Q2 2O23
INTERIM FINANCIAL REPORT
15 August 2023 | Company Announcement No. 806
2
HIGHLIGHTS
02 Executive Summary
03 Financial Highlights
4
BUSINESS UPDATE
04 Business Update
07 Revenue Review
11 Profitability
14 Cash Flow & Balance Sheet
15 Financial Guidance
18 Sustainability
19 Other Events
21 Contact
22
FINANCIAL STATEMENTS
22 Financial Statements
26 Accounting Notes
36 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 focuses on delivering sustainable and profitable revenue growth
building on the vast untapped opportunities within our existing core business. A strong
cash generation and attractive cash return will remain.
CONTENTS
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
2 | 36
EXECUTIVE SUMMARY
Robust growth in Q2 - revenue guidance raised
Financial highlights
• Brand strength and strong product offering combine to deliver robust growth. Q2 2023 organic growth
accelerates to 5%, comprising of LFL (like-for-like) growth of +2% and network expansion of +4%.
• LFL growth in key markets in Europe broadly stable at 0%, US sees improvement to -4% LFL growth and
Rest of Pandora sees ongoing strong growth at +12% LFL.
• Gross margins continue upward trend witnessed over past years and reach 78.1%, +170bp vs. Q2 2022.
• As expected, EBIT margin at 20.2% was -190bp Y/Y reflecting a.o. cost phasing and planned investments
into growth. Full-year EBIT margin to be broadly in line with last year.
• Leverage remains low with NIBD/EBITDA at 1.3x. DKK 3.3 billion worth of shares purchased since February
8, making good progress towards purchasing a total of DKK 5.0 billion by February 2, 2024 at the latest.
Phoenix strategy highlights
• Phoenix continues to elevate Pandora as the go-to affordable global jewellery brand. Investments across
the brand, products, store execution, online and not least the organisation are paying off.
• New unique product designs resonating with consumers; iconic studded bracelet sees good demand and
underpins resilience in Moments with LFL at 0%. Other platforms continue to see solid growth with
Pandora ME delivering another double-digit LFL quarter at +17% and Timeless delivering +7% LFL.
• LFL in Pandora owned stores continued to be strong (+4% in Q2 2023) and +9pp above partner stores
reflecting improvements in our store execution across a.o. merchandising, inventory availability, staffing.
• Pandora continues its mission to democratise diamonds. In late August, Pandora launches three new lab-
grown diamonds collections and expands offering to Australia. Mexico and Brazil to follow in October.
• Following three years of COVID-19 disruption in China, Pandora took the initial steps in the relaunch of
the brand in mid-July. While still very early days on the journey, Pandora has seen some pick-up in traffic.
2023 outlook and current trading
• Reflecting the solid performance YTD, the organic growth guidance range is updated to “+2% to +5%”
(previously -2% to +3%). The EBIT margin guidance remains unchanged at “Around 25%”.
• Current trading in Q3 so far is solid with LFL growth at mid-single digit levels. This has been driven by a
broad-based pick up in traffic during the holiday season. Pandora expects traffic to ease off after the
holiday season. Nonetheless, the underlying trading trends are encouraging. Pandora remains mindful of
the macroeconomic climate.
Alexander Lacik, President and CEO of Pandora, says:
“We are pleased with delivering yet another solid quarter against a backdrop of macroeconomic uncertainty. We have
consistently demonstrated that the foundations built under the Phoenix strategy are yielding positive results. We will
continue to push ahead with our strategic initiatives for the second half of 2023 and beyond, including the expansion
of our assortment in Diamonds and the ongoing roll-out of our new store concept, EVOKE 2.0. Given our solid
performance so far, our updated guidance now sees another year of positive organic growth”.
DKK million
Q2 2023
Q2 2022
H1 2023
H1 2022
FY 2022
FY 2023
guidance
Revenue
5,894
5,655
11,745
11,344
26,463
Organic growth
5%
3%
3%
11%
7%
+2% to +5%
Like-for-Like, %
2%
2%
1%
9%
4%
Operating profit (EBIT)
1,188
1,249
2,445
2,559
6,743
EBIT margin, %
20.2%
22.1%
20.8%
22.6%
25.5%
Around 25%
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
3 | 36
FINANCIAL HIGHLIGHTS
DKK million
Q2 2023
Q2 2022
H1 2023
H1 2022
FY 2022
Financial highlights
Revenue
5,894
5,655
11,745
11,344
26,463
Organic growth, %
5%
3%
3%
11%
7%
Like-for-Like, %
1
2%
2%
1%
9%
4%
Earnings before interest, tax, depreciation and amortisation
(EBITDA)
1,690
1,737
3,444
3,509
8,716
Operating profit (EBIT)
1,188
1,249
2,445
2,559
6,743
EBIT margin, %
20.2%
22.1%
20.8%
22.6%
25.5%
Net financials
-171
-27
-265
-37
-210
Net profit for the period
778
934
1,667
1,929
5,029
Financial ratios
Revenue growth, DKK, %
4%
10%
4%
17%
13%
Revenue growth, local currency, %
7%
4%
5%
12%
8%
Gross margin, %
78.1%
76.4%
77.8%
76.2%
76.3%
EBITDA margin, %
28.7%
30.7%
29.3%
30.9%
32.9%
EBIT margin, %
20.2%
22.1%
20.8%
22.6%
25.5%
Effective tax rate, %
23.5%
23.5%
23.5%
23.5%
23.0%
Equity ratio, %
19%
27%
19%
27%
33%
NIBD to EBITDA, x
1.3
1.0
1.3
1.0
0.8
Return on invested capital (ROIC)
2
42%
46%
42%
46%
48%
Cash conversion incl. lease payments, %
104%
40%
25%
-37%
39%
Net working capital, % of last 12 months’ revenue
8.4%
5.8%
8.4%
5.8%
4.2%
Capital expenditure, % of revenue
6.8%
5.4%
5.7%
4.1%
4.9%
Stock ratios
Total pay-out ratio (incl. share buyback), %
186%
77%
259%
180%
100%
Dividend per share, proposed, DKK
-
-
-
-
16
Dividend per share, paid, DKK
-
-
16
16
16
Earnings per share, basic, DKK
8.9
9.9
19.0
20.5
54.2
Earnings per share, diluted, DKK
8.8
9.8
18.9
20.3
53.7
Consolidated balance sheet
Total assets
22,112
20,503
22,112
20,503
22,013
Invested capital
15,609
13,543
15,609
13,543
13,961
Net working capital
2,265
1,451
2,265
1,451
1,104
Net interest-bearing debt (NIBD), incl. capitalised leases
11,363
7,926
11,363
7,926
6,794
Equity
4,245
5,617
4,245
5,617
7,167
Consolidated statement of cash flows
Cash flows from operating activities
1,627
928
1,485
-183
4,434
Capital expenditure – total
398
306
668
464
1,290
Capital expenditure - property, plant and equipment
312
236
477
319
929
Free cash flows incl. lease payments
1,230
506
616
-936
2,602
1
Like-for-Like growth include sell-out from all concept stores (including partner owned), owned and operated Shop in Shops and Pandora Online. Partner owned other points of sale are not
included in Like-for-Like. The KPI includes stores which have been operating for +12 months.
2
Last 12 months’ EBIT in % of invested capital.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
4 | 36
BUSINESS UPDATE
Leveraging Phoenix to deliver a solid quarter with improving momentum
Building on the success of the Phoenix strategy, Pandora delivered robust Q2 2023 results with accelerating
momentum on top-line and solid profitability. Despite the macroeconomic environment, Pandora achieved organic
growth of 5% in Q2 2023 which comprised of solid LFL growth of +2% and network expansion of +4%.
In the second quarter, most of Pandora’s key markets reported stable to slightly improving LFL performance.
European key markets were stable, highlighting the brand's strong positioning and customer loyalty. Germany
continued to deliver yet another quarter of double-digit LFL growth at +11%. The US witnessed an improvement with
a reduced decline in LFL growth at -4% indicating the effectiveness of strategic initiatives implemented by Pandora
to capture market opportunities. Furthermore, Rest of Pandora continued to deliver strong growth at +12% LFL.
China reported a notable milestone as it moved into positive territory with +5% LFL growth, albeit off the easier prior
year comparatives which were impacted by COVID-19. More recently, Pandora has taken the first steps in the
relaunch of the brand across the two cities of Shanghai and Beijing. The relaunch is a journey, and it will take time
before impacting revenue growth in China in a significant way. Since the relaunch was initiated mid-July, we have seen
some pick-up in traffic in both stores in Shanghai and Beijing as well as online.
