Pandora A/S : Teleconference presentation Q4 2020

Teleconference presentation 04 February 2021

FOURTH QUARTER

RESULTS 2020

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 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 Q4 2020 - Teleconference presentation

CONTINUED BRAND

MOMENTUM DRIVES

STRONG PERFORMANCE

• COVID-19creates 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 2020 - Teleconference presentation

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 -	savings of DKK 1.6
visible progress across the	investments in brand,	billion p.a. - funding the
value chain	digital and organisation	transformation journey
	are paying off

4 Pandora Q4 2020 - Teleconference presentation

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

PROGRAMME NOW APPROACHING COMPLETION

Turnaround objectives

Brand

Relevance

Brand

Access

Cost reset

Initiatives

Data-driven growth and personalisation

Win in China

Omnichannel capabilities

New store concept

Cost reset continuation

• Digital spend optimised and increased to reach a targeted audience
• Step-changingdata-drivene-mail marketing - material performance improvement both in terms of traffic and conversion rate
• China continues to be challenging, as expected
• New Chinese management team in place to create and execute on growth plan
• China remains top priority and a significant growth opportunity for Pandora
• "Click & collect" rolled out to more than 400 concept stores in US and UK
• Endless Aisle implemented in most key markets
• Newly established team ready to drive development of the new store concept
• Full-scaletesting expected in H2 2021 with first roll-out in 2022
• DKK 1.6 billion cost reduction target delivered
• The Cost reset team will remain in place after Programme NOW - leverage further cost reduction opportunities

6 Pandora Q4 2020 - Teleconference presentation

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 LFL before	Significant improvement
NOW revealed	effectuated	COVID-19 implications	in sell-out
Feb 2019	Aug 2019	Jan Feb 2020	Q3 2020

7 Pandora Q4 2020 - Teleconference presentation

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 Italy, France, Germany, UK, and
have a ~10% share of searches		Australia
	•	Number 2 in US

•Source: Google Trends . Share of Search (%) is (Searches Pandora)/(Searches Pandora + Searches relevant competitor brands)

Source Female unaided brand awareness: Internal brand tracker. Old monthly brand tracker (August 2018- June 2020) and new brand tracker setup (August 2020- ) were compared for

comparison purposes. Sample sizes: Old setup (n=400 females per month/market) and New setup (n= 300 females per month/market). The tracker looks at women aged 18-64 and includes markets IT, FR, DE, ES, UK, US, CA, AU weighted according to population size

8 Pandora Q4 2020 - Teleconference presentation

POSITIVE SELL-OUT

GROWTH IN 5 OUT

OF 7 KEY MARKETS

IN Q4 2020

• Programme NOW is yielding visible results continuing the positive trajectory and momentum in Q4 2020 - China is challenging, as expected

• Q4 performance was supported by better product availability - the new operating model shows its worth

• In order to spread our traffic during a peak season with social distancing requirements, Q4 2020 had slightly more promotional days than Q4 2019

9 Pandora Q4 2020 - Teleconference presentation

		Temp. closed
SELL-OUT	Q4	stores due to
DEVELOPMENT	2020	COVID-19, %*
US	+22%	5%
UK	+1%	24%
Italy	-12%	8% (30%)1
France	1%	30%
Germany	5%	25%
China	-25%	1%
Australia	19%	8%
Group	1%	Around 10%

*Average closures throughout Q4

1Italy store closures of 8% only include stores closed for a full week, but actual closing days are up to 30% in Q4

SOCIAL DISTANCING BATTLE PLAN PROVED SUCCESSFUL - CERTAIN INITIATIVES TO CONTINUE

Increased online capacity

Operational effectiveness was kept high supported by increased investments in online capacity

Virtual try on

Enabled customers to virtually inspect items outside of the store: using simulated try-on

Remote shopping assistant

Allowed consumers to call in for a voice appointment to guide them. Was rolled out in UK, US, France and Germany

Pop-up shops

Temporarily opened around

100 pop-up shops in key cities minimising queues and traffic

Redirected traffic

Promoted the online store and the omnichannel service "Endless Aisle" in campaigns and in queues in front of stores

Stretched peak trading periods

Used promotional tactics and media planning to stretch the peak trading period over longer time

