Programme NOW on track – Brand relaunch to strengthen consumer relevance from 29 August
Q2 2019 Highlights
- As expected, the financial results continued to be weak and impacted by the Commercial Reset initiated as part of Programme NOW
- The 2019 financial guidance for organic growth and EBIT margin excluding restructuring costs is unchanged
- Early positive signs of the impact from Programme NOW is visible in the underlying gross margin, cost levels and cash generation
- Organic growth was -7% and total like-for-like sales-out growth (like-for-like) was -10% in Q2 2019 driven by decreasing traffic into the physical stores. Like-for-like in Online Stores accelerated to 22%
- Testing of increased marketing investments in Italy and the UK have shown a positive effect on traffic and an ability to drive profitable revenue growth. Consequently, it has been decided to significantly increase marketing investments for the rest of 2019
During Q2 2019, Pandora has progressed rapidly with the preparations of the brand relaunch on 29 August. The brand relaunch will be kick-started by a global PR event in Los Angeles on 28 August evolving around the new brand purpose “We give a voice to people’s loves – Passions, People & Places”. Following extensive consumer research, the new purpose is taking focus back to Pandora’s core proposition of co-creation, self-expression and collecting. The new brand relaunch will refresh all consumer touchpoints to increase brand relevance. One of the cornerstones is a new store design that builds on discovery and collecting supported by new collaborations, celebrity endorsements, new products and the largest marketing boost in the company’s history. Pandora will also launch new online stores and refresh its presence on marketplaces such as Tmall.
In Q2 2019, the cost reduction initiatives delivered results in line with plans with savings of DKK 200 million, of which DKK 125 million is related to Programme NOW initiatives. The cost reductions supported the gross margin, which reached the highest level ever at 76.1% excluding restructuring costs. The EBIT margin excluding restructuring costs was 22.9% which is an incremental improvement compared with Q1 despite lower revenue and additional marketing spending. The Commercial Reset initiatives, including fewer promotion days and reduced sell-in packages, progressed as planned. The wholesale inventory buyback programme has been initiated in Q3 2019, and Pandora has decided to conduct additional important restructuring initiatives to improve the structural health of the business. These initiatives will entail additional restructuring costs of around DKK 0.5 billion (see Financial Guidance on page 14 for further details).
Alexander Lacik, President and CEO of Pandora, says:
“Financial results in the second quarter of 2019 were in line with plans. In the quarter, we have progressed rapidly on a number of important commercial initiatives which we can soon reveal and showcase to our consumers as part of our brand relaunch on 29 August. Our preparations and marketing pilots spur confidence in our direction – by improving execution with focus on Pandora’s core proposition, we can improve our relevance for consumers around the world. This is the first important step in our journey towards positive growth”
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 (0) 33 33 000 804
US: +1 631 91 31 422
Please use PIN: 822 85 045#
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 7,500 points of sale, including more than 2,700 concept stores.
Founded in 1982 and headquartered in Copenhagen, Denmark, Pandora employs more than 26,000 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).
For more information, please contact:
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