Q1 2O21
INTERIM FINANCIAL REPORT
4 May 2021 | Company Announcement No. 621
Havneholmen 17-19 | DK-1561 Copenhagen V | Denmark | www.pandoragroup.com | Company reg. no.: 2850 5116
2
HIGHLIGHTS
02 Executive Summary
03 Financial Highlights
04 New Strategy
6
BUSINESS UPDATE
06 Business Update
07 Revenue Review
11 Profitability
13 Cash Flow & Balance Sheet
14 Financial Guidance
17 Sustainability
18 Other Events
19 Contact
20
FINANCIAL STATEMENTS
20 Financial Statements
24 Accounting Notes
33 Disclaimer
Our equity story
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.
CONTENTS
Executive
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
2 | 33
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
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
3 | 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 2019
5
-3%
n/a
n/a
Sell-out growth incl. temporarily closed stores, %
21%
-17%
-12%
Sell-out growth incl. temporarily closed stores, %, vs 2019
5
-5%
n/a
n/a
Gross margin
1
, %
76.3%
77.4%
76.5%
EBIT margin
1
, %
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, DKK
3
-
-
-
Quarterly dividend per share, DKK
4
-
-
-
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
1
2020 numbers are excluding Programme NOW restructuring costs.
2
Excluding sale of Treasury shares amounting to DKK 1.8 billion in Q2 2020.
3
Proposed dividend per share for the year.
4
Paid quarterly dividend per share for the period.
5
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
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
4 | 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
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
5 | 33
Personalisation: Personalise the customer experience
Pandora is a global brand with a direct relationship to millions of consumers. This connection provides rich insights
that can help the company offer a better and more personalised service throughout the whole customer journey. The
aim is to provide a more relevant and customised omni-channel shopping experience across stores and online.
Core markets: Grow our Core Markets with particular focus on US and China
Pandora sees significant opportunities to grow in existing markets, rather than expanding into new geographies. In
particular, Pandora will focus on untapped opportunities in US and China – markets where our brand penetration is
still low. US and China represent more than 50% of the global jewellery market, and they will continue to increase in
importance with a significant part of the absolute market growth driven by these two markets. As such, Pandora plans
to invest over-proportionally in US and China.
FOUNDATION
To succeed with Phoenix, Pandora will rely on its strong foundation:
People
From crafting and distribution to stores and offices, Pandora is a world-class team connected by passion and a strong
sense of purpose. The new global operating model ensures the company delivers one brand experience based on
shared processes and clear roles. Pandora will continue to attract and develop talent, raise mobility and provide
innovative digital solutions that help employees connect, perform and grow their careers.
Digitalisation
The solid digital foundation Pandora is building will enable the strategy. With its new digital powerhouse in
Copenhagen, Pandora will significantly increase its use of data and advanced analytics and digitalise its business in
many other ways. Pandora’s ambition is to be best at offering personalised service to many customers.
Sustainability
Pandora’s ambition is to be an industry leader in sustainability and become a low-carbon, circular, inclusive and fair
business with a positive impact across the value chain. High-quality jewellery, strong business performance and high
ethical standards go hand in hand, and the company operates with respect for resources, environment and people.
Excellence
Programme NOW brought significant operational improvements but Pandora still has many opportunities to raise the
bar for excellence across manufacturing, stores and functions. The company will continue to be highly cost-conscious
across its operations.
Scale
Pandora is the largest jewellery manufacturer in the world and has the biggest brand reach, touching millions of
consumers every day. Pandora will continue to leverage this scale advantage to provide jewellery at competitive
prices, and reach consumers faster and better, while staying agile and adapting to changes in the market.
PRESENTATION AND CONFERENCE CALL
Today, Pandora will host an extended conference call where the headlines of the new strategy will be presented. A
separate Phoenix presentation as well as a video recording of the conference call will be available on our website.
CAPITAL MARKETS DAY
Pandora will host a Capital Markets Day on 14 September 2021 in London. The Executive Leadership Team will be
present and share details of the strategic initiatives. At the same time, Pandora will announce new financial targets.
Executive
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
6 | 33
BUSINESS UPDATE
Strong start to 2021 despite an average of 30% temporarily store closures in the quarter
Despite another wave of COVID-19 lockdowns in Q1 2021, Pandora delivered solid revenue performance supported
by significant growth in the biggest market, US, representing 31% of revenue in Q1 2021 vs 22% in Q1 2020. Most of
Pandora’s markets across Europe experienced store closures and COVID-19 restrictions in Q1 2021, including limited
openings hours and social distancing measures. Pandora therefore continued to focus its marketing efforts on driving
traffic online. Revenue generated by email marketing, as one of the initiatives, grew by triple digits growth rates in the
quarter. Additionally, Pandora tested new platforms in Q1 2021, such as TikTok and Twitch in selected markets like
the US. The initial results are positive and help secure the strong online performance. Performance in China continued
to be unsatisfactory with sell-out decreasing by -48% vs 2019. The performance is in line with expectations and China
continue to be a top priority. The first significant steps to reposition the brand in China will be initiated in the second
half of 2021. China accounted for only 6% of revenue in Q1 2021.
The traffic into owned physical stores was down by around 50% compared to Q1 2020. But the quality of traffic is
better, leading to a materially higher conversion rate, while continuing to indicate that more consumers enter the
stores with a purpose to buy during the pandemic. In Australia and US, traffic into physical stores was positive
compared to Q1 2020 suggesting that consumers largely revert to the physical channel once stores are open. The
same early signs are seen in UK, which reopened early April.
Pandora’s continued efforts to improve merchandising processes resulted in a 60% reduction in the end of season
sale in Q1 2021 – another sign that the brand health is improving. Valentines, which is the key trading event in Q1, did
very well and was up 5% vs 2019. Markets like the UK also delivered positive Valentines growth, despite all stores
being temporarily closed.
Pandora’s strong brand position was maintained and one third of all Google searches for branded jewellery globally
in Q1 2021 was for Pandora.
As Pandora enters Q2, the uncertainty around COVID-19 continues, especially in Europe where the lockdowns are
widely imposed in our key markets France, Italy and Germany. With 35% of stores closed end of March and around
20% today and with Mother’s Day approaching, chances that the event will be fully online in some markets are high.
Pandora will leverage on learnings from the strong UK online event, where Mother’s Day falls in Q1.
The solid performance continued in April 2021. Sell-out growth is expected to be mid-single digit positive vs 2019.
