Outlook

Financial Guidance for 2020

As announced on 16 March 2020, the financial guidance for 2020 was withdrawn following the escalation of COVID-19. As a result of the continued high uncertainty, it is still not deemed meaningful to provide any financial guidance at this stage.

The organic growth in April was materially impacted by temporary concept store closures during the month. The online store growth accelerated generating triple-digit growth in April. The current run rate organic growth at the time of reporting is improving slightly, reflecting the recent store re-openings in Germany and a continued gradual but slow improvement in China.

The 2020 EBIT-margin is naturally first and foremost dependent on the revenue development. While no meaningful financial guidance for 2020 can be provided at this stage, it should be noted that Pandora can absorb up to around 50% decline in revenue before reaching break-even on full-year EBIT excluding restructuring costs.

Based on the continued widespread lock-down of markets across the world, Pandora is likely to generate significant negative EBIT in Q2 2020.

Based on the assumption that the second quarter will be materially impacted by COVID-19 and that there will be a slow gradual improvement during the second half of 2020, Pandora can provide the following guidance:

  • The restructuring costs related to Programme NOW are expected to amount to around DKK 1.0 billion compared to previous expectations of around DKK 1.3 billion. The restructuring costs relate to the strategic re-organisation, consultancy costs and costs of implementing cost reduction initiatives such as the IT transformation and manufacturing efficiencies
  • CAPEX for the year is expected to be around DKK 0.7 billion compared to the initially expected amount of DKK 1.0-1.2 billion. The reduction is a result of deliberate actions to protect cash including a reduction of the number of expected store refurbishments
  • The number of concept stores is expected to be reduced by 25-50 in 2020 compared to previous expectations of a flat development in the number of stores. The change is due to fewer planned store openings in China and Latin America due to COVID-19

The effective tax rate in 2020 is still expected to be 22-23%. Assuming current exchange rates versus Danish kroner, growth reported in DKK is expected to be 0-1pp higher than in local currency.

Mid-term financial aspirations

Pandora’s aspiration for the mid-term horizon is to deliver sustainable positive organic growth and industry-leading profitability. Organic growth will be driven by positive total like-for-like growth.