By channel, LFL growth continued to show notable outperformance by stores owned and operated by Pandora which
delivered +4% LFL vs. partners at -5% LFL. This difference can be attributed to the vast improvements made in
Pandora’s own retail execution and operations since the implementation of the Phoenix strategy. Pandora will
continue to work with partners to narrow the gap.
Pandora's gross margin continued to trend higher in Q2 2023, reaching 78.1% and up 170bp vs. Q2 2022. This
increase can be attributed to successful pricing gains, positive mix and a lower drag from forward integration which
more than offset the net drag from FX and commodities combined. Whilst the external environment remains highly
promotional, Pandora maintained good discipline across the quarter with promotional activity broadly consistent with
last year. The upward trend in gross margins over the past years highlights the brand's adeptness in managing costs
and capturing value.
Ongoing investments in brand and product innovation yielding good results
Pandora’s unique designs and handcrafted jewellery continues to resonate with consumers. In Q1 2023, Pandora
launched a new iconic studded chain bracelet which offers a completely different texture and canvas for styling. The
bracelet continued to see good consumer traction through Q2 2023 and underpinned resilient performance in
Moments at 0% LFL. The performance in Moments was also helped by other strong product innovations in the quarter
such as the new unique Sun and Moon rings which created buzz on various social media channels. Collaborations also
saw solid growth of 1% LFL with Disney 100 and the launch of the Little Mermaid seeing good uptake with consumers.
All product innovations are good examples of the many avenues Pandora has available to extract solid ongoing growth
from the Moments platform.
Elsewhere, Timeless built further on the strong start to the year with another solid quarter of +7% LFL which was
helped by a solid Mother’s Day performance. Pandora ME also delivered another strong quarter at +17% LFL growth
with good broad-based growth across most countries being helped by good execution. LFL growth in Signature
declined at -6% reflecting some ongoing optimisation of the assortment.
Gearing up for the significant expansion for Pandora Lab-Grown Diamonds
Revenue in the quarter for Pandora Lab-Grown Diamonds was stable at DKK 32 million. Pandora continues to see vast
growth opportunities for the platform and is preparing for the launch of three new lab-grown diamond collections as
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
5 | 36
well as expanding the offering to Australia, Mexico and Brazil, bringing diamond jewellery to more consumers for more
wearing occasions. The new collections will launch during the New York Fashion Week in late August. Whilst the initial
launch of Pandora Lab-Grown Diamonds included a narrow product range spanning 36 design variations, the
expansion will add three new collections, spanning 57 new design variations which will be available in more than 700
store locations across US, Canada, UK and Australia. Select collections will launch by the end of October 2023 in
Mexico and Brazil, with a full roll-out in the markets expected in the first quarter of 2024. The new collections will
add fresh design aesthetics through new cuts, original settings, and everyday essential styles with wide consumer
appeal and will be backed by an exciting new marketing campaign which centres around Pandora key ideology –
democratising diamonds. Price points start at USD 290 and each stone in the new collections ranges from 0.15 to one
carat. The expansion is the next step on Pandora’s journey to build out a significant presence in the lab-grown
diamonds market.
REVENUE BY SEGMENT
DKK million
Q2 2023
Q2 2022
1
Like-for-
Like
Share of
Revenue
H1 2023
H1 2022
1
Like-for-
Like
Share of
revenue
Moments incl. Collabs
4,570
4,459
0%
78%
9,040
8,917
-1%
77%
- Moments
4,025
3,916
0%
68%
7,885
7,779
-1%
67%
- Collabs
545
543
1%
9%
1,155
1,138
-1%
10%
Style
1,324
1,196
8%
22%
2,705
2,427
8%
23%
- Timeless
880
788
7%
15%
1,829
1,616
9%
16%
- Signature
218
240
-6%
4%
447
491
-9%
4%
- ME
194
159
17%
3%
362
301
18%
3%
- Pandora Lab-Grown Diamonds
32
10
291%
1%
66
19
268%
1%
Total revenue
5,894
5,655
2%
100%
11,745
11,344
1%
100%
1
Pandora has updated its collection structure by moving products from Style to Moments incl. Collabs in Q1 2023. Comparative figures for Q2 2022 were restated
accordingly by moving DKK 236 million from Style to Moments inc. Collabs. Total restatement on comparative figures for H1 2022 were DKK 497 million from Style to
Moments incl. Collabs.
Notable current and future value from network development, Evoke 2.0 roll-out continues as planned
In Q2 2023, Pandora saw an incremental revenue contribution from network expansion of +4%, mainly related to the
impact over the past 12 months from net 105 concept store openings and 111 Pandora owned shop-in-shop
openings. Within Q2 2023, Pandora opened net 33 new concept stores and 24 Pandora owned shop-in-shops,
underpinning solid future growth at accretive EBIT margins. Pandora is now targeting net concept store openings of
75-125 during 2023, up from 50-100 previously. Openings for Pandora owned other points of sales (i.e. shop-in-
shops) are still expected to be 50-100.
During Q2 2023, Pandora opened doors to its brand-new store concept, Evoke 2.0, with a refit of an existing store in
Italy. This marked an important milestone for the brand as the new store concept centres on a notably enhanced
consumer journey, fostering a more intuitive and engaging experience across all of Pandora's platforms. The launch in
Italy in April has seen encouraging initial results with improved traffic and consumer engagement. During the second
quarter, Pandora opened a total of seven Evoke 2.0 stores across mainly Italy and the UK but also a brand-new store
in Copenhagen Airport. Pandora is targeting over 40 Evoke 2.0 store openings globally in 2023, including the
refurbishment of existing stores. The CAPEX per Evoke 2.0 store will be roughly in line with current levels.
In addition to network expansion, Pandora's forward integration strategy has played a significant role in driving
operational efficiency and growth potential. Notably, Pandora's own stores have outperformed partner stores by
9pp in LFL growth in Q2 2023. The outperformance reinforces the value of forward integration. By gaining greater
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
6 | 36
control over the retail experience and customer interactions, Pandora is well-positioned to further optimise its
operations, enhance brand consistency, and capture untapped growth potential.
New share buy-back announced, on track to deliver highest shareholder distribution in Pandora’s history
During Q2 2023, Pandora initiated a new share buy-back programme to acquire own shares for a maximum
consideration of DKK 2.6 billion in the period from 21st June 2023 to 2nd February 2024 at the latest, both days
inclusive.
The programme followed the successful conclusion of Pandora’s DKK 2.4 billion share buy-back programme.
Combined, the two programmes deliver on Pandora’s intention to buy back DKK 5.0 billion worth of own shares over
twelve months. The total shareholder distribution, including dividends, of DKK 6.4 billion is the highest in Pandora’s
history.
For the first time, Pandora’s share buy-back features a sustainability commitment whereby DKK 2 million, a portion
of the expected execution performance, will be used to accelerate Pandora’s low-carbon strategy via the purchase
of Renewable Energy Certificates and investments in energy efficiency projects at Pandora’s crafting facilities in
Thailand. This is part of Pandora’s ambitious low-carbon strategy to reduce emissions by 50% by 2030 and achieve
net zero emissions by 2040.
Capital Markets Day 2023, October 5, London: Update on Phoenix strategy
Pandora hosted a Capital Markets Day in September 2021 providing financial targets covering the period 2021-2023.
Since then – and despite headwinds from COVID-19 in China and a worsening macroeconomic situation - Pandora
has made significant progress on the Phoenix strategy. At a Capital Markets Day on 5 October, 2023 in London,
Pandora will provide an update on the strategy and the next steps in driving sustainable and profitable growth.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
7 | 36
REVENUE REVIEW
Solid revenue growth driven by robust LFL and network developments
Pandora delivered organic growth of 5% which comprised of robust LFL growth of 2% and network expansion of 4%.
Lower sell-in to partners, reflecting lower inventory cover for some partners as well as a drag in other points of sale
(not included in LFL), had a negative impact on organic growth of 1%.
Forward integration continues to support total revenue growth, driven mainly by the acquisitions in H2 2022 in the
US and of the Portuguese distributor in Q3 2022. Furthermore, the acquisitions of 14 concept stores in the US and
14 concept stores in Colombia in 2023 have further contributed to revenue growth, bringing the total contribution
from forward integration to 2%. Foreign exchange rates represented a net headwind of 3%, as most currencies have
depreciated vs. DKK, with in particular a weaker USD and AUD, but also a material decline in the Turkish lira.