This continues to be driven by US where performance in April is even stronger than in Q1 2021. Draft numbers for
April shows revenue of around DKK 1.7 billion corresponding to an organic growth vs 2019 of around 30%. Organic
growth is supported by timing of shipments between March and April 2021. A trading update with the final revenue
numbers for April 2021 will be released in due course.
Executive
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
7 | 33
REVENUE REVIEW
Strong underlying revenue development
The revenue growth development can be illustrated as follows (supplementary comments follows below):
Q1 growth composition vs Q1 2019
Q1 growth composition vs Q1 2020
Q1 2021 was another quarter with performance impacted by temporarily closed stores. On average 30% of the
stores was temporarily closed in Q1 2021 vs approx. 20% in Q1 2020. 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.
All markets were generally impacted by some restrictions from social distancing. Traffic vs 2020 was, as expected,
negative across most key markets in the physical stores partly offset by double digit growth in conversion rates. The
total sell-out growth vs 2019 at -5% and +21% vs 2020, was driven by continued strong online performance where
both traffic and conversion rates continue to grow by high double digits. Additionally, US and Australia both delivered
positive growth vs 2019, also in the physical network contributing positively to the strong performance.
*Sell-out growth incl. temporarily closed stores, %
Executive
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
8 | 33
Q1 growth composition vs Q1 2019
Organic growth vs 2019 was negatively impacted by approximately -1.5pp from the closure of 54 concept stores
compared with Q1 2019.
The impact of lockdowns and social restrictions in physical stores, has skewed the channel mix towards online. This
created a positive impact on reported revenue converting wholesale sell-in to sell-out in the online channel.
Finally the organic growth was positively impacted by relatively higher sell-in compared to Q1 2019. As part of
Programme NOW, Pandora initiated a commercial reset in Q1 2019 with the purpose of among others reducing
inventory at wholesale partners. Sell-in to partners in Q1 2019 was therefore unusually low.
Q1 growth composition vs Q1 2020
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.
Organic growth vs 2020 was 13% driven by sell-out growth of 21%. The sell-out growth vs 2020 was favourably
boosted due to differences in trading days between the weekly so-called 4-4-5 retail calendar (used for sell-out) and
the Gregorian calendar (used for organic growth). Week 13 is part of Q1 2021 sell-out and include four days of April,
1-4 April. In April 2020, almost the entire network was temporarily closed due to COVID-19 making comparable
numbers easy and differences between the retail and Gregorian calendar therefore impact the two KPI’s.
Both Global Business Units showed good performance in Q1 2021. Moments and Collabs generated 22% sell-out
growth vs 2020 while Style and Upstream Innovation generated 17% sell-out growth vs 2020.
REVIEW OF REVENUE BY CHANNEL
Revenue in Pandora owned concept stores was down vs both 2020 and 2019, clearly impacted by store closures. On
the other hand the very strong online performance continued, offsetting some of the impact from COVID-19 related
lockdowns in physical stores.
Organic growth in Pandoras wholesale business was -4% vs 2019, as store closures affects the sell-in to partners.
Furthermore, Pandora has maintained its focus to secure a balanced sell-in vs sell-out ratio, and in general the
partners have managed well through the pandemic. Other points of sales grew 7% vs 2019 driven by wholesalers in
mainly Germany and China with an online business.
QUARTERLY REVENUE DEVELOPMENT BY CHANNEL
DKK million
Q1 2021
Q1 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Organic
growth vs 2020
Organic
growth vs 2019
Local currency
growth vs 2020
Share of
Revenue
Pandora owned
1
retail
2,956
2,623
27%
2%
17%
-1%
18%
66%
- of which concept stores
1,381
1,836
-
-
-22%
-41%
-20%
31%
- of which online stores
1,417
621
-
-
136%
205%
136%
31%
- of which other points of sale
158
165
-
-
0%
-15%
0%
4%
Wholesale
1,365
1,328
12%
-15%
9%
-4%
8%
30%
- of which concept stores
689
765
-
-
-2%
-12%
-5%
15%
- of which other points of sale
676
563
-
-
25%
7%
25%
15%
Third-party distribution
179
220
12%
-15%
-14%
-22%
-14%
4%
Total revenue
4,500
4,172
21%
-5%
13%
-3%
13%
100%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
Executive
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
9 | 33
REVIEW OF NETWORK DEVELOPMENT
In Q1 2021, Pandora took over 22 concept stores in the US from a franchise partner.
Other points of sale is down 352 compared with Q4 2020. The closures was mainly driven by US and Spain. In the US,
Pandora closed down approx. 230 Jared accounts, while the closures in Spain is part of a general optimisation of the
footprint closing smaller multibrand accounts.
Number of points of sale
Q1 2021
Q4 2020
Q1 2020
Growth
Q1 2021
/Q4 2020
Growth
Q1 2021
/Q1 2020
Concept stores
2,659
2,690
2,746
-31
-87
- of which Pandora owned
1
1,394
1,382
1,382
12
12
- of which franchise owned
755
797
845
-42
-90
- of which third-party distribution
510
511
519
-1
-9
Other points of sale
4,050
4,402
4,593
-352
-543
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
REVIEW OF REVENUE BY KEY MARKET
The US market, Pandora’s largest market generating 31% of total revenue in Q1 2021, delivered very strong
performance in the quarter. The strong performance was driven by a well-executed Valentines campaign and a
continued utilisation of omni-channel features with approx. 10% of online orders being click-&-collect. Pandora
decided to increase media investments in the quarter, as consumer sentiment towards discretionary goods is strong
and the market was almost fully open in the quarter. The results were encouraging, as Pandora delivered 52% sell-out
growth vs 2019, indicating that Pandora continue to increase market share. Demand for discretionary goods in the
US, also outside the jewellery sector, is temporarily supported by the stimulus packages.
The UK market was challenged by lockdowns. All physical stores were closed throughout the entire quarter. Given
these circumstances, Pandora is satisfied with the -16% sell-out growth vs 2019 driven by +400% online growth.
Mother’s Day in the UK falls on 14 March. Pandora had to plan it as a pure online event and it proved successful as
sell-out growth was up 14% vs 2020 in the three weeks of Mother’s Day campaign. Furthermore, the strong online
business was supported by various digital initiatives, which helped stimulate the online performance. Targeted e-mails
proved particularly effective in activating customers.
The Australian market was almost fully open throughout Q1 and delivered positive sell-out growth vs 2019 of 5%.
The online business did well, generating sell-out growth vs 2019 of around 60%. The strong online performance was
further supported by positive sell-out growth in the franchise concept stores, which are located in less touristed
areas compared to Pandora owned concept stores. Consumers started to come back to the stores after re-opening
with traffic being up double digits vs 2020. The effects of the pandemic is visible in Australia, as tourism has declined
significantly and has been replaced by domestic spending.
