pandora company presentation

PANDORA INVESTOR EVENT - LONDON 1

PANDORA Investor Event LONDON

10 December 2013

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PANDORA INVESTOR EVENT – LONDON 10 DECEMBER 2013

2 PANDORA INVESTOR EVENT - LONDON 10 DECEMBER 2013

AGENDA

Introduction and outlining of strategy 13:00 – 13:45: President and CEO, Allan Leighton Building PANDORA through design 13:45 – 14:45: Senior Vice President and Chief Creative Officer, Stephen Fairchild 14:45 – 15:00: Coffee break Taking the product to the end consumer 15:00 – 16:00: Executive Vice President and Chief Marketing & Merchant Officer, Thomas Ryge Mikkelsen Executing on the strategy in the US 16:00 – 17:00: President, PANDORA Americas, Scott Burger Concluding the day 17:00 – 17:15: President and CEO, Allan Leighton All presentations include a 10-15 minutes Q&A session.

DISCLAIMER

Certain statements in this presentation constitute forward-looking statements. Forward-looking statements are statements (other than statements of historical fact) relating to future events and our anticipated or planned financial and operational performance. The words “targets,” “believes,” “expects,” “aims,” “intends,” “plans,” “seeks,” “will,” “may,” “might,” “anticipates,” “would,” “could,” “should,” “continues,” “estimate” or similar expressions or the negatives thereof, identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements include, among other things, statements addressing matters such as our future results of operations; our financial condition; our working capital, cash flows and capital expenditures; and our business strategy, plans and objectives for future operations and events, including those relating to our ongoing operational and strategic reviews, expansion into new markets, future product launches, points of sale and production facilities; and Although we believe that the expectations reflected in these forward-looking statements are reasonable, such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results, to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks, uncertainties and other important factors include, among others: global and local economic conditions; changes in market trends and end-consumer preferences; fluctuations in the prices of raw materials, currency exchange rates, and interest rates; our plans or objectives for future operations or products, including our ability to introduce new jewellery and non-jewellery products; our ability to expand in existing and new markets and risks associated with doing business globally and, in particular, in emerging markets; competition from local, national and international companies in the United States, Australia, Germany, the United Kingdom and other markets in which we operate; the protection and strengthening of our intellectual property, including patents and trademarks; the future adequacy of our current warehousing, logistics and information technology operations; changes in Danish, E.U., Thai or other laws and regulation or any interpretation thereof, applicable to our business; increases to our effective tax rate or other harm to our business as a result of governmental review of our transfer pricing policies, conflicting taxation claims or changes in tax laws; and other factors referenced in this presentation. Should one or more of these risks or uncertainties materialize, or should any underlying assumptions prove to be incorrect, our actual financial condition, cash flows or results of operations could differ materially from that described herein as anticipated, believed, estimated or expected. We do not intend, and do not assume any obligation, to update any forward-looking statements contained herein, except as may be required by law or the rules of NASDAQ OMX Copenhagen. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this presentation.


4 PANDORA INVESTOR EVENT - LONDON

PRESIDENT AND CEO, ALLAN LEIGHTON

• 2013: President and CEO, PANDORA

• 2008: President, Loblaw Companies Ltd

• 2002: Chairman, Royal Mail

• 1999: CEO, Wal-Mart Europe

• 1996: Chief Executive, ASDA

• 1974: Career started in Mars

• Chairman of Matalan, Office, Pace, and

Musicmagpie.co.uk. Non-executive director at

Bigham’s

• Patron, Breast Cancer Care. Chairman, Business in

the Community

• Leeds United fan (currently 6th in The

Championship)

10 DECEMBER 2013

10 DECEMBER 2013 PANDORA INVESTOR EVENT - LONDON 5

INTRODUCTION AND OUTLINING OF STRATEGY PRESIDENT AND CEO ALLAN LEIGHTON

FULLY INTEGRATED BUSINESS MODEL IN THE AFFORDABLE LUXURY SPACE

PANDORA operates and manages a vertically integrated business model, from in-house design and production to global marketing and direct distribution in most markets.

Define, Design & Develop

Forecast & Produce Communicate

& Launch Distribute & Service

Sell & Replenish

PANDORA INVESTOR EVENT - LONDON 6 10 DECEMBER 2013


PANDORA JEWELLERY IS….


PANDORA JEWELLERY

• Hand-finished genuine jewellery

• Well positioned in the affordable luxury segment

• A strong global brand distributed on six continents

• Well positioned in the market, with several drivers

to fuel continued growth

• Deepen penetration in existing markets • Leverage and renew existing product categories

• Upgrade multi-brand retailers • Increase branded points of sale, in particular Concept stores and Shop-in-

Shops

4 GROWTH DRIVERS

8

VISION: TO BECOME THE WORLD’S MOST RECOGNISED JEWELLERY BRAND

Focus on branded sales channels

Build a global brand

• Apply marketing and communication consistently • Increase brand awareness

Capitalise on product offering

Tailored approach to new markets

• Penetrate independent retailers in traditional high-spend jewellery markets • Seize opportunities in emerging markets through mono-branded space