The revenue growth development can be illustrated as follows:
Q2 2023 growth composition vs. Q2 2022
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
8 | 36
REVIEW OF REVENUE BY KEY MARKET
Like-for-like performance in Q2 driven by strong growth in Rest of Pandora
Pandora’s robust performance in Q2 2023 followed similar patterns to previous quarters in most markets, however,
with US and China improving sequentially. Despite challenging economic conditions, Pandora's focus on brand
strength and execution continues to drive resilient results. The main trading events in Q2 2023 were Mother’s Day
and the End of Season Sale (EOSS) and, in-line with recent history, Pandora continued to demonstrate solid
performances.
US
In the US, LFL improved sequentially to -4% from -7% in Q1 2023. Network expansion in the US lifted organic growth
to 0% and total revenue growth in local currency was +2%. LFL momentum improved through the quarter following
Mother's Day in May and a strong EOSS in June. Retail execution improved with strong conversion rates and traffic
improving in the second quarter. E-commerce also played a significant role in driving growth, with strong demand for
new product launches, including the highly popular Little Mermaid collection. LFL in the wholesale channel improved
in the second quarter, resulting in a narrowing of the performance gap vs. Pandora’s owned and operated stores.
Key markets in Europe
In aggregate, LFL for the key markets in Europe was 0% in Q2 2023, stable vs. Q1 2023.
The UK market once again demonstrated stability and resilience with 0% LFL. The performance remained broadly
consistent throughout the second quarter and overall trading patterns were rather stable with the average selling
price and basket also being broadly stable despite a weak consumer sentiment. The full-price business remained
robust, demonstrating the strength of Pandora's product offerings and customer loyalty.
Germany continues to excel with another quarter of double-digit growth at +11%, reaffirming the effectiveness of
Pandora's consistent growth approach across platforms. Despite challenging economic conditions and promotional
competition, Pandora continues to thrive with strong brand momentum. Pandora continues to see vast long-term
potential in the German market.
In Italy, LFL was in line with the first quarter at -5%. The introduction of the highly anticipated Evoke 2.0 stores has
been met with good enthusiasm from customers, who appreciate the warm atmosphere the stores offer. The
performance of the three new stores has been encouraging, with higher traffic and conversion rates, highlighting the
potential for future roll out of the concept. Furthermore, Pandora's Timeless collection has shown good success,
contributing to increased brand penetration and attracting new customers.
Performance in France was also in line with the first quarter at -5% LFL despite performance being weighed down
once again by the wholesale channel. LFL in Pandora operated stores was -1% in Q2 vs. -16% in the partner stores.
There are encouraging underlying signs of better brand momentum in France with the appointment of Laury
Thilleman, a prominent French TV personality and model, as the new Pandora France Ambassador already resonating
well with consumers across a strong Mother’s Day campaign.
China
China showcased a notable milestone as it moved into positive territory with +5% LFL growth, albeit off easier
comparatives. Pandora strategically deferred media spend until July, aligning with the initiation of the brand relaunch
across the two cities of Shanghai and Beijing. The relaunch is a journey, and it will take time before impacting revenue
growth in China in a significant way. Since the relaunch was initiated mid-July, we have seen some pick-up in traffic in
both stores in Shanghai and Beijing as well as online.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
9 | 36
Australia and Rest of Pandora
Australia delivered -5% LFL vs. Q2 2022, driven by a continued weak consumer sentiment in the country. Pandora’s
owned and operated concept stores continues to outperform the wholesale channel (0% vs. -10% LFL in Q2), partly
driven by tourism as well as strong execution in Pandora owned and operated stores with high conversion rates.
Rest of Pandora continued to showcase strong performance, with a consistent 12% LFL growth rate maintained
throughout the first and second quarter of 2023. The growth is broad-based with double-digit growth rates achieved
in multiple markets including Portugal, Peru, Poland, Austria, and Turkey. Mexico and Spain continued to report solid
LFL growth at 8% and 5%, respectively.
QUARTERLY REVENUE DEVELOPMENT BY KEY MARKET
DKK million
Q2 2023
Q2 2022
Like-for-Like
Organic growth
Share of revenue
US
1,834
1,841
-4%
0%
31%
China
156
179
5%
-6%
3%
UK
656
665
0%
1%
11%
Italy
584
595
-5%
-2%
10%
Australia
218
246
-5%
-3%
4%
France
231
237
-5%
-3%
4%
Germany
295
285
11%
3%
5%
Total top-7 markets
3,972
4,048
-2%
-1%
67%
Rest of Pandora
1,922
1,607
12%
21%
33%
Total revenue
5,894
5,655
2%
5%
100%
YEAR-TO-DATE REVENUE DEVELOPMENT BY KEY MARKET
DKK million
H1 2023
H1 2022
Like-for-Like
Organic growth
Share of revenue
US
3,549
3,490
-5%
-2%
30%
China
317
433
-12%
-23%
3%
UK
1,465
1,473
0%
3%
12%
Italy
1,123
1,181
-5%
-5%
10%
Australia
438
490
-5%
-6%
4%
France
474
498
-5%
-5%
4%
Germany
564
559
11%
1%
5%
Total top-7 markets
7,930
8,125
-4%
-3%
68%
Rest of Pandora
3,815
3,219
12%
18%
32%
Total revenue
11,745
11,344
1%
3%
100%
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
10 | 36
REVIEW OF NETWORK DEVELOPMENT
Strategic network expansion, targeting 125-225 net openings in 2023
In the second quarter of 2023, Pandora has continued its strategic network expansion by opening a net total of 33
new concept stores and 24 Pandora owned shop-in-shops. This brings the year-to-date net openings to 10 concept
stores and 29 Pandora owned shop-in-shops. Given the value creation from network expansion, Pandora is now
targeting 75-125 net concept store openings in 2023, up from 50-100 previously. Net openings of Pandora owned
shop-in-shops are still expected to be 50-100. The majority of the new store openings are still expected to be
concentrated towards the end of the year, following a similar trend to that of the previous year.
Compared to Q2 2022, Pandora has opened net 105 concept stores, of which 33 has been opened in the US, and
111 Pandora owned shop-in-shops, which is concentrated around Latin America and in particular Mexico. Network
expansion drove 4% of growth in the quarter and comes with significant opportunity for further value creation.
Number of points of sale
1
Q2 2023
Q1 2023
Q2 2022
Growth
Q2 2023
/Q1 2023
Growth
Q2 2023
/Q2 2022
Concept stores
2,552
2,519
2,447
33
105
- of which Pandora owned
2
1,712
1,655
1,500
57
212
- of which franchise owned
533
562
618
-29
-85
- of which third-party distribution
307
302
329
5
-22
Other points of sale
3,975
3,964
4,001
11
-26
- of which Pandora owned
2
493
469
382
24
111
- of which franchise owned
3,167
3,177
3,141
-10
26
- of which third-party distribution
315
318
478
-3
-163
Total points of sale
6,527
6,483
6,448
44
79
1
Please refer to note 14 Store network, concept store development in the accounting notes section for more details.
2
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
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PROFITABILITY
Gross margin continues to strengthen, EBIT margin on track
As anticipated, the EBIT margin for Q2 2023 landed at 20.2%, representing a decline of 190bp compared to Q2 2022.
As previously communicated, the EBIT margin in Q1-Q3 2023 was expected to be below last year and Q4 above last
year among others due to cost phasing and the impact from foreign exchange rates and commodities. Pandora
remains on track to deliver a full-year EBIT margin around 25%, broadly in line with last year.
In Q2 2023, operating leverage from LFL growth and network expansion contributed positively alongside the
previously implemented pricing actions across the Group. These were offset by planned Phoenix investments and
salary increases as well as cost phasing. Silver prices and foreign exchange rates represented a net headwind of 60bp
mainly driven by a weaker USD partly offset by tailwinds from silver prices. Silver prices and foreign exchange rates
are expected to turn from a net drag of roughly 70bp in Q1-Q3 to a positive impact on the EBIT margin in Q4 2023.
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GROSS MARGIN
In Q2 2023, Pandora achieved a strong gross margin of 78.1%, reflecting an increase of 170bp compared to Q2 2022.
Favourable channel mix and a successful pricing strategy have been instrumental in driving this upward trend in gross
margins.
Foreign exchange rates constituted a headwind of 90bp, driven by a stronger USD and THB relative to DKK on the
sold products, due to the time-lag from production and inventories. This was partly offset by favourable changes to
commodity prices, mainly on silver, which provided an upside of 60bp.
