Interim report for Q1 2012

5/8/2012 2:00 AM EST

Pandora A/S
Quarterly report

Interim report for Q1 2012

GROUP REVENUE WAS DKK 1,424 MILLION. EBITDA MARGIN WAS 28.2%. NET PROFIT WAS
DKK 338 MILLION. REPORTED NUMBERS IN LINE WITH EXPECTATIONS AND AS EXPECTED
ADVERSELY AFFECTED BY STOCK BALANCING CAMPAIGN. 

No. 60

COMPANY ANNOUNCEMENT

8 May 2012



The implementation of the strategic review is on track and during Q1 2012 the
Company executed on both the stock balancing campaign and the realignment of
price architecture and product range as planned. The reported numbers in this
interim report are in line with our expectations, but as expected adversely
impacted by the effect from the stock balancing campaign launched on 21
February 2012. Please see PANDORA’s Annual report for 2011 for a full
description of the stock balancing campaign. 

In Q1 2012 PANDORA received returns of discontinued products of DKK 340
million. Of this, DKK 162 million was replaced during Q1 2012. 



  -- Group revenue decreased by 18.4% in Q1 2012 to DKK 1,424 million compared
     to DKK 1,745 million in Q1 2011:
     -- Americas decreased by 2.0% (5.5% decrease in local currency)
     -- Europe decreased by 36.2% (35.9% decrease in local currency)
     -- Asia Pacific decreased by 16.4% (22.3% decrease in local currency)
     -- Branded revenue as percentage of total revenue increased to 80.2% (75.5%
        in Q1 2011)
  -- Gross margin was 71.6% in Q1 2012 (compared to a gross margin of 71.6% in
     Q1 2011),
  -- EBITDA margin was 28.2% in Q1 2012 (compared to an EBITDA margin of 40.6%
     in Q1 2011), EBITDA decreased by 43.4% to DKK 401 million
  -- EBIT margin was 24.8% in Q1 2012 (compared to an EBIT margin of 36.5% in Q1
     2011), EBIT decreased by 44.6% to DKK 353 million
  -- Net profit decreased by 34.4% to DKK 338 million in Q1 2012 (compared to a
     net profit of DKK 515 million in Q1 2011)
  -- Free cash flow was DKK 118 million in Q1 2012 (compared to DKK 476 million
     in Q1 2011)



CONFIRMED Financial outlook for 2012

Assuming a negative impact on revenue corresponding to the maximum cap of DKK
800 million from the stock balancing campaign, PANDORA expect to report revenue
above DKK 6 billion, a gross margin in the low 60’s and an EBITDA margin in the
low 20’s. 

Excluding the negative impact of the one-off stock balancing campaign PANDORA
expects 2012 revenue growth in mid-single digits; gross margin in the low 60’s
driven by the impact of commodities prices and a reduction in our selling
prices; and EBITDA margin in the mid 20’s. 

CAPEX and the effective tax rates will not be affected by the stock balancing
campaign. PANDORA expects CAPEX to be around DKK 300 million and an effective
tax rate of 18,0%. 

PANDORA’s revenue assumption is based on the expectation of approximately 200
new Concept stores in 2012, with a particular focus in new markets. PANDORA
expects to open at least 135 new Concept stores and Shop-in-Shops in our key
new markets (Italy, France, Russia and Asia) during the course of 2012. 

PANDORA’s 2012 guidance is based on the following assumptions:

  -- Main commodities: Gold: 1,534 USD/oz and silver: 32.7 USD/oz 
  -- Main currencies: DKK/GBP: 858.7, DKK/USD: 551.1, DKK/AUD: 536.4 and
     DKK/THB: 17.7



CEO Björn Gulden, said:

“During the first couple of months I have been spending time with all of our
major markets and also visited our production facilities in Thailand. I have
worked through our strategic review, and can confirm that I 100% agree to its
conclusions. Our strategy is intact – it is all about execution. 

Our operations developed as planned during the quarter. It is evident that we
do have a number of short-term challenges but I am encouraged to see that we
have initiated actions to deal with all of them. I am also very happy to see
how motivated and passionate our people are. They are all proud of being part
of PANDORA and are genuinely focused on continuing making PANDORA a globally
successful company.  We will achieve this by working hard on three things:
understanding the consumer, improving our product offering and strengthening
the sales-out. 

The stock balancing campaign is on track, but due to the way this campaign
affects our quarterly reported numbers, progress can be difficult to track. The
most important fact is that we work together with our retailers, to make sure
that the quality of their stock is improving. The fact that we have realigned
the price architecture and product range and also reduced prices on several of
our products is also assuring that we will have a larger offering in the
commercial PANDORA price points going forward. 

I’m happy to see that the Spring/Summer 2012 collection launched in mid-March
is doing very well both in terms of sales-in and sales-out, and I’m confident
that this improvement will continue with our product offering for Fall/Winter
2012.” 



CONFERENCE CALL

A conference call for investors and financial analysts – hosted by CEO Björn
Gulden and CFO Henrik Holmark – will be held today at 10.00 CET and can be
accessed from our website: www.pandoragroup.com. The corresponding presentation
will be available on the website one hour before the call. 



The following numbers can be used by investors and analysts:

DK: +45 3272 7625

UK (International): +44 (0) 1452 555 566

US: +1 631 510 7498

To help ensure that the conference begins in a timely manner, please dial in 5
minutes prior to the scheduled starting time. Participants will have to quote
confirmation code 73331039 when dialling into the conference. 



ABOUT PANDORA
PANDORA designs, manufactures and markets hand-finished and modern jewellery
made from genuine materials at affordable prices. PANDORA jewellery is sold in
more than 65 countries on six continents through over 10,000 points of sale,
including around 700 concept stores. 

Founded in 1982 and headquartered in Copenhagen, Denmark, PANDORA employs over
5,300 people worldwide of whom 3,600 are located in Gemopolis, Thailand, where
the Company manufactures its jewellery. PANDORA is publicly listed on the
NASDAQ OMX Copenhagen stock exchange in Denmark. In 2011, PANDORA’s total
revenue was DKK 6.7 billion (approximately EUR 893 million). For more
information, please visit www.pandoragroup.com 



CONTACT

For further queries, please contact:



INVESTOR RELATIONS                          MEDIA RELATIONS                     
Morten Eismark, VP Group Investor           Kasper Riis, VP Group Communications
 Relations                                  Phone +45 3673 0627                 
Phone +45 3673 8213                         Mobile +45 3035 6728                
Mobile +45 3045 6719