Q4 Traffic		Q4 Conversion rate
- growth		- growth
-60% +50%	+65% +30%
O&O	Online	O&O	Online
concept		concept
stores		stores

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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 will continue to be an important driver of sales

	VISITS	REVENUE
DKK	THROUGH E-MAILS	PER E-MAIL

million revenue	YoY	YoY
in Q4 2020
			CONVERSION	SENT
			RATE

>110%

compared with

Data-driven

growth initiatives

such as e-mail

marketing support

strong online

organic growth of

104% in Q4

last year

YoYYoY

11 Pandora Q4 2020 - Teleconference presentation

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

Q4 PERFORMANCE -

COVID-19 LOCKDOWNS BLUR THE PICTURE

• Sell-outgrowth in Q4 2020 ended in positive territory
• Sell-outgrowth was impacted by two opposing COVID-19 factors:
• 1. Lockdown of stores dragging down revenue
  2. A shift in general consumer demand away from travelling etc. and towards among others gifting and jewellery
• We do not have data suggesting what the net impact of these two factors is
• Credit card data from the US, however, suggests that the jewellery category grew significantly in Q4 2020 vs prior year - indicating a material and temporary shift in demand
• Having said that, the scattered market data available indicates that Pandora's overall Q4 performance was better than the market in general

Q4 illustrative performance

1%

Q4 2020 Sell-	Lost revenue in	Lost revenue	Extra spending	Underlying
out growth	physical stores	recovered online	from consumer	performance
			wallet shifting

Store operations in Q4 2020

of stores open 100%

of stores with
reduced opening hours	Around	of stores

temporarily closed

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MANAGING UNCERTAINTY AS LOCKDOWNS

CONTINUES

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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 will to the extent possible continue the successful initiatives from the Social distancing battle plan in Q4
• Flexibility will be key again this quarter, as the ability to manage inventory between stores and online will secure availability of best sellers in the right channel
• Continued strong traction on cost reset savings funding investments in Media and Marketing

COST SAVINGS RUN-RATE TARGET OF DKK 1.6B DELIVERED

COST CATEGORIES

Cost of sales

Retail expenses

Administrative expenses

IT

Other

	ANNUAL RUN RATE TARGET	SAVINGS ACHIEVED
COST INITIATIVES & IMPROVEMENTS	BY END 2020 (DKK billion)	(RUN RATE END 2020, DKK billion)

• Continued incremental savings through optimisation of production

	of existing assortment and existing production methods	0.45 - 0.48
• Design to value review of high-running products done
•	Improved productivity in store (sales per labour hour)
•	Further lease cost reductions driven by newly established Global	0.35 - 0.38
	Network team

• New ways of working and travel norms has reduced travel expenses

•	Global Business Services organisation launched - savings to	0.25
	materialise from 2022
•	IT Transformation completed	0.20
•	Efficiencies and savings delivered as planned

• Higher efficiency of marketing and media spending from global/local tenders
• Insourcing of critical capabilities reducing external spend	0.3-0.34
•	Optimisation and retendering of packaging material
•	Introduction of sustainability initiatives e.g. 'ask for bags' in store

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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

SOLID FINANCIAL RESULTS DESPITE CONTINUED NEGATIVE COVID-19 IMPACT

Revenue

7.9

DKK billion

(4% YoY growth in local

currency)

• Strong performance continues in Q4 despite 10% of the stores being closed due to COVID-19
• Uplift from consumer spending away from traveling and services towards gifting and discretionary goods

Sell-out growth incl.

temporarily closed stores

1%

(-5% in Q4 2019)

• Five out of seven key markets delivered positive sell-out growth despite negative COVID-19 impact
• Social distancing battle plan pays off contributing to the solid Q4 performance

Organic growth	EBIT margin excluding	Free cash flow incl.
	restructuring costs	lease payments
4%	31.8%	3.8
(-1% in Q4 2019)	(35.3% in Q4 2019)	DKK billion
		(DKK 2.8 billion in Q4 2019)
• Material organic growth	• Higher than anticipated EBIT	• Operating working capital
improvement in Q4 2020 -	margin driven by operating	ended in negative by the end
first quarter with positive	leverage from top-line	of 2020 - lowest level ever
organic growth since Q4	growth	• 2020 was the second
2017
• Gross margin remains strong	consecutive year with cash
• Performance supported by	- 1.5pp drag from raw	conversion well above 100%
online growth of +104% -	materials and FX
both traffic and conversion	development compared with
rate are strong	last year