France, Italy and Germany have all been impacted by closures and social restrictions throughout Q1. Given the
circumstances, the negative sell-out growth vs 2019 is satisfactory, not least in Italy where the online business is
traditionally limited. The combined underlying sell-out growth in these three markets – adjusted for COVID-19 – is
likely to be positive. Online performance continue to improve and all three markets saw +200% sell-out growth vs
2019 online.
Executive
summary
Financial
highlights
New
strategy
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
10 | 33
Performance in China continued to be unsatisfactory with sell-out decreasing by -48% vs 2019. As previously
communicated, the core issue in China is that Pandora is perceived as a mainstream jewellery brand. Consumer
perception must be changed to focus on Pandora’s key brand strengths. Pandora today separately communicate the
highlights of the new strategy, in which China play an important role. Performance in China is not expected to improve
in the short term and the benefits of the strategic initiatives are not expected to be visible before next year. As part
of repositioning and strengthening the brand, Pandora plan to a) invest significantly in media and b) reduce the level
of promotions – both starting in the second half of 2021. China accounted for 6% of revenue in Q1 2021.
QUARTERLY REVENUE DEVELOPMENT BY KEY MARKET
DKK million
Q1 2021
Q1 2020
Sell-out growth
vs 2020
Sell-out growth
vs 2019
Organic growth vs
2020
Local currency
growth
Share of
revenue
UK
587
590
-7%
-16%
1%
1%
13%
Italy
440
452
5%
-11%
-2%
-2%
10%
France
194
241
-15%
-22%
-19%
-19%
4%
Germany
191
179
-16%
-22%
7%
7%
4%
US
1,391
935
81%
52%
62%
64%
31%
Australia
243
193
29%
5%
18%
18%
5%
China
281
212
43%
-48%
35%
35%
6%
Total top-7 markets
3,326
2,800
32%
5%
-
-
74%
Rest of Pandora
1,174
1,371
-4%
-26%
-
-
26%
Total revenue
4,500
4,172
21%
-5%
13%
13%
100%
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
11 | 33
PROFITABILITY
Solid EBIT margin in a difficult environment - driven by operating leverage
The EBIT margin was 20.1% in Q1 2021, up from 15.3% in Q1 2020. Pandora benefitted from the strong inherent
operating leverage in the business, following the 13% organic growth vs last year. Additionally, Pandora has received
DKK 82 million in government support in Q1 2021 (mainly UK, Italy and Germany). In Q1 2020, Pandora did not receive
any government support.
As previously communicated, cost savings generated as part of Programme NOW has a DKK 350 million impact in
2021 and supported the EBIT margin in Q1 by 2pp. The cost savings were fully reinvested into the business through
marketing, data driven, organisational capabilities and other strategic initiatives to support topline growth.
The positive impacts on the EBIT margin was offset by adverse foreign exchange development and rising commodity
prices. The adverse impact from foreign exchange rates came mainly from depreciation of the USD against the Danish
krone which was partly offset by a positive effect from weakening of the THB. Combined with higher silver and gold
prices, it led to a total headwind of -1.5pp. The bigger drag on the EBIT margin in Q1 vs the original full-year guidance
is due to an unfavourable impact from FX. At current exchange rates, the full-year impact is expected to be in line
with the original full-year guidance.
EBIT-MARGIN DEVELOPMENT
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GROSS MARGIN
In Q1 2021, the gross margin decreased around 1pp to 76.3% compared with 77.4% in Q1 2020 (excluding
restructuring cost). The decline was mainly driven by higher silver prices partially offset by favourable foreign
exchange development. The negative impact from commodities is expected to gradually increase during 2021.
Additionally, the gross margin is impacted by a number of other factors including a slight drag from channel mix (online
growth is a slight drag on gross margin, as the online margin is slightly lower than for O&O stores as freight cost is
recognised in cost of sales). Gross margin was on the other hand positively impacted by both less discounts in Q1
2021 vs Q1 2020, as the end of season sale was significantly lower this year, as well as by the cost reduction program.
COST OF SALES AND GROSS PROFIT
DKK million
Q1 2021
Q1 2020
Growth
Share of revenue
Q1 2021
Share of revenue
Q1 2020
Revenue
4,500
4,172
8%
100.0%
100.0%
Cost of sales
-1,065
-942
13%
-23.7%
-22.6%
Gross profit excl. restructuring costs
3,436
3,230
6%
76.3%
77.4%
Restructuring costs
-
-86
-100%
-
-2.1%
Gross profit incl. restructuring costs
3,436
3,144
9%
76.3%
75.4%
OPERATING EXPENSES
Total operating expenses was DKK 2,533 million in Q1 2021, up 1% compared to Q1 2020 in constant foreign
exchange rates. Sales and distribution expenses decreased 4% in constant foreign exchange rates, mainly driven by
government support programmes of DKK 82 million. Marketing expenses increased by 5% in constant foreign
exchange rates. Pandora has deliberately continued its efforts to drive relevance of the brand and increase brand
awareness. Pandora continue to invest in digital marketing activities to drive traffic online, while at the same time
assure to be top of mind with consumers when the stores reopen. Administrative expenses increased by 16% in
constant foreign exchange rates following the investment Pandora has made into significantly lifting organisational
capabilities as part of the strategic reorganisation in Q2 last year (HR and people development, CCO organisation,
merchandising, network management, Digital Hub etc.).
OPERATING EXPENSES
DKK million
Q1 2021
Q1 2020
Growth
Share of revenue
Q1 2021
Share of revenue
Q1 2020
Sales and distribution expenses
-1,471
-1,594
-8%
32.7%
38.2%
Marketing expenses
-578
-570
1%
12.8%
13.7%
Administrative expenses
-484
-428
13%
10.8%
10.3%
Total operating expenses excl. restructuring costs
-2,533
-2,592
-2%
56.3%
62.1%
Restructuring costs
-
-348
-100%
-
8.4%
Total operating expenses incl. restructuring costs
-2,533
-2,940
-14%
56.3%
70.5%
FINANCIAL EXPENSES AND TAX
Net financial expenses ended well below last year. Q1 2020 was impacted by unrealised foreign exchange rate
losses on intercompany balances. The effective tax rate was well in line with guidance and in line with last year.
