Q3 2019 Highlights
- Programme NOW is on track – Pandora has taken the first steps towards enhanced brand relevance, becoming more cost-efficient and creating a strengthened business platform through the Commercial Reset
- The underlying traffic trend supports the expectations of an improving performance during Q4 and a strong Christmas trading. Total like-for-like sales out growth (like-for-like) improved in most markets following the brand relaunch ending at -7% in October. Disappointing results in China impacted October like-for-like negatively by 2pp
- Q3 2019 was marked by the clean-up phase with deliberate promotional reduction. Like-for-like was -10% (adjusted for -1.0pp impact from Hong Kong SAR turmoil) with a record high gross margin of 78.6%. Cash generation remained strong
- Strong progress on the cost reduction programme - the cost savings target for 2019 is increased by DKK 50 million to DKK 650 million, and the 2020 run-rate target is increased by DKK 100 million to DKK 1.3 billion
On 29 August, Pandora initiated the brand relaunch – the first important milestone in the journey to strengthen Pandora’s brand relevance among consumers. The early results of the initiatives are encouraging with positive consumer response to the new visual identity, online stores as well as the pilot concept stores.
The positive effect on like-for-like from the brand initiatives and the increased media spend was offset by a deliberate reduction of promotions. Q3 organic growth was -14%, impacted by change of payment terms in Italy compared to last year (shift of revenue from Q3 to Q4 2019) and continued clean-up of wholesale inventory through inventory reduction.
The financial guidance for 2019 is unchanged for like-for-like, and the EBIT margin guidance is narrowed towards the lower half of the previously guided range. To fully clean up inventories in the wholesale channel, sell-in to partners will temporarily be supressed. The 2019 organic growth is now expected to be “-7% to -9%”. The EBIT margin is expected to be “26 - 27%” reflecting the change of the organic growth guidance and partly offset by additional cost reductions.
Alexander Lacik, President and CEO of Pandora, says:
“Q3 was an important milestone for Pandora. Our brand initiatives that started in late August receive good feedback from consumers, and the early positive indications are supporting our expectations for solid Christmas trading. We continue to believe that we will see an improvement in like-for-like in Q4 although the exact magnitude is clearly subject to uncertainty. Q3 financial results were marked by our deliberate Commercial Reset, and we will continue to make any necessary decisions that support the long-term health of Pandora”.
Financial overview (excluding restructuring costs)
|Q3 2019||Q3 2018||9M 2019||9M 2018|
|Total like-for-like, %||-10%1||-3%||-10%1||-3%|
|Organic growth, %||-14%||-7%||-11%||-3%|
|Revenue, DKK million||4,415||4,982||13,912||14,916|
|EBIT margin, %||20.2%||24.0%||21.9%||26.2%|
1 Total like-for-like excluding Hong Kong SAR in Q3 2019
A conference call for investors and financial analysts will be held today at 11.00 CEST 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 91 31 422
Please use PIN: 374 77 663#
Link to webcast: https://pandora.eventcdn.net/2019q3/
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 7,400 points of sale, including more than 2,700 concept stores.
Founded in 1982 and headquartered in Copenhagen, Denmark, Pandora employs more than 25,000 people worldwide of whom more than 11,500 are located in Thailand, where the Company manufactures its jewellery. Pandora is publicly listed on the Nasdaq Copenhagen stock exchange in Denmark. In 2018, Pandora’s total revenue was DKK 22.8 billion (approximately EUR 3.1 billion).
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