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BACK TO POSITIVE GROWTH IN Q4 - FIRST TIME SINCE Q4 2017

Organic growth supported by phasing of sell-in and shift in channel mix

DKK million, %-p growth (approximately)

	4%	0	4%
	2.5%
7,956	1.5%		-5%
-1%	1%
			-1%

Revenue,	Network	Sell-out	Phasing of	Channel mix	Organic	Forward	Total	FX	Total
Q4 2019	expansion	growth incl.	sell-in from	& other	growth,	integration	revenue		revenue
		temporarily	Q3 to Q4		Q4 2020		growth in		growth in
		closed stores					LC,		DKK,
							Q4 2020		Q4 2020

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Commentary

• Network expansion has a 1pp negative impact due to net 80 store closures
• Sell-into Wholesale partners was boosted by the phasing from Q3 to Q4 (equivalent negative impact in Q3 2020)
• Channel mix supported the organic growth by 1pp (wholesale revenue converting to online revenue) and online freight income also supported organic growth by around 1pp

STRONG EBIT MARGIN IN A DIFFICULT ENVIRONMENT

EBIT margin at strong level despite COVID-19 headwind

%-p growth (approximately)
35.3%	1.5%	-2%
		-2%
		-2.5%	31.8%
		1.5%
			-3.7%
			28.1%

EBIT margin	Leverage from	FX &	Non-	Programme	Programme	EBIT margin	Restructuring	Reported
excl.	organic growth	commodities	recurring &	NOW	NOW cost	excl.	costs	EBIT margin,
Restructuring			COVID-19	investments	reductions	restructuring		Q4 2020
costs,			costs			costs,
Q4 2019						Q4 2020

19 Pandora Q4 2020 - Teleconference presentation

Commentary

• Adverse foreign exchange development impacted the EBIT margin by -1pp driven by depreciation of the USD and GBP against the Danish krone, partly offset by a positive impact from weakening of the THB
• Higher silver prices dragged down the margin by 1pp
• COVID-19related costs - mainly additional costs to mange social distancing requirements in the stores - combined with other non-recurring costs negatively impacted the margin by 2pp
• Cost savings delivered were reinvested into driving the top-line and strengthening the organisation. In Q4 2020, significant investments in additional online capacity as well as in improved online customer service were made
• Restructuring costs of DKK 0.3 billion represent the final one-off costs under Programme NOW. No further restructuring costs will be reported separately in 2021

CONTINUED STRONG FREE CASH FLOW IN Q4

Free cash flow increased from last year and leverage at low end of policy range

Commentary

Strong free cash flow

• Strong free cash flow again in Q4 2020 closing

the quarter better than Q4 2019, coming from

a continued solid development in operating

working capital, a relatively lower CAPEX level

Q4 2019	Q4 2020
	171%
120%

Cash conversion

excl. IFRS 16

3.8

2.8

Free cash flow incl. lease payments

(DKK billion)

1.1x

0.5x

NIBD to EBITDA excl. restructuring costs

2.3%

1.6%

CAPEX

(% of revenue)

and lower tax payments

Working capital turn negative - not a sustainable level

•	Inventories ended 2020 almost 10% below last
	year and below our targeted weeks of
	coverage. An increase in inventories in 2021 is
	planned
•	Trade receivables significantly down compared

Record low working capital dipping into negative levels

	Q4 2019			Q4 2020	%, last 12 months rolling revenue
									-16.9%
									-14.2%
	3.1%								9.8%	10.3%
							7.5%
							4.6%
			-2.1%
		Working capital		Trade receivables	Trade payables	Inventories
20		Pandora Q4 2020 - Teleconference presentation

with 2019 as DSO close at an all time low in Q4

• Trade payables at high level boosted by non-

recurring payables related to restructuring

costs

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

STABILISING THE TOP-LINE:

• In 2021, Pandora expects to reach an important milestone: returning to top-line growth after three years of decline
• In the absence of COVID-19 impact, Pandora would guide for slightly positive organic growth in 2021 versus 2019
• Having said that, 2021 will be impacted by COVID-19 lockdowns and performance therefore remains highly uncertain. Around 6% drag on revenue is assumed in 2021
• In order to increase transparency on Pandora's thinking about the underlying business and as a reflection of the high level of uncertainty on the materiality and duration of the COVID-19 impact, Pandora therefore provides supplementary information about what the guidance would have been in the absence of COVID-19 lockdowns

OFFICIAL 2021

GUIDANCE

Including impact from

COVID-19

ORGANIC REVENUE

GROWTH

Above 8%

(Above -3% vs 2019)

EBIT MARGIN

Above 21%

Excluding impact from

COVID-19

ORGANIC REVENUE

GROWTH

Above 14%

(Above 2% vs 2019)

EBIT MARGIN

Above 23%

22

FULL YEAR 2021 ORGANIC GROWTH GUIDANCE BRIDGE

2021 vs 2020
>14%	Above 14%	~-6%	Above 8%
~0%

2020 revenue	Network	Sell-out growth in	2021	COVID-19 impact	2021 incl.
	development	own channels &	expectations pre		COVID-19
		sell-in to partners	COVID-19 impact

2021 vs 2019

>3%	Above 2%	~-5%	Above -3%
~-1%

2019 revenue	Network	Sell-out growth in	2021	COVID-19 impact	2021 incl.
	development	own channels &	expectations pre		COVID-19
		sell-in to partners	COVID-19 impact

23 Pandora Q4 2020 - Teleconference presentation

GUIDANCE

ASSUMPTIONS 2021

• The guidance is based on the assumption that approximately 25% of the stores will be temporarily closed during the first half of 2021 and that organic growth will be negatively impacted by around -6% for the full year
• The guidance is also based on the assumption that the positive impact seen in late 2020 of reallocation of consumer spending away from travelling and services towards gifting and discretionary goods was not larger than the negative impact from temporary store closures
• The impact from forward integration is expected to be around 1% in 2021. Finally, Pandora expects headwind from foreign exchange rates of approximately -1% taking total revenue growth in DKK to above 8% in 2021

FULL YEAR 2021 EBIT MARGIN

GUIDANCE BRIDGE

%-points approximations

2021 expectations before

COVID-19 impact

~5.5%

~-1.5%

Above 23%

				~-1.0%
	20.4%						~0.5%	Above 21%
						~-2.5%
EBIT margin	2021 growth	No	Commodities,	EBIT margin	Elevated	Cost actions	2021 EBIT
	2020	leverage	government	FX & other	expectations	COVID-19 risk & government	margin
			support or		pre COVID-19		support	guidance
			rent
			concessions
24	Pandora Q4 2020 - Teleconference presentation

EBIT MARGIN GUIDANCE 2021

• As illustrated on the left there is significant positive operating leverage in the business model
• In the EBIT margin guidance this is not directly visible due to continued COVID-19 headwind and higher commodity prices
• The assumed COVID-19 lockdowns in H1 2021 drags down the margin by 2pp
• The quarterly phasing of the EBIT margin obviously depends on the COVID-19 development. As in prior years and in line with normal seasonality, Q4 is expected to be by far the most profitable quarter of the year
• CAPEX for the year is expected to be in the range of DKK 1.0-1.2 billion
• No major changes to the overall concept store network are expected
• The effective tax rate is expected to be 22-23%,

in line with 2020

CASH DISTRIBUTION IS SUSPENDED DUE TO UNCERTAINTY AROUND COVID-19

Ending 2020 with solid financials

Ample liquidity		NIBD to EBITDA ratio
DKK 10 billion		0.5x
(DKK 3 billion in cash)		(Low end of capital structure policy)

Cash distribution development since 2015 (DKK billion)

Share buyback (cancelled due to COVID-19)

	Share buyback			5.9			19
	Dividend	5.5	5.8
						-
	5.0		1.8				COVID
				4.0	4.0		to
		4.0
					2.9	due
	3.9				2.2
						Suspended
			4.0			2.1
	1.1	1.5		1.9	1.8
				0.8
	2015	2016	2017	2018	2019	2020	2021
25	Pandora Q4 2020 - Teleconference presentation