Lower temporary cost related to buying back inventories in relation to forward integration represented a net tailwind
of 90bp compared to Q2 2022. Adjusted for these non-recurring items, the gross margin improved by 80bp to 78.4%.
GROSS MARGIN AND GROSS PROFIT
DKK million
Q2 2023
Q2 2022
Growth in
constant FX
H1 2023
H1 2022
Growth in
constant FX
Revenue
5,894
5,655
7%
11,745
11,344
5%
Cost of sales
-1,289
-1,337
-5%
-2,603
-2,702
-7%
Gross profit
4,606
4,318
10%
9,142
8,642
8%
Gross margin
78.1%
76.4%
77.8%
76.2%
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OPERATING EXPENSES
Total operating expenses increased by 13% in constant foreign exchange rates vs. Q2 2022. This was mainly driven
by the profitable expansion of the Pandora owned physical network – reflected in the 19% increase in sales and
distribution cost, which is also impacted by the higher than usual salary increases, not least to store staff.
Administrative expenses remain stable and in-line with previous quarters. As mentioned in the Q2 2022 Company
Announcement, administrative expenses were lower than usual in Q2 2022 which reflects the 29% increase in
constant foreign exchange rates vs. Q2 2022. Furthermore, Pandora continues to strategically invest in Digital &
Technology, including the new ERP platform, and investments in the organisation to keep strengthening the
foundation for future growth.
As for the first quarter of 2023, last year’s global media tender resulted in lower advertising costs. Consequently,
Pandora is able to maintain a strong media presence despite marketing expenses decreasing by 4% in constant foreign
exchange rates compared to last year. Full year marketing costs are still expected to be within the 13-15% range of
full year revenue.
QUARTERLY OPERATING EXPENSES
DKK million
Q2 2023
Q2 2022
Growth in
constant FX
Share of revenue
Q2 2023
Share of revenue
Q2 2022
Sales and distribution expenses
-1,975
-1,701
19%
33,5%
30.1%
Marketing expenses
-864
-914
-4%
14,7%
16.2%
Administrative expenses
-578
-454
29%
9,8%
8.0%
Total operating expenses
-3,417
-3,069
13%
58.0%
54.3%
YEAR-TO-DATE OPERATING EXPENSES
DKK million
H1 2023
H1 2022
Growth in
constant FX
Share of revenue
H1 2023
Share of revenue
H1 2022
Sales and distribution expenses
-3,978
-3,461
16%
33,9%
30.5%
Marketing expenses
-1,579
-1,659
-4%
13,4%
14.6%
Administrative expenses
-1,140
-964
19%
9,7%
8.5%
Total operating expenses
-6,697
-6,083
11%
57.0%
53.6%
FINANCIAL EXPENSES AND TAX
Net financials in Q2 2023 ended at a cost of DKK 171 million compared to DKK 27 million in Q2 2022. The increase
compared to last year is partly explained by the extraordinary tailwind in Q2 2022 related to foreign exchange
adjustments and losses on foreign exchange rate hedges, as highlighted in the Q2 2022 company announcement,
which combined represented a tailwind of DKK 46 million in Q2 2022. Furthermore, similar to the first quarter of
2023, increased interest rates and higher leverage compared to last year impacted the interest paid on loans and
IFRS 16 related interest on lease payments. The net realised profit on foreign exchange hedging contracts was
negligible in Q2 2023.
The effective tax rate ended at 23.5% for Q2 2023, at the mid-point of the guided range of 23-24% and in line with
previous quarters. EPS ended at DKK 8.9 per share in Q2 2023, DKK 1 below Q2 2022.
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CASH FLOW & BALANCE SHEET
Strong cash conversion following sequential improvement in net working capital
The net working capital improved sequentially despite the usual slight seasonal build up of inventories and ended at
8.4% of the last 12 months revenue. The year-on-year increase was driven mainly by a decrease in payables and net
positive market values on silver hedges, which represented a significant net liability in Q2 2022. Inventories ended at
16.6% of the last 12 months revenue, a touch below last year’s level and in line with expectations. The full year
inventory position (measured in DKK) is expected to land broadly in line with last year.
Trade receivables continues to be at a healthy level with wholesale Days Sales Outstanding (DSO) ending at 30 days,
vs. 24 days in Q2 2022. The increase was mainly driven by geographical mix in the wholesale channel. Total DSO,
including retail receivables, ended at 12 days by the end of Q2 2023, slightly above Q2 2022 of 11 days.
Cash conversion was strong and ended at 104% in Q2 2023, as last year’s deliberate inventory build-up is starting to
lapse. Free cash flow including lease payments ended at DKK 1,230 million. CAPEX ended at 6.8% of revenue as
investments into growth and in particular the physical store network ramps up, bringing the YTD CAPEX spent closer
to the targeted full year CAPEX at around 6% of revenue.
ROIC continues to be strong at 42%, slightly below last year with 46% in Q2 2022. The decrease is mainly a function
of a higher invested capital and the higher net working capital compared to last year.
NET WORKING CAPITAL
Share of preceding 12 months' revenue
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Inventories
16.6%
16.3%
15.9%
20.1%
16.9%
Trade receivables
2.9%
3.2%
4.8%
3.4%
2.6%
Trade payables
-8.5%
-8.2%
-11.8%
-10.4%
-9.5%
Other net working capital elements
-2.6%
-2.4%
-4.7%
-4.3%
-4.2%
Total
8.4%
8.8%
4.2%
8.8%
5.8%
Balance Sheet
Total non-current assets increased to DKK 14.9 billion at the end of Q2 2023 (Q2 2022: DKK 13.5 billion), mainly due
to higher right-of-use assets coming from network expansion, higher CAPEX across asset types and goodwill related
to forward integration. Current assets remained broadly stable and similar to Q2 2022.
Net interest-bearing debt amounted to DKK 11.4 billion at the end of Q2 2023 (Q2 2022: DKK 7.9 billion),
corresponding to a financial leverage of 1.3x (Q2 2022: 1.0x). Net interest-bearing debt developed in line with
expectations and the increase compared to last year was mainly driven by cash distributions to shareholders in the
first quarter of 2023 following Pandora’s decision to slightly lift leverage from the low end of the capital structure
range of 0.5x to 1.5x NIBD to EBITDA (year-end measure) to around the mid-point of the range.
At the end of Q2 2023, equity in Pandora amounted to DKK 4.2 billion, down from DKK 7.2 billion by year end 2022
reflecting usual seasonality driven by distributions to shareholders in the form of dividends and share buybacks.
Pandora has paid out DKK 1.4 billion in dividends and bought back shares for an amount of DKK 3.0 billion in the first
half of 2023.
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FINANCIAL GUIDANCE
Raising revenue guidance based on solid performance YTD
The brand has demonstrated resilience since the macroeconomic conditions started to worsen during 2022. Whilst
the economic outlook for the remainder of 2023 remains uncertain, performance YTD has been solid as initiatives
under the Phoenix strategy continue to yield good results. Pandora therefore updates its financial guidance to
“organic growth of +2% to +5%” (previously -2% to +3%). The EBIT margin guidance remains unchanged at “Around
25%”. The low end of the updated organic growth range would require a consistent worsening of macro conditions
relative to today.
Whilst the short-term macroeconomic environment remains uncertain, Pandora’s internal initiatives to position the
company for sustainable growth continue unabated. The Group will continue to focus on driving higher brand
desirability, acquiring new customers, and expanding the network. The prospects for delivering healthy LFL and
organic growth remain as strong as ever.
REVENUE GUIDANCE
Pandora is currently expecting a LFL growth in 2023 between 0% to +2% (previously -4% to 0%), depending on how
macroeconomic conditions progress through the year. Continued network expansion is expected to add 4%
(previously 3%) to growth whereas the phasing of sell-in to partners/other is expected to be a drag of -1% to -2%
(previously 0 to -1%). In combination, these elements help lift organic growth to +2% to +5%. Forward integration is
expected to add around 1% with revenue growth in local currency ending at +3% to +6%.
The organic growth guidance can be illustrated as follows:
PROFITABILITY GUIDANCE
The EBIT margin guidance for 2023 is unchanged at “Around 25%”. The building blocks include temporary and non-
recurring costs from 2022 which are expected to drive a tailwind of 80bp whilst the structural cost reductions and
the price increases implemented in Q4 2022 will be driving a further tailwind of 110bp. Higher-than-normal salary
increases are expected to suppress the EBIT margin by 100bp while foreign exchange rates and commodity
assumptions per 31 July 2023 currently represent a net headwind of 20bp.