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13 | 33
CASH FLOW & BALANCE SHEET
Net working capital remain negative despite inventory built up
The net working capital remained strong and ended at -0.4% of last 12 months revenue in Q1 2021 compared with -
7.6% in Q4 2020 and 0.0% in Q1 2020. As communicated in the Q4 2020 announcement, Pandora ended 2020 with
unsustainable low inventory. Pandora decided to build up inventory by around DKK 0.4 billion in Q1 in order to
decrease the risk of disruptions in the supply chain as well as decrease the risk of stock-outs. Furthermore Trade
payables has decreased by approx. DKK 0.9 billion compared to Q4 2020, partly due to normal seasonality and partly
due to the fact that the final one-off restructuring costs related to Programme NOW have been paid. Trade
receivables is partially offsetting above, as trade receivables declined DKK 0.3 billion and wholesale Days Sales
Outstanding (DSO) remained healthy and stayed close to the historical low at 25 days. Total DSO, including retail
receivables was 12 days by the end of March, down from 23 days last year.
Free cash flow incl. lease payments ended at DKK -0.6 billion corresponding to a cash conversion of -65% in Q1 2021
compared to -134% in Q1 2020. The free cash flow incl. lease payments was negatively impacted by the working
capital movements mentioned above. CAPEX in the quarter remained relatively low at 2% of revenue partially due to
postponement of certain projects due to COVID-19 lockdowns.
NET WORKING CAPITAL AS A SHARE OF THE LAST 12 MONTHS’ REVENUE
Share of preceding 12 months' revenue
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Inventories
12.3%
10.3%
13.7%
11.6%
10.1%
Trade receivables
3.1%
4.6%
3.2%
3.1%
5.1%
Trade payables
-11.8%
-16.9%
-12.7%
-11.9%
-11.0%
Other net working capital elements
-4.0%
-5.6%
-4.2%
-4.2%
-4.2%
Total
-0.4%
-7.6%
0.0%
-1.5%
0.0%
NIBD to EBITDA excl. restructuring costs was 0.6x by the end of March, in the low end of the capital structure policy
(NIBD to EBITDA between 0.5 and 1.5x). After the end of the quarter, Pandora has successfully refinanced its DKK 7
billion (EUR 950 million) Revolving Credit Facilities at competitive terms. The margin on the loan is linked to Pandora’s
sustainability targets to be carbon neutral and to use recycled metals only by 2025. During April 2021, Pandora has
also prepaid the DKK 3 billion Club Deal which was put in place in early 2020 as a precautionary measure when the
pandemic broke out. As of today, available liquidity amounts to approximately DKK 7 billion.
Pandora continue to hold a strong liquidity position and is well positioned for the continued elevated uncertainty
related to COVID-19 and has decided to re-initiate cash distribution to shareholders, see section below.
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
14 | 33
FINANCIAL GUIDANCE
GUIDANCE FOR 2021 UPGRADED
Based on the strong start to 2021 and an updated full-year forecast, the financial guidance for 2021 is upgraded to
“organic growth above 12%” (previously “above 8%”) and EBIT margin “above 22%” (previously “above 21%”).
The launch of the new strategy, Phoenix, and the launch of Pandora Brilliance (separate press release) is incorporated
into the updated 2021 financial guidance, but would in itself not have had any material impact on the original 2021
financial guidance.
REVENUE GUIDANCE
The revenue guidance is upgraded to organic growth “above 12%” (previously “above 8%”), driven by the US stimulus
packages as well as stronger underlying performance. An organic growth of “above 12%” vs 2020 correspond to an
organic growth expectation of “above 0%” vs 2019.
COVID-19 continues to create an elevated level of uncertainty on the guidance. The expected full-year impact on
organic growth from COVID-19 is unchanged compared to the original guidance at -6pp, but with a different phasing.
In the original guidance, COVID-19 was assumed to impact mainly H1 2021. The updated guidance is based on the
assumption that 20-25% of the stores will be temporarily closed during the first half of 2021 and 5-10% in the
second half. The -6pp impact only includes the COVID-19 impact on closed stores and an assumed level of pick-up
in the online business. It does not include the temporary impact from US support packages.
The combination of COVID-19 impact in both 2021 and 2020 may create significant quarterly swings in revenue
growth vs 2020 in certain markets.
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15 | 33
PROFITABILITY GUIDANCE
The EBIT margin guidance is upgraded to “above 22%” (previously “above 21%”), driven by operating leverage from
expected higher growth. This is partly offset by marketing investments in China, as Pandora take the first significant
steps in the China transformation by investing in a repositioning of the brand.
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
16 | 33
2021 GUIDANCE - OTHER PARAMETERS
Other parameters are unchanged from the original guidance. CAPEX for the year is expected to be in the range of
DKK 1.0-1.2 billion. This includes investments in Pandora’s physical stores, the crafting facilities in Thailand as well as
digitalisation and technology. No major changes to the overall concept store network are expected in 2021. The
effective tax rate is expected to be 22-23%, in line with 2020.
CAPITAL STRUCTURE POLICY AND CASH DISTRIBUTION
At the end of March 2021, Pandora’s leverage continued to be in the low end of the capital structure policy at 0.6x
NIBD to EBITDA. The capital structure policy remains unchanged at 0.5-1.5x NIBD to EBITDA. The leverage would,
everything else being equal and in the absence of cash distribution, likely be close to zero at the end of 2021. At the
Annual General Meeting on 11 March 2021, Pandora’s shareholders granted the authority to the Board of Directors
to pass one or more resolutions to distribute extraordinary dividends of up a total of DKK 15 per share. Given the
strong performance in Q1, the ample liquidity and low leverage in combination with the successful refinancing of its
Revolving Credit Facilities, Pandora has decided to re-initiate distributions to its shareholders. During the next three
months, up to DKK 1 billion will be distributed through a combination of extraordinary dividend of DKK 5 per share,
that will be paid on 18 May 2021, and share buyback of up to DKK 500 million.
Assuming no significant worsening of COVID-19, it is Pandora’s intention to initiate further cash distribution
programmes in Q3 and Q4 2021.
FOREIGN EXCHANGE ASSUMPTIONS AND IMPLICATIONS
Average 2020
27 April 2021
FX ASSUMPTIONS AND
2021 Y-Y Financial
IMPLICATIONS
FX Rates
FX Rates
Impact
USD/DKK
6.5422
6.1516
THB/DKK
0.2091
0.1961
GBP/DKK
8.3890
8.5575
CNY/DKK
0.9476
0.9488
AUD/DKK
4.5069
4.7872
REVENUE (DKKm)
-250 to -300
EBIT (DKKm)
~75
EBIT margin
~0,5%
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17 | 33
SUSTAINABILITY
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18 | 33
OTHER EVENTS
OTHER IMPORTANT EVENTS IN Q1 2021 AND AFTER THE REPORTING PERIOD
After the end of Q1 2021, Pandora has successfully refinanced its DKK 7 billion (EUR 950 million) Revolving Credit
Facilities at competitive terms. The margin on the loan is linked to Pandora’s sustainability targets to be carbon neutral
and to use recycled metals only by 2025. Pandora has also prepaid the DKK 3 billion Club Deal.