• Pandora continues to be highly cash generative and has ample liquidity to initiate cash distribution to shareholders
• By the end of 2020, financial leverage was 0.5x. This is in the low end of the capital structure policy (NIBD to EBITDA between 0.5 and 1.5x)
• However due to the unprecedented uncertainty caused by COVID-19, Pandora considers it appropriate and prudent to await further certainty about the pandemic before re-initiating cash distribution to the shareholders
• At the Annual General Meeting in March 2021, Pandora will ask shareholders to authorise Pandora to distribute up to DKK 15 extraordinary dividend per share
• The Board of Directors already has the authority to initiate a share buyback at any point in time
• The capital structure policy remains unchanged

EXCITING PRODUCT LINE-UP FOR KEY

TRADING EVENTS IN Q1 2021

January 2021	February 2021		March 2021

26 Pandora Q4 2020 - Teleconference presentation

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

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Q&A

28 Pandora Q4 2020 - Teleconference presentation

APPENDIX

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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 in China and Russia.

30 Pandora Q4 2020 - Teleconference presentation

PANDORA'S ONLINE BUSINESS & PRESENCE

Online store development

DKK million													Online store % of Group Revenue				Online store revenue
																											%
2,600																																								55
2,400																																								50
																											52%
2,200
																																							45
2,000
																																							40
1,800
																																							35
1,600
																																							30
1,400
																																				32%
1,200																																			2,533		25
1,000																																								20
800																						16%												21%
									13%					12%										1,487								15
																		1,307
600		9%	9%									10%		10%				15%
8%		1,019																	841					10
400											543								621
		438		447									477				455																		5
				400
200
0																																								0
	Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020

104%		32%		20		SINGLE		STRONG
ORGANIC		REVENUE SHARE OF
GROWTH IN		GROUP REVENUE IN		MARKETS		DIGIT RETURN		PROFITABILITY
Q4 '20		Q4 '20				RATES

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 345 million visits on the Pandora online stores in 2020

18 million Pandora club members worldwide

16.9 million Facebook followers

8.3 million followers on Instagram

31 Pandora Q4 2020 - Teleconference presentation

REVENUE DEVELOPMENT BY CHANNEL AND BY PRODUCT CATEGORY

Channel development

		Growth, Q4 2020		Growth, FY 2020
		Q4/Q4,	share of		FY/FY,	share of
DKK million	Q4 2020	LC	revenue FY 2020	LC	revenue
Pandora owned retail	5,525	12%	70%	13,426	-2%	71%
- of which concept	2,725	-21%	35%	7,321	-29%	39%
stores
- of which online stores	2,533	104%	32%	5,483	103%	29%
- of which other points	266	7%	3%	622	-18%	3%
of sale
Wholesale	2,143	-10%	27%	4,949	-25%	26%
- of which concept	1,182	-14%	15%	2,714	-28%	14%
stores
- of which other points	961	-5%	12%	2,235	-21%	12%
of sale
Third-party distribution	223	-10%	3%	634	-33%	3%
Total revenue	7,891	4%	100%	19,009	-11%	100%

Product category development

		Growth, Q4 2020		Growth, FY 2020
		Q4/Q4,	share of		FY/FY,	share of
DKK million	Q4 2020	LC	revenue FY 2020	LC	revenue
Charms	3,936	1%	50%	9,646	-13%	51%
Bracelets	1,614	9%	20%	3,751	-8%	20%
Rings	1,113	5%	14%	2,774	-8%	15%
Earrings	580	8%	7%	1,319	-9%	7%
Necklaces & Pendants	649	10%	8%	1,519	-6%	8%
Total revenue	7,891	4%	100%	19,009	-11%	100%

32 Pandora Q4 2020 - Teleconference presentation

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 which Pandora owned	235	3	28
- of which wholesale	3,602	-53	-210
- of which third-party distribution	565	-11	-73
Total points of sale	7,092	-60	-335