Investments in Phoenix initiatives and future growth are expected to be a -120bp drag on the EBIT margin (previously
-100bp). In-line with previous guidance, Pandora will continue to demonstrate an extra layer of cost flexibility to
either underpin the EBIT margin further or invest for growth. The EBIT margin phasing through the year is expected
to be more skewed towards Q4 than in 2022. This mainly reflects phasing of costs, hedged silver prices and foreign
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exchange rates. Silver prices and foreign exchange rates are expected to turn from a net drag of roughly 70bp in Q1-
Q3 to a positive impact on the EBIT margin in Q4 2023.
The EBIT margin guidance can be illustrated as follows:
2023 GUIDANCE – OTHER PARAMETERS
Pandora expects to open net 75-125 concept stores (previously “net 50-100 concept store openings”) and 50-100
owned and operated other points of sales in 2023.
CAPEX is expected to end at around 6% share of revenue, primarily driven by investments into the store network,
digital initiatives and crafting facilities. The effective tax rate is expected to be 23-24%, unchanged from last year.
The guidance 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,
please also refer to the disclaimer on page 36.
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FOREIGN EXCHANGE AND COMMODITY ASSUMPTIONS AND IMPLICATIONS – As of 31 July 2023
Average 2022
Average 2023
2023 Y-Y Financial
Impact
USD/DKK
7.07
6.83
THB/DKK
0.20
0.20
GBP/DKK
8.73
8.59
CNY/DKK
1.05
0.97
AUD/DKK
4.91
4.60
Silver/USD (per ounce)
24.9
22.7
REVENUE (DKK million)
Approx. -600
EBIT (DKK million)
Approx. -200
EBIT margin (foreign exchange)
Approx. -0.8%
EBIT margin (commodities)
Approx. +0.6%
CAPITAL STRUCTURE POLICY AND CASH DISTRIBUTION
At the end of June 2023, Pandora’s leverage remains low at 1.3x NIBD to EBITDA. The increase in leverage vs. the end
of December 2022 is in line with expectations as previously communicated and primarily reflects cash distributions
to the shareholders as well as usual seasonality.
Pandora has paid out DKK 4.4 billion to shareholders in the first half of 2023, of which DKK 1.4 billion came from an
ordinary dividend of DKK 16 per share and the DKK 3.0 billion was distributed via share buybacks. Pandora intend to
buy back DKK 5.0 billion worth of own shares over twelve months ending February 2, 2024, of which DKK 3.3 billion
has been bought back as of August 11, 2023.
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SUSTAINABILITY
More information on Pandora’s 2022 sustainability performance, strategy and targets can be found in Pandora’s
Sustainability Report 2022.
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OTHER EVENTS
During Q2 2023, Pandora initiated a new share buy-back programme to acquire own shares for a maximum
consideration of DKK 2.6 billion in the period from 21
st
June 2023 to 2
nd
February 2024 at the latest, both days
inclusive.
The programme followed the successful conclusion of Pandora’s DKK 2.4 billion share buy-back programme.
Combined, the two programmes deliver on Pandora’s intention to buy back DKK 5.0 billion worth of own shares over
twelve months. The total shareholder distribution, including dividends, of DKK 6.4 billion is the highest in Pandora’s
history.
FINANCIAL CALENDAR 2023
The expected dates for publication of financial announcements in 2023 for Pandora A/S are as follows:
5 October 2023 Capital Markets Day 2023
08 November 2023 Interim Financial Report for the third quarter/first nine months of 2023
07 February 2024 Annual Report 2023
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2023 YEAR-TO-DATE DEVELOPMENT
REVENUE
Total revenue increased by 5% in local currency to DKK 11,745 million in H1 2023 compared with H1 2022. Organic
growth was 3% reflecting robust underlying performance against a backdrop of macroeconomic uncertainty.
GROSS PROFIT AND COSTS
Gross profit was DKK 9,142 million in H1 2023 (DKK 8,642 million in H1 2022), resulting in a gross margin of 77.8% in
H1 2023 vs. 76.2% in H1 2022. The increase was driven by favourable channel mix and pricing.
Sales and distribution expenses increased to DKK 3,978 million in H1 2023 (DKK 3,461 million in H1 2022),
corresponding to 33.9% of revenue in H1 2023 (30.5% in H1 2022). The increase is mainly the result of the profitable
expansion of the Pandora owned physical network.
Marketing expenses was DKK 1,579 million in H1 2023 (DKK 1,659 million in H1 2022), resulting in a share of revenue
of 13.4% in H1 2023 compared with 14.6% in H1 2022, driven by last year’s global media tender which resulted in
lower advertising costs. Consequently, Pandora is able to maintain the media pressure at a lower cost.
Administrative expenses ended at DKK 1,140 million in H1 2023 compared with DKK 964 million in H1 2022,
corresponding to 9.7% of revenue in H1 2023 (8.5% in H1 2022). The increase was mainly driven by lower than usual
administrative expenses in Q2 2022.
EBIT
EBIT for H1 2023 was DKK 2,445 million, resulting in an EBIT margin of 20.8% in H1 2023 vs. 22.6% in H1 2022. As
previously communicated, the EBIT margin phasing through the year is expected to be more skewed towards Q4 than
in 2022 due to cost phasing, silver prices and foreign exchange rates.
NET FINANCIALS
Net financials amounted to a cost of DKK 265 million in H1 2023 vs. a cost of DKK 37 million in H1 2022. This reflects
among others higher leverage and increased interest rates on loans and store leases.
INCOME TAX EXPENSES
Income tax expenses were DKK 512 million in H1 2023 compared with DKK 593 million in H1 2022, implying an
effective tax rate for the Group of 23.5% for H1 2023 similar to H1 2022.
NET PROFIT
Net profit in H1 2023 was DKK 1,667 million vs. DKK 1,929 million in H1 2022.
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CONTACT
CONFERENCE CALL
A 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 before the call.
The following numbers can be used by investors and analysts:
DK: +45 78 76 84 90
SE: +46 406 820 620
UK: +44 203 769 6819
US: +1 646 787 0157
PIN: 837462
Link to webcast: https://pandora-events.eventcdn.net/events/Q2-2023
ABOUT PANDORA
through more than 6,500 points of sale, including more than 2,500 concept stores.
Headquartered in Copenhagen , Denmark, Pandora employs 32,000 people worldwide and crafts its jewellery at two
LEED-certified facilities in Thailand. Pandora is committed to leadership in sustainability and will purchase only
recycled silver and gold for crafting its jewellery by 2025 and halve greenhouse gas emissions across its value chain
by 2030. Pandora is listed on the Nasdaq Copenhagen stock exchange and generated sales of DKK 26.5 billion (EUR
3.6 billion) in 2022.