FINANCIAL CALENDAR 2021
The financial calendar lists the expected dates of publication of financial announcements
17 August 2021
14 September 2021
Interim Financial Report for the second quarter/first six months of 2021
Capital Markets Day
03 November 2021
Interim Financial Report for the third quarter/first nine months of 2021
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
19 | 33
CONTACT
CONFERENCE CALL
An extended conference call for investors and financial analysts will be held today at 11.00 CET and can be joined
online at www.pandoragroup.com. The presentation for the call will be available on the website one hour before the
call.
The following numbers can be used by investors and analysts:
DK: +45 35 44 55 77
UK (International): +44 33 33 000 804
US: +1 631 913 1422
Please use PIN: 526 45 052#
Link to webcast: https://streams.eventcdn.net/pandora/2021q1
ABOUT PANDORA
Pandora designs, manufactures and markets hand-finished and contemporary jewellery made from high-quality
materials at affordable prices. Pandora jewellery is sold in more than 100 countries on six continents through more
than 6,700 points of sale, including more than 2,600 concept stores.
Founded in 1982 and headquartered in Copenhagen, Denmark, Pandora employs around 26,000 people worldwide
of whom more than 11,400 are located in Thailand, where the Company manufactures its jewellery. Pandora is
publicly listed on the Nasdaq Copenhagen stock exchange in Denmark. In 2020, Pandora’s total revenue was DKK
19.0 billion.
For more information, please contact:
INVESTOR RELATIONS
John Bäckman
VP, Investor Relations, Tax & Treasury
+45 5356 6909
jobck@pandora.net jobck@pandora.net
CORPORATE COMMUNICATIONS
Mads Twomey-Madsen
VP, Corporate Communications & Sustainability
+45 2510 0403
madt@pandora.net
Kristoffer Malmgren
Director, Investor Relations
+45 3050 1174
kram@pandora.net
Johan Melchior
Director, External Relations
+45 4060 1415
jome@pandora.net
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20 | 33
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
DKK million
Notes
Q1 2021
Q1 2020
FY 2020
Revenue
3,4
Cost of sales
-1,065
-1,028
-4,634
Gross profit
Sales, distribution and marketing expenses
-2,049
-2,254
-9,155
Administrative expenses
-484
-687
-2,536
Operating profit
Finance income
Finance costs
-109
-252
-507
Profit before tax
-30
Income tax expense
-182
-556
Net profit for the period
-24
Earnings per share, basic, DKK
-0.3
Earnings per share, diluted, DKK
-0.3
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
DKK million
Q1 2021
Q1 2020
FY 2020
Net profit for the period
-24
Other comprehensive income:
Items that may be reclassified to profit/loss for the period
Exchange rate adjustments of investments in subsidiaries
-217
-609
Fair value adjustment of hedging instruments
-384
-179
Tax on other comprehensive income, hedging instruments, income/expense
-13
Items that may be reclassified to profit/loss for the period, net of tax
-129
-353
-416
Items not to be reclassified to profit/loss for the period
Actuarial gain/loss on defined benefit plans, net of tax
Items not to be reclassified to profit/loss for the period, net of tax
Other comprehensive income, net of tax
-129
-353
-410
Total comprehensive income for the period
-377
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CONSOLIDATED BALANCE SHEET
DKK million
Notes
2021
31 March
2020
31 March
2020
31 December
ASSETS
Goodwill
10
Brand
Distribution
Other intangible assets
Total intangible assets
Property, plant and equipment
Right-of-use assets
11
Deferred tax assets
Other financial assets
Total non-current assets
Inventories
Trade receivables
8
Right-of-return assets
Derivative financial instruments
6,7
Income tax receivable
Other receivables
Cash
Total current assets
Total assets
EQUITY AND LIABILITIES
Share capital
Treasury shares
-92
-2,386
-93
Reserves
Retained earnings
Total equity
Provisions
Loans and borrowings
11
Deferred tax liabilities
Total non-current liabilities
Provisions
Refund liabilities
Contract liabilities
Loans and borrowings
11
Derivative financial instruments
6,7
Trade payables
Income tax payable
Other payables
Total current liabilities
Total liabilities
Total equity and liabilities
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
DKK million
Share
capital
Treasury
shares
Translation
reserve
Hedging
Reserve
Dividend
proposed
Retained
earnings
Total
equity
2021
Equity at 1 January
-93
Net profit for the period
Other comprehensive income, net of tax
-300
-8
-129
Total comprehensive income for the period
-300
Share-based payments
Equity at 31 March
-92
-84
2020
Equity at 1 January
-1,964
Net profit for the period
-24
-24
Other comprehensive income, net of tax
-213
-140
-353
Total comprehensive income for the period
-213
-140
-24
-377
Share-based payments
Purchase of treasury shares
-431
-431
Dividend paid
-836
-825
Equity at 31 March
-2,386
-86
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CONSOLIDATED STATEMENT OF CASH FLOW
DKK million
Notes
Q1 2021
Q1 2020
FY 2020
Operating profit
Depreciation and amortisation
Share-based payments
Change in inventories
-355
-139
-96
Change in receivables
Change in payables and other liabilities
-1,441
-880
Other non-cash adjustments
-252
-155
Interest etc. received
Interest etc. paid
-61
-47
-247
Income taxes paid
-155
-76
-192
Cash flows from operating activities, net
-316
Acquisitions of subsidiaries and activities, net of cash acquired
9
-14
-5
-12
Purchase of intangible assets
-50
-34
-130
Purchase of property, plant and equipment
-60
-82
-374
Change in other non-current assets
-1
Proceeds from sale of property, plant and equipment
-2
Cash flows from investing activities, net
-117
-124
-484
Acquisitions of non-controlling interests
-42
Dividend paid
-826
-825
Purchase of treasury shares
-431
-431
Sale of treasury shares
Proceeds from loans and borrowings
Repayment of loans and borrowings
-29
-1,785
-9,073
Repayment of lease commitments
-226
-253
-839
Cash flows from financing activities, net
-256
-419
-3,571
Net increase/decrease in cash
-689
-488
Cash at beginning of period
1
Exchange gains/losses on cash
-29
-62
Net increase/decrease in cash
-689
-488
Cash at end of period
1
Cash flows from operating activities, net
-316
55
5,975
- Interests etc. received
-
-1
-3
- Interests etc. paid
61
47
247
Cash flows from investing activities, net
-117
-124
-484
- Acquisition of subsidiaries and activities, net of cash acquired
14
5
12
Free cash flow incl. IFRS 16 (excluding repayment of lease commitments)
-359
-19
5,747
Free cash flow excl. IFRS 16 (including repayment of lease commitments)
-586
-272
4,908
Unutilised committed credit facilities
6,998
4,170
6,998
1
Cash comprises cash at bank and in hand.
