685

-35%

-

24%

4,356

-11%

-15%

20%

- of which Australia

167

-30%

-33%

6%

1,118

-16%

-17%

5%

- of which China

378

-24%

-24%

13%

1,970

-1%

-11%

9%

Group

2,876

-38%

-39%

100%

21,868

-6%

-8%

100%

37 Pandora Q2 2020 - Teleconference presentation

Store network development

Net openings

Number of points of sale

Q2 2020

Q2 2020 vs Q1 2020

Q2 2020 vs Q2 2019

Concept stores

2,714

-32

-17

- of which Pandora owned

1,373

-9

-7

- of which franchise owned

828

-17

-6

- of which third-party distribution

513

-6

-4

Other points of sale

4,539

-54

-239

- of which Pandora owned

227

2

39

- of which wholesale

3,706

-40

-222

- of which third-party distribution

606

-16

-56

Total points of sale

7,253

-86

-256

38 Pandora Q2 2020 - Teleconference presentation

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

Q2 2020

Q2 2020

Number of O&O

Q2 2020

Q2 2020

Q2 2020

Q1 2020

Q2 2019

/Q1 2020

/Q2 2019

Q2 2020

/Q1 2020

/Q2 2019

UK

216

222

233

-6

-17

127

1

0

Russia

182

186

195

-4

-13

0

0

0

Germany

138

141

151

-3

-13

133

-2

-12

Italy

146

146

146

0

0

107

0

2

France

121

121

121

0

0

77

0

2

Spain

88

88

83

0

5

70

0

2

Poland

52

52

49

0

3

37

0

-1

South Africa

30

30

30

0

0

28

0

0

Turkey

30

30

29

0

1

30

0

1

Ireland

26

29

28

-3

-2

21

-3

-2

Netherlands

25

26

27

-1

-2

25

-1

-2

Ukraine

30

30

27

0

3

0

0

0

Portugal

26

26

26

0

0

0

0

0

Belgium

23

24

25

-1

-2

14

-1

-1

Romania

23

23

22

0

1

12

0

0

United Arab Emirates

18

18

20

0

-2

18

0

-2

Czech Republic

19

19

19

0

0

10

0

0

Israel

17

18

17

-1

0

0

0

0

Austria

11

14

15

-3

-4

9

0

-1

Greece

13

14

14

-1

-1

0

0

0

Denmark

7

8

14

-1

-7

7

-1

-7

Saudi Arabia

12

13

12

-1

0

0

0

0

Sweden

10

9

11

1

-1

10

1

-1

Nigeria

8

8

10

0

-2

0

0

0

Rest of EMEA

145

146

137

-1

8

21

0

2

EMEA

1,416

1,441

1,461

-25

-45

756

-6

-20

USA

403

403

395

0

8

156

0

3

Brazil

91

91

95

0

-4

54

0

-3

Canada

79

79

79

0

0

23

0

0

Mexico

76

76

66

0

10

47

0

7

Caribbean

26

27

27

-1

-1

0

0

0

Rest of Americas

81

82

67

-1

14

13

0

0

Americas

756

758

729

-2

27

293

0

7

China

236

238

227

-2

9

225

-2

7

Australia

123

126

128

-3

-5

38

0

-1

Philippines

35

34

35

1

0

0

0

0

Malaysia

31

32

33

-1

-2

0

0

0

Hong Kong

28

29

28

-1

0

26

-1

1

Thailand

21

20

19

1

2

0

0

0

New Zealand

18

18

17

0

1

9

0

1

Singapore

11

11

16

0

-5

11

0

-1

Rest of Asia Pacific

39

39

38

0

1

15

0

-1

Asia Pacific

542

547

541

-5

1

324

-3

6

All markets

2,714

2,746

2,731

-32

-17

1,373

-9

-7

39 Pandora Q2 2020 - Teleconference presentation

Profitability development

Q2 2020

Q2 2020 excl.