For more information, please contact:
INVESTOR RELATIONS
Bilal Aziz
VP, Investor Relations & Treasury
+45 3137 9486
biazi@pandora.net
CORPORATE COMMUNICATIONS
Mads Twomey-Madsen
SVP, Corporate Communications & Sustainability
+45 2510 0403
madt@pandora.net
Adam Fuglsang
Director, Investor Relations
+45 6167 7425
adfug@pandora.net
Johan Melchior
VP, Media Relations & Public Affairs
+45 4060 1415
jome@pandora.net
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FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
DKK million
Notes
Q2 2023
Q2 2022
H1 2023
H1 2022
FY 2022
Revenue
3
Cost of sales
-1,289
-1,337
-2,603
-2,702
-6,273
Gross profit
Sales, distribution and marketing expenses
-2,839
-2,615
-5,557
-5,120
-11,322
Administrative expenses
-578
-454
-1,140
-964
-2,125
Operating profit
Finance income
Finance costs
-239
-160
-424
-258
-622
Profit before tax
Income tax expense
-239
-287
-512
-593
-1,504
Net profit for the period
Earnings per share, basic, DKK
Earnings per share, diluted, DKK
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
DKK million
Q2 2023
Q2 2022
H1 2023
H1 2022
FY 2022
Net profit for the period
Other comprehensive income:
Items that may be reclassified to profit/loss
for the period
Exchange rate adjustments of investments in
subsidiaries
-25
-66
-196
Fair value adjustment of hedging instruments
-282
-337
-249
-157
Tax on other comprehensive income, hedging
instruments, income/expense
Items that may be reclassified to profit/loss
for the period, net of tax
-263
-132
-267
Items not to be reclassified to profit/loss for
the period
Actuarial gain/loss on defined benefit plans,
net of tax
-21
-21
Items not to be reclassified to profit/loss for
the period, net of tax
-21
-21
Other comprehensive income, net of tax
-284
-132
-288
Total comprehensive income for the period
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CONSOLIDATED BALANCE SHEET
DKK million
Notes
2023
30 June
2022
30 June
2022
31 December
ASSETS
Goodwill
9
Brand
Distribution
Other intangible assets
Total intangible assets
Property, plant and equipment
Right-of-use assets
10
Deferred tax assets
Other financial assets
Total non-current assets
Inventories
Trade receivables
7
Right-of-return assets
Derivative financial instruments
5,6
Income tax receivable
Other receivables
Cash
Total current assets
Total assets
EQUITY AND LIABILITIES
Share capital
Treasury shares
-2,337
-1,690
-3,320
Reserves
Proposed dividend
Retained earnings
Total equity
Provisions
Loans and borrowings
10
Deferred tax liabilities
Total non-current liabilities
Provisions
Refund liabilities
Contract liabilities
Loans and borrowings
10
Derivative financial instruments
5,6
Trade payables
11
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
2023
Equity at 1 January
-3,320
Net profit for the period
Other comprehensive income, net of tax
-73
-195
-21
-288
Total comprehensive income for the period
-73
-195
Share-based payments
-185
Purchase of treasury shares
-2,980
-2,980
Cancellation of treasury shares
-7
-3,680
Dividend paid
-1,412
-1,412
Dividend proposed
-18
Equity at 30 June
-2,337
-74
2022
Equity at 1 January
-3,416
-110
Net profit for the period
Other comprehensive income, net of tax
-122
Total comprehensive income for the period
-122
Share-based payments
-157
Purchase of treasury shares
-1,958
-1,958
Cancellation of treasury shares
-5
-3,481
Dividend paid
-1,516
-1,514
Equity at 30 June
-1,690
-233
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CONSOLIDATED STATEMENT OF CASH FLOWS
The above cannot be derived directly from the income statement and the balance sheet.
DKK million
Notes
Q2 2023
Q2 2022
H1 2023
H1 2022
FY 2022
Operating profit
Depreciation and amortisation
Share-based payments
Change in inventories
-97
-594
-179
-948
-1,012
Change in receivables
-531
Change in payables and other liabilities
-267
-1,741
-2,078
-559
Other non-cash adjustments
-41
-26
-27
-18
Finance income received
Finance costs paid
-133
-98
-249
-198
-466
Income taxes paid
-207
-219
-603
-952
-1,790
Cash flows from operating activities, net
-183
Acquisitions of subsidiaries and activities,
net of cash acquired
8
-111
-2
-156
-293
-562
Purchase of intangible assets
-56
-75
-170
-140
-353
Purchase of property, plant and equipment
-226
-198
-452
-297
-838
Change in other assets
-3
-36
Proceeds from sale of property, plant and equipment
Cash flows from investing activities, net
-371
-277
-748
-723
-1,785
Dividend paid
-1,412
-1,514
-1,514
Dividend paid – withholding tax
-337
-345
Purchase of treasury shares
-1,451
-719
-2,900
-1,958
-3,527
Proceeds from loans and borrowings
Repayment of loans and borrowings
-273
-3,061
-273
-1,985
Repayment of lease commitments
-264
-245
-515
-519
-1,068
Cash flows from financing activities, net
-778
-370
-560
-3,100
Net increase/decrease in cash
-73
-452
Cash and cash equivalents, beginning of period
Exchange gains/losses on cash and cash equivalents
-17
-23
Net increase/decrease in cash
-73
-452
Cash and cash equivalents, end of period
Cash balances
Overdrafts
-106
-106
-199
Cash and cash equivalents, end of period
Cash flows from operating activities, net
-183
- Finance income received
-5
-1
-10
-2
-7
- Finance costs paid
Cash flows from investing activities, net
-371
-277
-748
-723
-1,785
- Acquisition of subsidiaries and activities, net of cash acquired
Repayment of lease commitments
-264
-245
-515
-519
-1,068
Free cash flows incl. lease payments
-936
Unutilised committed credit facilities
5
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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.
The accounting policies applied are consistent with the accounting policies set out in the Annual Report 2022.
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 financial report that are not defined according to IFRS. Pandora
believes these non-GAAP measures provide valuable information to investors and Pandora’s management when
evaluating performance. Since other companies may 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
to be a replacement for measures defined under IFRS. Apart from the ‘Free cash flows incl. lease payments’ which is
defined as cash flows from operating activities, excluding financial items; cash flows from investing activities excluding
acquisitions of subsidiaries and activities and includes the repayment of lease commitments, for definitions of the
performance measures used by Pandora, see note 5.6 Financial definitions to the consolidated financial statements
in the Annual Report 2022.
New standards, interpretations and amendments adopted by Pandora
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 2023. The implementation of these new or amended
standards and interpretations had no material impact on the financial statements for the period. The new standards
that are not yet effective are not expected to have any material impact on Pandora.
NOTE 2 – Significant accounting estimates and judgements
In preparing the condensed consolidated interim financial statements, management makes various judgements,
accounting estimates and assumptions that form the basis of the 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 2022
to which we refer.
NOTE 3 – Segment and revenue information
Pandora’s activities are segmented into two reportable segments, each responsible for the end-to-end performance
of collections. One includes Moments incl. Collabs, while the other, Style, covers newer collections and innovations.
In Q1 2023, Pandora updated its collection structure by moving products across Signature and Timeless into the
Moments platform. The strategic reasoning centres around personalisation and becoming more customer centric,
leading to a centralised platform for congruent charms and charm holders.
The two operating segments include all channels relating to the distribution and sale of Pandora products.
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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.
Non-unit driven revenue, comprising mainly franchise fees, is allocated proportionately to the different revenue
categories.
SEGMENT INFORMATION
DKK million
Moments incl.
Collabs
Style
Group
Q2 2023
Revenue
4,570
1,324
5,894
Cost of sales
-1,024
-265
-1,289
Gross profit
3,547
1,059
4,606
Operating expenses
-3,417
Consolidated operating profit (EBIT)
1,188
Profit margin (EBIT margin)
20.2%
Q2 2022
1
Revenue
4,459
1,196
5,655
Cost of sales
-1,091
-246
-1,337
Gross profit
3,368
950
4,318
Operating expenses
-3,069
Consolidated operating profit (EBIT)
1,249
Profit margin (EBIT margin)
22.1%
DKK million
Moments incl.
Collabs
Style
Group
H1 2023
Revenue
9,040
2,705
11,745
Cost of sales
-2,053
-550
-2,603
Gross profit
6,987
2,155
9,142
Operating expenses
-6,697
Consolidated operating profit (EBIT)
2,445
Profit margin (EBIT margin)
20.8%
H1 2022
1
Revenue
8,917
2,427
11,344
Cost of sales
-2,201
-500
-2,702
Gross profit
6,716
1,926
8,642
Operating expenses
-6,083
Consolidated operating profit (EBIT)
2,559
Profit margin (EBIT margin)
22.6%
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REVENUE BY SEGMENTS
DKK million
Q2 2023
Q2 2022
1
Like-for-
like
Local
currency
growth
Share of
Revenue
H1 2023
H1 2022
1
Like-
for-like
Local
currency
growth
Share of
Revenue
Moments incl. Collabs
4,570
4,459
0%
5%
78%
9,040
8,917
-1%
2%
77%
- Moments
4,025
3,916
0%
5%
68%
7,885
7,779
-1%
2%
67%
- Collabs
545
543
1%
2%
9%
1,155
1,138
-1%
1%
10%
Style
1,324
1,196
8%
13%
22%
2,705
2,427
8%
12%
23%
- Timeless
880
788
7%
14%
15%
1,829
1,616
9%
14%
16%
- Signature
218
240
-6%
-7%
4%
447
491
-9%
-8%
4%
- ME
194
159
17%
25%
3%
362
301
18%
22%
3%
- Pandora Lab-Grown Diamonds
32
10
291%
240%
1%
66
19
268%
259%
1%
Total revenue
5,894
5,655
2%
7%
100%
11,745
11,344
1%
5%
100%
Goods transferred at a point in time
5,880
5,638
11,716
11,310
Services transferred over time
14
17
29
34
Total revenue
5,894
5,655
11,745
11,344
1
Pandora has updated its collection structure by moving products from Style to Moments incl. Collabs in Q1 2023. Comparative figures for Q2 2022 were restated
accordingly by moving DKK 236 million from Style to Moments inc. Collabs. Total restatement on comparative figures for H1 2022 were DKK 497 million from Style to
Moments incl. Collabs.
