On track to deliver on the full year guidance - Diamonds by Pandora well received in North America

Pandora A/S

Highlights

• Organic growth of 3% and sell-out growth of 1% vs Q3 2021 (13% organic growth vs Q3 2019)

• Phoenix strategy on track. Brand metrics remain strong, the core platform is growing while important steps to build new platforms have been taken

• Pandora’s biggest product platform, Moments, delivered 2% sell-out growth vs Q3 2021

• Diamonds by Pandora was launched in North America on 25 August and reached 3% share of sell-out

• As expected, US was down 3% organically as the market is comping the unusual effects from last year’s stimulus cheques. US delivered strong organic growth of 56% vs Q3 2019 - in line with last quarter

• UK and Australia delivered double digit organic growth vs Q3 2021. France continued to be impacted by lower promotional activity. Germany remains healthy while Italy saw some signs of a weakening consumer sentiment

• After successful testing, Pandora has increased prices on selected items in North America, while remaining affordable. Similar price increases (4% on average) was implemented globally in early Q4

• Network expansion drives 2% organic growth in the quarter at an average EBIT margin of 40%

• The gross margin was strong and increased 1.2pp vs Q3 2021. The EBIT margin in Q3 2022 was 18.6%. As previously communicated, the Q4 2022 EBIT margin is expected to be stronger than last year

• Inventories deliberately increased ahead of peak season. The inventory composition remains very healthy

• Pandora plan to distribute DKK 5.3 billion to its shareholders in 2022, equal to around 13% of market cap

• Leverage remains low with NIBD to EBITDA at 1.1x. Pandora has a strong liquidity and funding position

Pandora confirms the guidance for 2022 of 4-6% organic growth and 25.0-25.5% EBIT margin. Trading in Q4 so far has been in line with the Q3 performance and thereby in line with the upper end of the implied guidance range for Q4. Pandora is assessing the impact of the recent fire at the European Distribution center. The initial assessment suggests limited net financial impact. The macroeconomic outlook is associated with elevated uncertainty.

Alexander Lacik, President and CEO of Pandora, says:
“We continued our growth journey in the third quarter and are well prepared for peak trading in November-December with an exciting product line-up. Our launch of Diamonds by Pandora is off to an encouraging start and new products will be added to the platform to fuel holiday momentum. Despite macroeconomic and geopolitical uncertainty, the shopping patterns of our consumers is so far largely unchanged. With strong financials and our position in affordable gifting, we are well equipped to weather a potential recession and seize relevant investment opportunities, for example to expand our store network. We are already now taking precautionary measures to ensure our profitability should circumstances change.“

DKK million	Q3 2022	Q3 2021	9M 2022	9M 2021	FY 2021	FY 2022 guidance
Revenue	5,263	4,728	16,607	14,383	23,394
Organic growth, %	3%	14%	8%	32%	23%	4-6%
Sell-out growth (like-for-like), %	1%	5%	6%	27%	20%
Operating profit (EBIT)	978	957	3,537	3,161	5,839
EBIT margin, %	18.6%	20.2%	21.3%	22.0%	25.0%	25-25.5%

Attachments

• Pandora Q3 2022 Interim Report_Company Announcement_751

• Pandora Appendix_Company Announcement_751