DKK million

Q2 2020 reported

Restructuring costs

restructuring costs

Q2 2019 reported

Revenue

2,876

-

2,876

4,693

Cost of sales

-778

-56

-722

-1,190

Gross profit

2,099

-56

2,155

3,503

Gross margin

73.0%

74.9%

74.6%

Operating expenses (incl. D&A)

-2,297

-175

-2,122

-2,739

- of which sales, distribution and marketing expenses

-1,704

-43

-1,704

-2,071

- of which administrative expenses

-418

-132

-418

-668

EBIT

-198

-231

33

764

EBIT margin

-6.9%

1.1%

16.3%

FY 2019

FY 2019 excl.

FY 20181

DKK million

FY 2019 reported

Restructuring costs

restructuring costs

Revenue

21,868

-

21,868

22,806

Cost of sales

-5,966

-1,016

-4,950

-5,864

Gross profit

15,903

-1,016

16,919

16,942

Gross margin

72.7%

77.4%

74.3%

Operating expenses (incl. D&A)

-6,457

-198

-6,259

-6,080

- of which sales, distribution and marketing expenses

-2,847

-151

-2,696

-2,142

- of which administrative expenses

-2,770

-660

-2,110

-2,289

EBIT

3,829

-2,025

5,854

6,431

EBIT margin

17.5%

26.8%

28.2%

1Comparison figures have not been restated following the implementation of IFRS 16 Leases

40 Pandora Q2 2020 - Teleconference presentation

Working capital and cash management

DKK million

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Q2 2019

Inventory

2,250

2,155

2,137

2,835

2,609

- Share of revenue (last 12 months)

11.6%

10.1%

9.8%

13.0%

11.7%

Trade receivables

602

1,081

1,643

1,256

1,124

- Share of revenue (last 12 months)

3.1%

5.1%

7.5%

5.8%

5.0%

Trade payables

-2,316

-2,337

-3,095

-2,222

-1,632

- Share of revenue (last 12 months)

-11.9%

-11.0%

-14.2%

-10.2%

-7.3%

Operating working capital

535

899

684

1,869

2,101

- Share of revenue (last 12 months)

2.8%

4.2%

3.1%

8.6%

9.4%

Free cash flow excl. IFRS16

CAPEX

% of revenue

NIBD to EBITDA excl. restructuring costs (last 12 months)

943

-272

2,760

758

1,145

121

129

184

254

206

4.2%

3.2%

2.3%

5.8%

4%

1.1x

1.3x

1.5x

1.8x

1.4x

Selected KPIs

Days Sales of Inventory

- last 6 months of COGS (183 days) Days Sales of Outstanding

  • last 3 months of wholesale and third party distribution revenue (90 days)

228

134

109

182

201

89

46

36

49

40

41 Pandora Q2 2020 - Teleconference presentation

Hedging policy and raw materials share of production costs

Commodity hedging policy is to hedge

around 70% of future 12 months use in production

For illustrative purposes

Hedged Realised

100%

70% to 100%

70% to 90%

50% to 70%

30% to 50%

Q2 2020

Q3 2020

Q4 2020

Q1 2021

Q2 2021

  • With an additional 2-4 months time lag from production to sale of the product and effect on the income statement, the impact of the recent increase in metal prices will not be seen until mid-2021

42 Pandora Q2 2020 - Teleconference presentation

Raw material share of cost of goods sold

Other

Other raw materials

Gold

Silver

25%

36%

45%

51%

58%

59%

54%

14%

14%

15%

14%

14%

12%

15%

9%

11%

9%

10%

9%

6%

46%

36%

8%

30%

27%

24%

24%

25%

2013

2014

2015

2016

2017

2018

2019

  • Other in 2019 consists of ~35% labour, ~15% cost to third-partyset-ups (i.e. plating) and ~50% licence, customs, remelt and minor provisions
  • From 2019 inhouse plating is considered part of 'Other raw materials', having previously been part of 'Other'.