REVENUE DEVELOPMENT IN KEY MARKETS
DKK million
Q2 2023
Q2 2022
Like-for-like
Local currency
growth
H1 2023
H1 2022
Like-for-like
Local
currency
growth
US
1,834
1,841
-4%
2%
3,549
3,490
-5%
1%
China
156
179
5%
-6%
317
433
-12%
-23%
UK
656
665
0%
1%
1,465
1,473
0%
3%
Italy
584
595
-5%
-2%
1,123
1,181
-5%
-5%
Australia
218
246
-5%
-3%
438
490
-5%
-6%
France
231
237
-5%
-3%
474
498
-5%
-5%
Germany
295
285
11%
3%
564
559
11%
1%
Total top-7 markets
3,972
4,048
-2%
0%
7,930
8,125
-4%
-2%
Rest of Pandora
1,922
1,607
12%
23%
3,815
3,219
12%
20%
Total revenue
5,894
5,655
2%
7%
11,745
11,344
1%
5%
REVENUE DEVELOPMENT BY CHANNEL
DKK million
Q2 2023
Q2 2022
Organic
growth
Share of
Revenue
H1 2023
H1 2022
Organic
growth
Share of
Revenue
Pandora owned
1
retail
4,603
4,101
11%
78%
8,994
8,026
9%
77%
- of which concept stores
3,089
2,724
11%
52%
5,990
5,169
12%
51%
- of which online stores
1,141
1,098
7%
19%
2,285
2,317
0%
19%
- of which other points of sale
372
279
28%
6%
718
540
27%
6%
Wholesale
1,131
1,406
-15%
19%
2,414
2,972
-15%
21%
- of which concept stores
575
767
-15%
10%
1,229
1,600
-14%
10%
- of which other points of sale
555
639
-14%
9%
1,185
1,373
-16%
10%
Third-party distribution
161
148
30%
3%
337
346
14%
3%
Total revenue
5,894
5,655
5%
100%
11,745
11,344
3%
100%
1
Pandora does not own any of the premises (Land and buildings) where stores are operated. Pandora exclusively operates stores from leased premises.
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.
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NOTE 4 – Seasonality of operations
Due to the seasonal nature of the jewellery business, higher revenue and profits are historically realised in the fourth
quarter.
NOTE 5 – 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 Financial risks in the consolidated financial
statements in the Annual Report 2022.
During Q2 2023, Pandora launched a new share buy-back programme to acquire own shares for a maximum
consideration of DKK 2.6 billion up until 2 February 2024. This follows the successful conclusion of Pandora’s DKK 2.4
billion share buy-back programme ending late June 2023. For the first time, Pandora’s share buy-back features a
sustainability commitment whereby DKK 2 million, a portion of the expected execution performance, will be used to
accelerate Pandora’s low-carbon strategy via the purchase of Renewable Energy Certificates and investments in
energy efficiency projects at Pandora’s crafting facilities in Thailand.
Net interest-bearing debt (NIBD), including capitalised leases amounted to DKK 11.4 billion at the end of Q2 2023
(Q1 2023: DKK 10.2 billion) corresponding to a financial leverage of 1.3x (Q1 2023: 1.2x).
Outstanding committed loan facilities (end of June 2023)
DKK million
Available facilities
Maturity date
Drawn amount
Available
liquidity
Revolving credit facilities
1
7,075
April 2028
3,729
3,346
Term loan maturing in 2030
1
745
May 2030
745
-
Bond maturing in 2028
1
3,724
April 2028
3,724
-
Total outstanding committed loan facilities
11,544
8,198
3,346
1
Sustainability-linked facilities.
NOTE 6 – 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 Derivative financial instruments to the consolidated financial statements in the Annual Report 2022.
NOTE 7 – Trade receivables
DKK million
2023
30 June
2022
31 December
Receivables related to third-party distribution and wholesale
437
747
Receivables related to retail revenue
354
515
Total trade receivables
791
1,262
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NOTE 8 – Business combinations
In H1 2023, Pandora took over 28 concept stores (14 concept stores in the US and 14 concept stores in Colombia).
Net assets acquired mainly consisted of store properties, inventories and related liabilities. The total purchase price
for the acquisitions was DKK 166 million. Based on the purchase price allocations, goodwill was DKK 85 million.
Goodwill from the acquisitions was mainly related to the synergies from converting the stores from wholesale and
distribution to Pandora owned retail. Among the goodwill acquired, DKK 36 million was deductible for income tax
purposes.
Cost relating to the acquisitions was immaterial and has been recognised as operating expenses in the income
statement.
Excluding the temporary drag on gross margin from inventory buybacks and the impact from converting the stores
from wholesale to Pandora owned retail, contribution to Group revenue and net profit from acquisitions for the
period 1 January – 30 June 2023 was DKK 40 million and DKK 15 million respectively. On a pro forma basis, i.e. in the
event that the acquisitions had been effective from 1 January 2023, the impact on Group revenue and net profit for
the period 1 January – 30 June 2023 would have been approximately DKK 72 million and DKK 22 million.
The purchase price allocations have not yet been finalised at the time of reporting and the accounting for the business
combination is considered provisional at 30 June 2023.
ACQUISITIONS
DKK million
H1 2023
FY 2022
Property, plant and equipment and right-of-use assets
113
159
Inventories
75
195
Other current assets
1
-
Assets acquired
189
354
Non-current liabilities
71
78
Payables
1
3
Other current liabilities
36
61
Liabilities assumed
109
141
Total identifiable net assets acquired
81
213
Goodwill arising on the acquisitions
85
364
Purchase consideration
166
577
Cash movements on acquisitions:
Consideration transferred regarding previous years
1
6
-
Deferred payment
-15
-14
Net cash flow on acquisitions
156
562
1
The deferred payment of DKK 6 million related to the acquisition in Portugal in 2022 is paid in 2023.
Business combinations after the reporting period
No acquisitions to an extent of significance to Pandora took place after the reporting period.
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NOTE 9 – Goodwill
DKK million
2023
30 June
2022
31 December
Cost at 1 January
4,822
4,418
Acquisition of subsidiaries and activities in the period
85
364
Exchange rate adjustments
-25
39
Cost at the end of the period
4,882
4,822
No impairment indication was identified based on the information regarding the market and the forecast. The latest
impairment test was carried out 31 December 2022 and the test confirmed a substantial headroom between the
carrying amount and the value in use. All the assumptions used are as described in the Annual Report 2022.
NOTE 10 – Assets and liabilities related to leases
Amounts recognised in the balance sheet:
RIGHT-OF-USE ASSETS
DKK million
2023
30 June
2022
31 December
Property
3,352
2,960
IT
1
2
Cars
10
11
Other
4
5
Total right-of-use assets
3,367
2,978
Out of the total increase of DKK 0.4 billion in right-of-use-assets in the period 1 January to 30 June 2023, DKK 1
billion relates to renewals of lease contracts and new leases driven by network expansion and forward integration,
partially offset by a decrease of DKK 0.6 billion as a result of depreciation and currency exchange movement. The
development in right-of-use-assets is further affected by the timing of renewals of lease contracts and new leases
including the negotiation of more favourable leasing terms.
LEASE LIABILITIES
DKK million
2023
30 June
2022
31 December
Non-current
2,460
2,113
Current
1,008
950
Total lease liabilities
3,468
3,063
Lease liabilities are recognised in loans and borrowings.
Amounts recognised in the income statement:
RECOGNISED DEPRECIATION ON RIGHT-OF-USE ASSETS CHARGED TO THE INCOME STATEMENT FOR THE PERIOD
DKK million
1 January –
30 June 2023
1 January –
30 June 2022
Property
556
533
IT
1
1
Cars
4
4
Other
2
2
Total depreciation on right-of-use assets for the period
563
540
The vast majority of depreciation relates to leased stores and is presented in the sales and distribution expenses.
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OTHER ITEMS RELATING TO LEASES
DKK million
1 January –
30 June 2023
1 January –
30 June 2022
Interest expense
121
61
Total interest for the period
121
61
Costs recognised in the period for short-term and low-value leases were DKK 31 million (2022 H1: DKK 23 million).
Expenses are recognised on a straight-line basis.