The above cannot be derived directly from the income statement and the balance sheet.
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ACCOUNTING NOTES
NOTE 1 – Accounting policies
The unaudited condensed consolidated interim financial statements have been prepared in accordance with IAS 34
‘Interim Financial Reporting’ as issued by the International Accounting Standards Board (IASB) and adopted by the
European Union and additional Danish disclosure requirements for interim financial reporting of listed companies.
Pandora has adopted all new or amended standards (IFRS) and interpretations (IFRIC) as adopted by the EU and which
are effective for the financial year beginning on 1 January 2021. The new or revised Standards and Interpretations
did not affect recognition and measurement or result in any material changes to disclosures. The accounting policies
applied are consistent with the accounting policies set out in the Annual Report 2020.
Due to rounding, numbers presented throughout this report may not add up precisely to the totals and percentages
may not precisely reflect the absolute figures.
Pandora presents financial measures in the interim report that are not defined according to IFRS. Pandora believes
that these non-GAAP measures provide valuable information to investors and Pandora’s management when
evaluating performance. Since other companies might calculate these differently from Pandora, they may not be
comparable to the measures used by other companies. These financial measures should therefore not be considered
a replacement for measures defined under IFRS. For the definitions of other alternative performance measures used
by Pandora which are not defined by IFRS, refer to note 5.6 in the consolidated financial statement in the Annual
Report 2020.
NOTE 2 – Significant accounting estimates and judgements
In preparing the interim financial report, Management makes various accounting estimates and assumptions, which
form the basis of presentation, recognition and measurement of Pandora’s assets and liabilities.
All significant accounting estimates and judgements are consistent with the description in the Annual Report 2020
to which we refer.
Due to COVID-19 outbreak and the limited visibility of the impact, Pandora will continue assessing the value of the
assets and relevant contracts, especially in case of new material lockdowns.
For information on liquidity risk, please refer to note 6.
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NOTE 3 – Segment information
Pandora's activities are segmented on the basis of collections and consistent with the management reporting
structure.
The operating activities of the Group are divided into two operating segments: Moments and Collabs as well as Style
and Upstream Innovation. This structure was implemented as part of Pandora’s reorganisation in Q2 2020. The
comparative figures for Q1 2020 have been restated to reflect the new segments.
The two operating segments both include all channels relating to the distribution and sale of Pandora products.
Both segments derive their revenue from the types of products shown in the product information. For information
on revenue from the different products and sales channels reference is made to note 4.
Management monitors the profitability of the operating segments separately for the purpose of making decisions
about resource allocation and performance management. Segment results are measured at gross profit as presented
in the table below.
SEGMENT INFORMATION
DKK million
Moments and
Collabs
Style and
Upstream Innovation
Group
Q1 2021
Revenue
3,124
1,377
4,500
Cost of sales
-768
-297
-1,065
Gross profit
2,356
1,080
3,436
Operating expenses
-2,533
Consolidated operating profit (EBIT)
903
Profit margin (EBIT margin)
20.1%
Q1 2020
Revenue
2,830
1,342
4,172
Cost of sales
-700
-328
-1,028
Gross profit
2,130
1,014
3,144
Operating expenses
-2,940
Consolidated operating profit (EBIT)
204
Profit margin (EBIT margin)
4.9%
Restructuring costs
-435
Profit margin (EBIT margin) excl. restructuring costs
15.3%
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
26 | 33
REVENUE DEVELOPMENT IN THE KEY MARKETS
DKK million
Q1 2021
Q1 2020
Growth in
local
currency
FY 2020
UK
587
590
1%
2,960
Italy
440
452
-2%
2,021
France
194
241
-19%
1,154
Germany
191
179
7%
1,014
US
1,391
935
64%
4,505
Australia
243
193
18%
1,120
China
281
212
35%
1,261
Total top-7 markets
3,326
2,800
-
14,036
Rest of Pandora
1,174
1,371
-
4,973
Total revenue
4,500
4,172
13%
19,009
NOTE 4 – Revenue from contracts with customers
REVENUE BY CHANNEL
DKK million
Q1 2021
Q1 2020
Growth in
local
currency
FY 2020
Retail physical stores
1
1,539
2,001
-19%
7,943
Retail online stores
1,417
621
136%
5,483
Wholesale and third-party distribution
1,544
1,549
5%
5,583
Total revenue
4,500
4,172
13%
19,009
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
REVENUE BY GLOBAL BUSINESS UNITS
DKK million
Q1 2021
Q1 2020
Growth in
local
currency
FY 2020
Moments and Collabs
3,124
2,830
15%
13,059
Style and Upstream innovation
1,377
1,342
7%
5,950
Total revenue
1
4,500
4,172
13%
19,009
REVENUE BY PRODUCT CATEGORY
DKK million
Q1 2021
Q1 2020
Growth in
local
currency
FY 2020
Charms
2,278
2,124
12%
9,646
Bracelets
857
799
13%
3,751
Rings
724
663
15%
2,774
Earrings
298
270
15%
1,319
Necklaces & Pendants
343
315
14%
1,519
Total revenue
1
4,500
4,172
13%
19,009
Goods transferred at a point in time
4,485
4,155
18,939
Services transferred over time
16
17
70
Total revenue
4,500
4,172
19,009
1
Figures include franchise fees etc. of DKK 21 million in Q1 2021 (Q1 2020 DKK 24 million, FY 2020 DKK 129) which are allocated to the product categories.
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
27 | 33
Following Pandora’s strategic reorganisation our Global Business Unit structure constitutes a fundamental part in our
new strategy, thus information on revenue by GBU collection structure will replace revenue by product category in
Q2 and onwards.
The use of sales channels for the distribution of Pandora jewellery depends on the underlying market maturity and
varies within markets but is consistent when viewed between segments.
NOTE 5 – Seasonality of operations
Due to the seasonal nature of the jewellery business, higher revenue is historically realised in the second half of the
year.
NOTE 6 – Financial risks
Pandora’s overall risk exposure and financial risks, including risks related to commodity prices, foreign currency, credit,
liquidity and interest rates, are described in the disclosures in note 4.4 in the consolidated financial statements in the
Annual Report 2020.