Overview of the global jewellery market

Fine jewellery market 2018- 2022

MARKET DEVELOPMENT

CAGR of 6%

Jewellery market development

10 largest jewellery markets

10 years, EUR billion

CAGR

2018, EUR million

Costume Jewellery

Fine Jewellery

China

89,827

5%

India

54,556

282

USA

47,638

14%

13% 289

216

Japan

8.226

13%

14%

HK

6.255

146

Canada

5.820

15%

86%

87% 87%

UK

5.255

85%

Taiwan

4.510

Germany

4.235

2009201020112012201320142015201620172018

Russia

3.789

Jewellery eCOM development

EUR billion

E-commerce

CAGR

~15%

~20

~23

~18

2016

2017

2018

Global category share

Wristwear

Earrings

Other

JEWELLERY DEVELOPMENT

Rings

Neckwear

3%

17%

31%

31%

18%

Source: Euromonitor

Fine jewellery metal split (2018)

Gold

Metal Combination

Silver

Other

Platinum

6%

6%

10%

14%

64%

World's 10 largest jewellery brands

EUR billion, 2017, approx.

~3

Chow

Lao Feng

Tiffany Cartier

Kalyan Lao MiaoSwarovski Chow Bulgari

Tai Fook

Xiang

& Co

Sang

~2.5%

Sang

~0.5%

Market share (approx.)

43 Pandora Q2 2020 - Teleconference presentation

SUSTAINABILITY

Sustainability

We believe high-quality jewellery, superior business performance and high ethical standards go hand in hand, and we craft our jewellery with respect for resources, environment and people. We will become carbon neutral in our operations by 2025 and have committed to set Science Based Targets for reducing greenhouse gas emissions across the full value chain.

We are committed signatories of the United Nations Global Compact and certified member of the Responsible Jewellery Council since 2012.

Pandora supports the UN Sustainable Development Goals Four goals in particular guide our strategy as this is where we can contribute the most.

44 Pandora Q2 2020 - Teleconference presentation

Frontrunner in ESG

Investment Performance

For the fourth consecutive year, we received the top rating of AAA in the MSCI ESG Ratings assessment.

Climate and

As the world's largest jewellery maker, we are

environment

determined to reduce our climate footprint and

help set an example for the wider industry.

Carbon neutral

100% renewable energy

Committed to set

in own operations

at our crafting facilities

Science Based Targets

by 2025

by 2020

to reduce emissions

across full value chain

88%

of waste was

Our two largest crafting facilities and

recycled at our

crafting facilities

global office are Leadership in Energy and

Environmental Design (LEED) Certified.

Data per Dec. 31, 2019

SUSTAINABILITY

Sustainable

products

100%

97%

98%

recycled

recycled

of all stones are

silver grains

gold grains

man-made

Responsible

Sourcing

Programme

Pandora is committed

to ensuring that our

business practices,

including our suppliers,

live up to high social

100% certified

and environmental

silver and gold grain suppliers

standards.

45 Pandora Q2 2020 - Teleconference presentation

Workplace and society

Inclusive workspace

At Pandora, we are committed to fostering a culture of diversity and inclusion in and beyond our own operations. We will not tolerate any form of discrimination and are committed to gender diversity in our organisation. We will continue to advance our approach to diversity and inclusion.

Partnering with UNICEF to empower young people

Pandora and UNICEF have launched a global partnership to support the most vulnerable children, especially girls, around the world to lead healthier and safer lives and fulfil their potential. Through sale of Jewellery and other initiatives, Pandora will raise funds for UNICEF's important work.

50/50

gender split in our Board of

Directors

26%

of Senior management are women

and 74% are men

Data per Dec. 31, 2019

Investor Relations contact details

Investor Relations team

Michael Bjergby

VP, Investor Relations, Tax & Treasury +45 7219 5387 miby@pandora.net

Christian Møller

Investor Relations Officer +45 7219 5361 chmo@pandora.net

46 Pandora Q2 2020 - Teleconference presentation

Share information

ADR information

Trading symbol

PNDORA

ADR trading symbol

PANDY

Sponsored level 1 programme

Identification number/ISIN

DK0060252690

Programme type

(J.P. Morgan)

GICS

25203010

Ratio (ADR:ORD)

4 ADRs : 1 ordinary share (4:1)

Number of shares

100,000,000

ADR ISIN

US 698 341 2031

Apparel, Accessories & Luxury

Sector

Goods

Share capital

100,000,000

Nominal value, DKK

1

Free float (incl. treasury

100%

shares)

47 Pandora Q2 2020 - Teleconference presentation

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Pandora A/S published this content on 18 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 August 2020 08:55:09 UTC