Total cash outflow relating to leases was DKK 885 million for 2023 H1 (2022 H1: DKK 776 million), comprising fixed
lease payments in scope of IFRS 16 of DKK 515 million (2022 H1: DKK 519 million), variable lease payments of DKK
218 million (2022 H1: DKK 173 million), interest paid of DKK 121 million (2022 H1: DKK 61 million), and short-term
and low-value leases of DKK 31 million (2022 H1: DKK 23 million). Payments related to variable leases and short-term
and low-value leases are not included in the lease liabilities.
NOTE 11 – Trade payables
The Group generally accepts that vendors sell off their receivables arising from the sale of goods and services to the
Group to a third party. Pandora has established a supply chain financing programme where vendors can sell off their
receivables from Pandora on attractive terms, based on invoices approved by Pandora, but at the bank's sole
discretion. Pandora is not directly or indirectly a party to these agreements. The amounts payable to suppliers
included in the supply chain financing programme are classified as trade payables in the balance sheet as well as in
the statement of cash flows (working capital within cash flows from operations) and amounted to DKK 75 million at
30 June 2023 (30 June 2022: DKK 41 million).
NOTE 12 – Contingent assets and liabilities
Reference is made to note 5.1 Contingent assets and liabilities to the consolidated financial statements in the Annual
Report 2022.
The discussions of any potential insurance compensation for Pandora’s European Distribution Center, located in
Hamburg, Germany, that was affected by a fire in October 2022, are still ongoing with the insurers. Due to the
premature state of discussions and the associated uncertainties, Pandora has not recognised any material indemnity
claim under the business interruption insurance policy as of 30 June 2023.
NOTE 13 – Related parties
Related parties with significant interests
Other related parties of Pandora include the Board, Executive Management and their close family members. Related
parties also include companies in which the aforementioned 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 as a result of their membership of the Board, employment with
Pandora or shareholdings in Pandora.
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NOTE 14 – Store network, concept store development
1
Total concept stores
O&O concept stores
Number
of concept
stores
Q2 2023
Number
of concept
stores
Q1 2023
Number
of concept
stores
Q2 2022
Growth
Q2 2023
/ Q1 2023
Growth
Q2 2023
/Q2 2022
Number
of concept
stores
O&O
Q2 2023
Growth
O&O
stores
Q2 2023
/ Q1 2023
Growth
O&O
stores
Q2 2023
/Q2 2022
US
427
417
394
10
33
300
23
73
China
231
237
219
-6
12
218
-6
17
UK
215
211
209
4
6
200
4
11
Italy
160
155
145
5
15
124
6
16
Australia
124
120
122
4
2
46
4
4
France
122
120
122
2
-
82
2
2
Germany
132
132
133
-
-1
129
-
-1
Total top-7 markets
1,411
1,392
1,344
19
67
1,099
33
122
Rest of Pandora
1,141
1,127
1,103
14
38
613
24
90
All markets
2,552
2,519
2,447
33
105
1,712
57
212
1
All markets with 10 or more concept stores can be found in the Excel appendix uploaded on www.pandoragroup.com.
NOTE 15 – 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-month production plan. The table below illustrates the timing of the hedges related to the purchase of gold and
silver for production, 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 2-7 months.
HEDGED AND REALISED PURCHASE PRICES (AT USE OF THE GOLD AND SILVER FOR PRODUCTION)
USD / OZ
Realised in
Q2 2023
Hedged
Q3 2023
Hedged
Q4 2023
Hedged
Q1 2024
Hedged
Q2 2024
Gold price
1,891
1,765
1,884
2,071
1,989
Silver price
21.73
21.23
22.41
23.51
24.71
Commodity hedge ratio (target), %
Realised
70-100%
70-90%
50-70%
30-50%
NOTE 16 – Subsequent events
As described in section Other events in the Management review and in Note 8 Business Combinations, Pandora is not
aware of events after 30 June 2023, which are expected to materially impact the Group’s financial position.
Executive
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15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
34 | 36
QUARTERLY OVERVIEW
DKK million
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Financial highlights
Revenue
5,894
5,850
9,856
5,263
5,655
Organic growth, %
5%
1%
4%
3%
3%
Like-for-Like, %
1
2%
0%
-1%
1%
2%
Earnings before interests, tax, depreciation and
amortisation (EBITDA)
1,690
1,753
3,712
1,496
1,737
Operating profit (EBIT)
1,188
1,256
3,206
978
1,249
EBIT margin, %
20.2%
21.5%
32.5%
18.6%
22.1%
Net financials
-171
-94
-155
-18
-27
Net profit for the period
778
889
2,365
734
934
Financial ratios
Revenue growth, DKK, %
4%
3%
9%
11%
10%
Revenue growth, local currency, %
7%
2%
6%
5%
4%
Gross margin, %
78.1%
77.5%
76.2%
76.7%
76.4%
EBITDA margin, %
28.7%
30.0%
37.7%
28.4%
30.7%
EBIT margin, %
20.2%
21.5%
32.5%
18.6%
22.1%
Effective tax rate, %
23.5%
23.5%
22.5%
23.5%
23.5%
Equity ratio, %
19%
24%
33%
26%
27%
NIBD to EBITDA, x
2
1.3
1.2
0.8
1.1
1.0
Return on invested capital (ROIC)
3
42%
43%
48%
42%
46%
Cash conversion incl. lease payments, %
104%
-49%
110%
0%
40%
Net working capital, % of last 12 months’ revenue
8.4%
8.8%
4.2%
8.8%
5.8%
Capital expenditure, % of revenue
6.8%
4.6%
4.7%
6.9%
5.4%
Stock ratios
Total payout ratio (incl. share buyback), %
186%
322%
33%
108%
77%
Consolidated balance sheet
Total assets
22,112
21,519
22,013
21,776
20,503
Invested capital
15,609
15,481
13,961
14,853
13,543
Net working capital
2,265
2,332
1,104
2,249
1,451
Net interest-bearing debt (NIBD), incl. capitalised leases
11,363
10,227
6,794
9,174
7,926
Equity
4,245
5,254
7,167
5,679
5,617
Consolidated statement of cash flows
Cash flows from operating activities
1,627
-142
4,075
542
928
Capital expenditure, total
398
270
462
364
306
Capital expenditure, property, plant and equipment
312
165
349
260
236
Free cash flows incl. lease payments
1,230
-614
3,538
-
506
1
Like-for-Like growth include sell-out from all concept stores (including partner owned), owned and operated Shop in Shops and Pandora Online. Partner owned other
points of sale are not included in Like-for-Like. The KPI includes stores which have been operating for +12 months.
2
Ratio is based on 12 months’ rolling EBITDA.
3
Last 12 months’ EBIT in % of invested capital.
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
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15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
35 | 36
MANAGEMENT STATEMENT
EXECUTIVE MANAGEMENT
BOARD
Executive
summary
Financial
highlights
Business
update
Revenue
review
Profitability
Cash Flow &
Balance sheet
Financial
guidance
Sustainability
Other events
& Contact
Financial
statements
Accounting
notes
15 AUGUST 2023 | INTERIM FINANCIAL REPORT Q2 2023 | COMPANY ANNOUNCEMENT No. 806 | page
36 | 36
DISCLAIMER
This Company announcement contains forward-looking statements, including, but not limited to, guidance,
expectations, strategies, objectives and statements regarding future events or prospects with respect to the
Company’s future financial and operating results. Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain
words such as "expect", "estimate", "intend", "will be", "will continue", "will result", "could", "may", "might" or any
variations of such words or other words with similar meanings. Forward-looking statements are subject to risks and
uncertainties that could cause the Company’s actual results to differ materially from the results discussed in such
forward-looking statements. Prospective information is based on management’s then current expectations or
forecasts. Such information is subject to the risk that such expectations or forecasts, or the assumptions underlying
such expectations or forecasts, may change. The Company assumes no obligation to update any such forward-looking
statements to reflect actual results, changes in assumptions or changes in other factors affecting such forward-
looking statements. Some important risk factors that could cause the Company’s actual results to differ materially
from those expressed in its forward-looking statements include, but are not limited to: economic and geopolitical
uncertainty (including interest rates and exchange rates), financial and regulatory developments, general changes in
market trends and end-consumer preferences, demand for the Company’s products, competition, the availability
and pricing of materials used by the Company, production and distribution-related issues, IT failures, litigation,
pandemics, and other unforeseen factors. The nature of the Company’s business means that risk factors and
uncertainties may arise, and it may not be possible for management to predict all such risk factors, nor to assess the
impact of all such risk factors on the Company’s business or the extent to which any individual risk factor, or
combination of factors, may cause results to differ materially from those contained in any forward-looking statement.
Accordingly, forward-looking statements should not be relied on as a prediction of actual results.