33 Pandora Q4 2020 - Teleconference presentation

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%	16%
Italy	825	-3%	-12%	10%	2,021	-11%	-16%	11%
France	494	1%	1%	6%	1,154	-1%	-4%	6%
Germany	418	7%	5%	5%	1,014	6%	4%	5%
US	1,982	20%	22%	25%	4,505	0%	1%	24%
Australia	537	24%	19%	7%	1,120	2%	-2%	6%
China	322	-23%	-25%	4%	1,261	-35%	-35%	7%
Group	7,891	4%	-2%	100%	19,009	-11%	-12%	100%

34 Pandora Q4 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	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	/Q4 2019
UK	217	217	230	0	-13	139	139	126	0	13
Russia	174	173	184	1	-10	0	0	0	0	0
Germany	138	139	146	-1	-8	134	135	140	-1	-6
Italy	146	146	148	0	-2	107	107	107	0	0
France	121	121	122	0	-1	77	77	77	0	0
Spain	92	90	87	2	5	70	70	70	0	0
Poland	55	52	52	3	3	38	37	37	1	1
South Africa	30	30	30	0	0	28	28	28	0	0
Turkey	29	30	30	-1	-1	29	30	30	-1	-1
Ireland	26	26	29	0	-3	21	21	24	0	-3
Netherlands	25	25	26	0	-1	25	25	26	0	-1
Ukraine	31	31	29	0	2	0	0	0	0	0
Portugal	26	26	26	0	0	0	0	0	0	0
Belgium	22	23	24	-1	-2	14	14	15	0	-1
Romania	23	23	23	0	0	12	12	12	0	0
United Arab Emirates	17	18	18	-1	-1	17	18	18	-1	-1
Czech Republic	19	19	19	0	0	10	10	10	0	0
Israel	17	17	17	0	0	0	0	0	0	0
Austria	11	11	14	0	-3	9	9	9	0	0
Greece	11	11	14	0	-3	0	0	0	0	0
Denmark	7	7	12	0	-5	7	7	12	0	-5
Saudi Arabia	13	13	13	0	0	0	0	0	0	0
Sweden	7	10	10	-3	-3	7	10	10	-3	-3
Nigeria	8	8	10	0	-2	0	0	0	0	0
US	403	401	402	2	1	154	153	158	1	-4
Brazil	84	87	95	-3	-11	54	54	57	0	-3
Canada	77	78	79	-1	-2	30	23	23	7	7
Mexico	77	77	69	0	8	49	48	45	1	4
Caribbean	27	26	27	1	0	0	0	0	0	0
China	234	236	237	-2	-3	222	225	226	-3	-4
Australia	122	123	128	-1	-6	38	37	39	1	-1
Philippines	36	34	36	2	0	0	0	0	0	0
Malaysia	27	28	31	-1	-4	0	0	0	0	0
Hong Kong	24	23	30	1	-6	22	21	28	1	-6
Thailand	21	21	20	0	1	0	0	0	0	0
New Zealand	18	18	18	0	0	9	9	9	0	0
Singapore	11	11	12	0	-1	11	11	11	0	0
Rest of the World	264	260	273	4	-9	49	49	50	0	-1
All markets	2,690	2,689	2,770	1	-80	1,382	1,379	1,397	3	-15

35 Pandora Q4 2020 - Teleconference presentation

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)	-3,738	-276	-3,462	-3,730
- of which sales, distribution and marketing expenses	-3,060	-42	-3,018	-2,933
- of which administrative expenses	-678	-234	-444	-797
EBIT	2,212	-296	2,508	2,302
EBIT margin	28.0%		31.8%	28.9%
		FY 2020	FY 2020 excl.
DKK million	FY 2020 reported	Restructuring costs	restructuring costs	FY 2019
Revenue	19,009	-	19,009	21,868
Cost of sales	-4,634	-159	-4,475	-5,966
Gross profit	14,375	-159	14,534	15,903
Gross margin	75.6%		76.5%	72.7%
Operating expenses (incl. D&A)	-11,691	-1,039	-10,652	-12,074
- of which sales, distribution and marketing expenses	-9,155	-204	-8,951	-9,305
- of which administrative expenses	-2,536	-834	-1,702	-2,770
EBIT	2,684	-1,197	3,881	3,829
EBIT margin	14.1%		20.4%	17.5%