When COVID-19 forced many countries into lockdowns during early Spring 2020, Pandora decided to take a prudent
approach and build further liquidity reserves. The liquidity risk was mitigated by the establishment of a new Club Deal
amounting to DKK 3 billion and the sale of 8 million Treasury shares in May 2020 (DKK 1.8 billion net proceeds). An
overview of the current committed facilities can be seen below.
In case the pandemic continues for an extended period and results in renewed major lockdowns or otherwise
materially impacts consumer demand, this will obviously impact the financial risks facing Pandora, including liquidity
and credit risks. Having said that, it should be noted that Pandora has material liquidity reserves and can withstand a
global lockdown of the majority of physical stores even if it might continue throughout 2021.
Current outstanding committed loan facilities (end of March 2021)
Amount
(DKK million)
Maturity date
Drawn amount
(DKK million)
Revolving Credit Facilities
6,998
May 2022
0
Club Deal
2,975
December 2021
2,975
Total
9,973
2,975
Revolving Credit Facilities were refinanced in April with a DKK 7 billion sustainability-linked facility where the margin
on the loan is linked to Pandora’s sustainability targets to be carbon neutral and to use recycled metals only by 2025.
The facility will be part of the company’s liquidity reserve and has an initial five-year term, which may be extended by
an additional two years. Pandora has also prepaid the DKK 3 billion Club Deal due to a strong liquidity position. As of
today, available liquidity amounts to approximately DKK 7 billion.
NOTE 7 – Derivative financial instruments
Derivative financial instruments are measured at fair value and in accordance with level 2 in the fair value hierarchy
(IFRS 13).
See note 4.5 to the consolidated financial statement in the Annual Report 2020.
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
28 | 33
NOTE 8 – Trade receivables
NOTE 9 – Business combinations
Pandora took over 22 concept stores in the US in the period 1 January – 31 March 2021. Net assets taken over mainly
consists of non-current assets (DKK 41 million) and liabilities (DKK 40 million) relating to the stores. The total purchase
price was DKK 14 million and the purchase price allocations have not yet been finalised at the time of reporting.
Outstanding items are considered immaterial.
Acquisitions after the reporting period
No significant acquisitions took place after the reporting period.
NOTE 10 – Goodwill
DKK million
2021
31 March
2020
31 December
Cost at 1 January
4,247
4,416
Acquisition of subsidiaries and activities in the period
13
2
Exchange rate adjustments
109
-170
Cost at the end of the period
4,369
4,247
No impairment indication was identified based on the information regarding the market and the forecast. The latest
impairment test that was carried out in 2020 is still considered to include sufficient headroom.
NOTE 11 – Assets and liabilities related to leases
Amounts recognised in the balance sheet:
RIGHT-OF-USE-ASSETS
DKK million
2021
31 March
2020
31 December
Property
2,858
2,975
IT
4
5
Cars
16
18
Other
9
10
Total right-of-use assets
2,888
3,007
Out of the total decrease of DKK 0.1 billion in right-of-use-assets in the period 1 January – 31 March 2021, the DKK
0.2 billion relates to depreciation and currency exchange movement, partially offset by a net increase of DKK 0.1
billion as a result of renewals of lease contracts.
LEASE LIABILITIES
DKK million
2021
31 March
2020
31 December
Non-current
1,974
2,066
Current
1,024
993
Total lease liabilities
2,998
3,059
DKK million
2021
31 March
2020
31 December
Receivables related to third-party distribution and wholesale
435
600
Receivables related to retail revenue sales
167
270
Total trade receivables
602
870
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
29 | 33
Lease liabilities are recognised in loans and borrowings in the balance sheet.
Amounts recognised in the income statement:
RECOGNISED DEPRECIATION ON RIGHT-OF-USE ASSETS CHARGED TO THE INCOME STATEMENT FOR THE PERIOD 1 JANUARY –
31 MARCH
DKK million
1 January –
31 March 2021
1 January –
31 March 2020
Property
293
274
Cars
3
3
Other
1
2
Total depreciation on right-of-use assets for the period
297
278
OTHER ITEMS RELATING TO LEASES
DKK million
1 January –
31 March 2021
1 January –
31 March 2020
Interest expense
-24
-24
Total interest for the period
-24
-24
Costs recognised in the period for short term and low value leases were DKK 12 million (2020 Q1: DKK 7 million).
Expenses are recognised on a straight line basis.
Total cash outflow relating to leases was DKK 312 million (2020 Q1: DKK 330 million) for the period. This comprises
of fixed lease payments in scope of IFRS 16 in amount of DKK 226 million (2020 Q1: DKK 253 million), variable lease
payments in amount of DKK 50 million (2020 Q1: DKK 48 million), interest paid of DKK 24 million (2020 Q1: DKK 22
million) and short term and low value leases of DKK 12 million (2020 Q1: DKK 7 million). Payments related to variable
leases and short term and low value leases are not included in the lease liabilities.
Due to COVID-19, repayment of certain fixed leases has been negotiated and agreed with landlords and deferred by
approximately DKK 67 million. In addition, Pandora has received rent concessions from landlords in Q1 2021
amounting to DKK 16 million.
Pandora decided to apply the practical expedient for all contracts with rent concessions occurring as a direct
consequence of COVID-19 and where it meets all conditions of the practical expedient. The amendments to IFRS 16
are described in the note 1.2 in the Annual Report 2020.
As a result, rent concessions have been recognised in the profit and loss statement in Q1 2021 amounting to DKK 16
million under Sales and Distribution expenses.
Overall financing cash flow is positively impacted by DKK 83 million due to rent relief and rent deferrals.
NOTE 12 – Contingent liabilities
Reference is made to note 5.1 to the consolidated financial statements in the Annual Report 2020.
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
30 | 33
NOTE 13 – Related parties
Related parties with significant interests
Other related parties of Pandora with significant influence include the Board and the Executive Management of this
Company and their close family members. Related parties also include companies in which the persons have control
or significant interests.
Transactions with related parties
Pandora did not enter into any significant transactions with members of the Board or the Executive Management,
except for compensation and benefits received because of their membership of the Board, employment with
Pandora or shareholdings in Pandora.
