Pandora A/S Ord

Welcome to the Pandora Interim Financial Report. For the first part of this call, all participants will be in listen mode only. And afterwards, there'll be a question and answer session. Today, I'm pleased to present Head of Investor Relations, John Becker. Please begin the meeting.

Good morning, everyone, and welcome to the extended conference call for Pandora's Q1 results and the announcement of our new strategy. I'm John Beckman from the Investor Relations team. I'm here with our CEO, Alexander Lacek, and our CFO, Anders Boyer, and the rest of the IR team, Christoffer Malmgren and Mikkel Johansen. Slide two, please. Please pay notice to the disclaimer on slide two. Alexander, please go ahead.

Thank you, John, and welcome everyone for joining us in this extended call today. Today's call will be split in two parts. First, we'll go through the Q1 results and there will be a 30 minute Q&A session for that part. So please limit yourself to one question at a time and get back into the queue if you have additional questions. Then in the second part, we will present our new strategy and there will be a Q&A session following that as well. Next slide, please. go to the following slide. Today is a big day for us as we release our new strategy, Phoenix, a new chapter of sustainable and profitable growth for Pandora. The turnaround has been successfully completed, the top line has been stabilized, and we have a much stronger organization. We're now ready to share the highlights of our new strategy, which will lead Pandora into a chapter of sustainable and profitable growth. But more on that later. Let's first start with the Q1 numbers. As already announced in the March trading update, we've had a strong start to 2021 with a continued strong momentum. Our strong online growth continued and was up over 200% versus 2019. The US growth was very strong, up more than 50% versus 2019. Overall sell-out growth in the quarter was only down 5% versus 19%, despite that 30% of the stores were closed in the quarter. We are pleased with the start of the year. Next slide, please. On top of announcing the new strategy today, we have three other important announcements to make. First of all, based on the strong performance so far and our expectations for the rest of the year, we upgrade our guidance for the year to now expect organic growth above 12% and EBIT margin above 22%. Secondly, we also reinitiate cash distributions to the shareholders by doing a combination of extraordinary dividend and share buybacks. And finally, today our new sustainability report is also released, where we disclose strong results achieved so far and our ambitious goals for the future. Slide seven, please. Our underlying performance is best viewed versus 2019, when there was no impact from COVID-19. Using Q1 2019 as the comparison, in Q1 2021, we saw solid performance across most key markets despite lockdowns. UK, which is our second largest market, was only down 16% versus 2019, despite all the stores being closed in the quarter. Our stores in the UK are now fully opened again. The performance in our largest market, US, really stands out, with sellout growth 52% higher than the same quarter in 2019. Australia, which was almost fully open, also delivered positive growth versus 2019. As expected, China is still underperforming in the quarter. We're now getting ready to take the first and significant steps in the China transformation and increase our investments to strengthen and reposition our brand and reduce promotions during the second half of the year. Next slide, please. As said already, we think our underlying performance is best viewed versus 19. The sellout growth of minus 5% versus 19 is impacted by opposing factors. We talked about these in Q4 as well, and they are still all very relevant. First, lost revenue from closed stores, which is partly offset by revenue picked up online instead. Secondly, as we have talked about before, a shift in general consumer demand away from traveling and services, for instance, and towards, among others, gifting and jewelry. In the US, this has been fueled further by the stimulus packages. Net-net and trying to cut through all of this noise, our assessment is that the underlying Q1 performance confirms that this top line is stabilizing. Next slide, please. It's clear that we're maintaining our industry leading brand position. However, with lockdowns and closed stores, we have adjusted the spend pattern more towards digital, especially in markets where physical retail has been closed. So a little bit less of top funnel spending, which impacts the unaided brand awareness. More than one third of all Google searches for branded jewelry globally was for Pandora in the quarter, while the two closest competitors had around 10% share of searches. On global unaided brand awareness, we were number one in five out of seven key markets in the quarter and ranked second highest in the US. Next slide, please. Let's have a look at our digital results in Q1. Online growth continued and revenue more than doubled versus 2020 and was up over 200% versus 2019. Our online conversion rate was up over 80% year-on-year, and the conversion improved for most of the steps during the consumer acquisition funnel, from traffic to sales. The click and collect concept in the U.S. continued the strong traction and made up around 10% of online sales in the U.S. in the quarter. Digital plays a key role in our new strategy that we will cover later in this call, both as a foundation for the strategy and as a growth driver. Next slide, please. Today, we launched our new sustainability report with increased disclosure. Sustainability is close to our heart and we're working towards becoming a low-carbon, circular and inclusive business. In 2020, we lowered our CO2 footprint and switched to 100% renewable energy in our manufacturing facilities in Thailand. We're supporting a circular economy and have established a roadmap towards achieving our target of using only recycled silver and gold by 2025. Our recent refinancing also links part of our borrowing costs to our sustainability goals, to be carbon neutral and use recycled metals only by 2025. It integrates sustainability into our capital structure and creates a transparent, further incentive for us to reach our goals. I will now hand over to Anders to take us through the financial performance. Anders, please go ahead.