36 Pandora Q4 2020 - Teleconference presentation

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%
Trade payables	-3,211	-2,425	-2,316	-2,337	-3,095
- Share of revenue (last 12 months)	-16.9%	-12.7%	-11.9%	-11.0%	-14.2%
Operating working capital	-392	801	535	899	684

• Share of revenue (last 12 months) Free cash flow excl. IFRS16
  CAPEX

% of revenue

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

-2.1%	4.2%	2.8%	4.2%	3.1%
3,780	457	943	-272	2,760
124	117	121	129	184
1.6%	2.9%	4.2%	3.1%	2.3%
0.5x	1.1x	1.1x	1.3x	1.1x

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)

126	288	228	134	109
23	30	89	46	36

37 Pandora Q4 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%

Q4 2020

Q1 2021

Q2 2021

Q3 2021

Q4 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 be gradual.

38 Pandora Q4 2020 - Teleconference presentation

Raw material share of cost of goods sold

Other Other raw materials Gold Silver

	51%		58%		59%		54%		69%
	12%
						15%
		9%
			9%
	10%
		9%										4%
			8%			6%
							3%
	27%
						25%
		24%		24%			24%
	2016	2017	2018	2019	2020

• Other cost of goods sold consist of labour, cost to third-partyset-ups (i.e. plating) and licence, customs, freight cost, remelt and minor provisions
• 'Other raw materials' decreased in 2020 as plating is done in-house and expensed mainly through 'Other'.

OVERVIEW OF THE GLOBAL JEWELLERY MARKET

	Fine jewellery market 2020-2024
MARKET DEVELOPMENT	CAGR of 3%

Jewellery market development
10 years, EUR billion
	Costume Jewellery		Fine Jewellery		-
		315COVID19
		CAGR			6%
	14%	216								250
146
2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020

10 largest jewellery markets	Jewellery eCOM development
2020, EUR million	EUR billion
China	78,324	E-commerce	CAGR
USA	52,430
India	45,423		~29%	~39
Japan	6,226		~28
Canada	4,385	~23
UK	4,044
S. Korea	3,721
Taiwan	3,387
Germany	3,183	2018	2019	2020
HK	3,137

	Global category share (2020)
	Wristwear	Earrings	Other
JEWELLERY DEVELOPMENT	Rings	Neckwear
	4%
		18%
	31%
		29%

18%

Source: Euromonitor

Fine jewellery metal split (2020)

Gold	Metal Combination
Silver	Other
Platinum	8%
9%
6%
15%	62%

World's 10 largest jewellery brands (2019)

Chow	Lao Feng Cartier	Tiffany	Lao Miao Tanishq Swarovski Malabar Bvlgari
Tai Fook	Xiang	& Co		Gold
~2.5%				~0.5%
				Market share (approx.)

39 Pandora Q4 2020 - Teleconference presentation

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.

Frontrunner in ESG

Investment Performance

For the fifth 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	achieved in 2020	to reduce emissions
			across full value chain

90%
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.

40 Pandora Q4 2020 - Teleconference presentation

Data per Dec. 31, 2020

SUSTAINABLE PRODUCTS

		From 60%1 recycled in
99.8%	2020 to 100% in 2025
of all stones are	By 2025, 100% of products will
	man-made	be made from recycled silver and gold

		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.

41 Pandora Q4 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.

75%

of our Board of Directors are

women and 25% are men

Executive

Leadership Team

12.5% are women

87.5% are men

Data per Dec. 31, 2020

INVESTOR RELATIONS CONTACT DETAILS

Investor Relations team

John Bäckman

VP, Investor Relations, Tax & Treasury [phone] [e-mail]

Kristoffer Aas Malmgren

Director, Investor Relations

[phone] [e-mail]

Mikkel Johansen

Analyst, Investor Relations [phone] [e-mail]

42 Pandora Q4 2020 - Teleconference presentation

Share information			ADR information
Trading symbol		PNDORA		ADR trading symbol	PANDY
Identification		DK0060252690		Programme type	Sponsored level 1
number/ISIN			programme (J.P. Morgan)
					4 ADRs : 1 ordinary share
GICS		25203010		Ratio (ADR:ORD)
				(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)

Pandora Q4 2020 - Teleconference presentation