NOTE 14 – STORE NETWORK, OTHER POINTS OF SALE DEVELOPMENT
Q1 2021
Q4 2020
Q1 2020
Growth
Q1 2021
/ Q4 2020
Growth
Q1 2021
/Q1 2020
Other points of sale (retail)
253
235
225
18
28
Other points of sale (wholesale)
3,243
3,602
3,746
-359
-503
Other points of sale (third-party)
554
565
622
-11
-68
Other points of sale, total
4,050
4,402
4,593
-352
-543
NOTE 15 – STORE NETWORK, CONCEPT STORE DEVELOPMENT
1
Total concept stores
O&O concept stores
Number
of concept
stores
Q1 2021
Number
of concept
stores
Q4 2020
Number
of concept
stores
Q1 2020
Growth
Q1 2021
/ Q4 2020
Growth
Q1 2021
/Q1 2020
Number
of concept
stores
O&O
Q1 2021
Growth
O&O
stores
Q1 2021
/ Q4 2020
Growth
O&O
stores
Q1 2021
/Q1 2020
UK
216
217
222
-1
-6
138
-1
12
Italy
146
146
146
-
-
107
-
-
France
120
121
121
-1
-1
76
-1
-1
Germany
137
138
141
-1
-4
134
-
-1
US
391
403
403
-12
-12
179
25
23
Australia
123
122
126
1
-3
39
1
1
China
228
234
238
-6
-10
216
-6
-11
All markets
2,659
2,690
2,746
-31
-87
1,394
12
12
1
Includes 7 key markets measured on revenue for FY 2020. All markets with 10 or more concept stores can be found in the Excel appendix uploaded on
www.pandoragroup.com
NOTE 16 – Commodity hedging
It is Pandora’s policy to hedge at least 70% of the Group’s expected gold and silver consumption based on a rolling
12-months production plan. The below table illustrates the timing of the hedges related to the purchase of silver for
production, i.e. excluding the time lag effect from inventory to Cost of sales (when the product is sold). The time-lag
from use in production to impact on Cost of sales is usually 2-4 months.
HEDGED AND REALISED PURCHASE PRICES (AT USE OF THE SILVER AND GOLD FOR PRODUCTION)
USD / OZ
Realised in
Q1 2021
Hedged
Q2 2021
Hedged
Q3 2021
Hedged
Q4 2021
Hedged
Q1 2022
Gold price
1,673
1,991
1,848
1,794
1,815
Silver price
22.22
21.72
24.65
25.31
26.84
Commodity hedge ratio, %
Realised
70-100%
70-90%
50-70%
30-50%
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
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Pandora increased its hedge ratio of silver during the COVID-19 pandemic where the silver prices were very low.
Pandora has since reduced the hedge position at a gain of DKK 49 million which will impact production, mainly in Q1
2021 and Q2 2021 with a time-lag from use in production to impact on Cost of sales of 2-4 months. Of the DKK 49
million, DKK 14 million matured in Q1 2021. This gain is not reflected in the hedging purchase prices in the table
above.
NOTE 17 – Subsequent events
Other than as described in “Other events” in the Management review, Pandora is not aware of events after 31 March
2021, which are expected to materially impact the Group’s financial position.
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4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
32 | 33
QUARTERLY OVERVIEW
DKK million
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Key financial highlights
Organic growth, %
13%
4%
-5%
-38%
-14%
Organic growth, % vs 2019
-3%
n/a
n/a
n/a
n/a
Sell-out growth incl. temporarily closed stores, %
21%
1%
-2%
-39%
-17%
Sell-out growth incl. temporarily closed stores, % vs 2019
-5%
n/a
n/a
n/a
n/a
Gross margin, %
1
76.3%
75.7%
78.1%
74.9%
77.4%
EBIT margin, %
1
20.1%
31.8%
17.2%
1.1%
15.3%
Consolidated income statement
Revenue
4,500
7,891
4,070
2,876
4,172
Earnings before interests, tax, depreciations and
amortisations (EBITDA)
1,416
2,896
1,045
325
733
Operating profit (EBIT)
903
2,212
467
-198
204
Net financials
-92
96
-24
-28
-234
Net profit for the period
628
1,794
343
-175
-24
Financial ratios
Revenue growth, DKK, %
8%
-1%
-8%
-39%
-13%
Revenue growth, local currency, %
13%
4%
-5%
-38%
-14%
Gross margin, %
76.3%
75.4%
78.2%
73.0%
75.4%
EBITDA margin, %
31.5%
36.7%
25.7%
11.3%
17.6%
EBIT margin, %
20.1%
28.0%
11.5%
-6.9%
4.9%
Effective tax rate, %
22.5%
22.3%
22.5%
22.5%
22.5%
Equity ratio, %
41%
37%
30%
29%
19%
NIBD to EBITDA, excl. restructuring costs
2
, x
0.6
0.5
1.1
1.1
1.3
Return on invested capital (ROIC)
2
, %
29%
25%
22%
16%
22%
Cash conversion incl. lease payments (excl. IFRS 16), %
-65%
171%
98%
n/a
-134%
Net working capital, % of last 12 months revenue
-0.4%
-7.6%
0.0%
-1.5%
0.0%
Stock ratios
Total payout ratio (incl. share buyback)
3
, %
-
-
-
-
n/a
Consolidated balance sheet
Total assets
19,211
19,984
18,932
18,859
19,529
Invested capital
11,675
10,540
12,544
12,864
13,810
Net working capital
-76
-1,447
5
-286
10
Net interest-bearing debt (NIBD)
3,735
3,151
6,862
7,391
10,178
Equity
7,940
7,389
5,682
5,473
3,632
Consolidated statement of cash flow
Cash flow from operating activities
-316
4,062
776
1,082
55
Capital expenditure (CAPEX), DKK million
88
124
117
121
129
Capital expenditure, tangible assets (CAPEX), DKK million
35
78
97
100
94
Free cash flow incl. lease payments (excl. IFRS 16), DKK
-586
3,780
457
943
-272
1
2019 and 2020 numbers are excluding Programme NOW restructuring costs.
2
Ratios are based on 12 months’ rolling EBITDA and EBIT, respectively.
3
Excluding sale of Treasury shares amounting to DKK 1.8 billion in Q2 2020.
4 MAY 2021 | INTERIM FINANCIAL REPORT Q1 2021 | COMPANY ANNOUNCEMENT No. 621 | page
33 | 33
MANAGEMENT STATEMENT
Copenhagen, 04 May 2021
EXECUTIVE MANAGEMENT
Alexander Lacik Anders Boyer
Chief Executive Officer Chief Financial Officer
BOARD
Peter A. Ruzicka
Chair
Christian Frigast
Deputy Chair
Birgitta Stymne Göransson
Catherine Spindler
Heine Dalsgaard
Isabelle Parize
Jan Zijderveld
Marianne Kirkegaard
DISCLAIMER
This company announcement 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.