10 DECEMBER 2013 PANDORA INVESTOR EVENT - LONDON

1

2

3

4

MISSION: TO OFFER WOMEN ACROSS THE WORLD A UNIVERSE OF HIGH QUALITY, HAND-FINISHED, MODERN AND GENUINE JEWELLERY AT AFFORDABLE PRICES

• Upgrade multi-brand retailers • Increase branded points of sale, in particular Concept stores and Shop-in-Shops

FOCUS ON BRANDED SALES CHANNELS

9

FUTURE

Up

grad

e

BRANDED

SALES

White

Silver

Gold

Shop-in-shop

Concept Store roll-out

Concept

Shop-in-shop

Silver

White

Gold

BRANDED

SALES

PAST


1

INCREASING BRANDED REVENUE

• Better brand control…

• …by cleaning up distribution

network…

• …and more focus on in-store

execution

FOCUS ON BRANDED SALES CHANNELS

10

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

DKKm Revenue per store type (12M rolling revenue)

Concept stores SiS Gold Silver White & TR

81% branded sales

65% branded sales


1

JAN

FEB

APR

MAR

MAY

JUN JUL

NOV

SEP

OCT

AUG

DEC

SPRING

MOTHER’S DAY

HIGH SUMMER

AUTUMN

CHRISTMAS

VALENTINE’S

PRE-AUTUMN

CAPITALISE ON PRODUCT OFFERING – SEVEN ANNUAL LAUNCHES

11 10 DECEMBER 2013 PANDORA INVESTOR EVENT - LONDON

2

CAPITALISE ON PRODUCT OFFERING – DESIGN TO DEMAND


MONITORING SALES-OUT

• Sales-out closely monitored

despite being a wholesaler

• System monitors sales-out of

Concept stores on daily basis and

on SKU level

• Future designs to large degree

based on sales-out data

2

CAPITALISE ON PRODUCT OFFERING – PRICE STRUCTURE

RELEVANT PRICE STRUCTURE

• Prices within affordable luxury

sweet spot

• Improved price architecture

meeting demand

• Increasing share of DVs below DKK

750

• Price changes driven by

end-consumer demand


2

2011 2012 2013 2011 2012 2013 2011 2012 2013

<DKK 750 43% 60% 62% 93% 95% 96% 72% 78% 84%

Under DKK225 3% 13% 12% 34% 32% 27% 16% 16% 14%

DKK225 - DKK375 10% 19% 20% 27% 30% 36% 19% 22% 28%

DKK375 - DKK750 30% 29% 29% 31% 33% 33% 37% 40% 42%

DKK750 - DKK1500 16% 14% 13% 5% 4% 3% 11% 10% 8%

DKK1500 - DKK3750 16% 17% 16% 2% 1% 1% 12% 8% 6%

DKK3750 + 25% 9% 9% 0% 0% 0% 5% 4% 2%

REVENUE MIX BY

PRICE RANGE

UNITS SOLD BY PRICE

RANGE

DV MIX BY PRICE

RANGE

TAILORED APPROACH TO NEW MARKETS – GROWTH IN SECTOR PRIMARILY DRIVEN BY ASIA

14

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 E2013 E2014 E2015 E2016 E2017

USDm

THE GLOBAL GENUINE JEWELLERY MARKET

Asia Pacific North America Western Europe Eastern Europe Latin America Middle East and Africa Australasia

Source: Euromonitor 2013

CAGR: +10%


3

TAILORED APPROACH TO NEW MARKETS – BUT ALSO ROOM FOR GROWTH IN DEVELOPED MARKETS

15

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 E2013 E2014 E2015 E2016 E2017

USDm

THE GLOBAL GENUINE JEWELLERY MARKET (EXCL. ASIA PACIFIC)

North America Western Europe Eastern Europe Latin America Middle East and Africa Australasia

CAGR: +5%



3

TAILORED APPROACH TO NEW MARKETS – PANDORA’S CURRENT GEOGRAPHIC EXPOSURE


GEOGRAPHICAL EXPANSION

• Core markets expected to

deliver continued robust growth

• New markets are the engine of

growth

• Some of the largest jewellery

markets still virtually

unexplored

3

Developed

New markets

Emerging markets

BUILD A GLOBAL BRAND - PANDORA BRAND DNA

17

Accessible to a wide target audience due to broad pricing and distribution.

Hand-finished and made from genuine materials

Timeless designs constantly renewed - strong associations to love and family life

Can be mixed and matched to create a

personal look blending the casual and formal

The PANDORA woman always carries her own

personal story – each element reminds her of a special moment

Feminine and light, with warm colours, targeting

women with life experience, aged 25-49


4

AIDED BRAND AWARENESS IN KEY MARKETS*

BUILD A GLOBAL BRAND – INCREASING AWARENESS

18

2009 2013 2012 2011 2010

74%

63%

2007

52%

26%

38%

12%

*Based on brand tracking analysis carried out by GfK (2007 and 2009) and IUM (2010 - 2013) among women aged 25-49. Between 1,000 and 2,000 web interviews per country. 8 markets 2007-2009 = US, UK, Germany, Australia, Spain, Portugal, Netherlands and Denmark. 16 markets 2010-2013 = 8 markets + Canada, Ireland (incl. Northern Ireland), Austria, Belgium, Switzerland, France, Poland and Italy.


4

MARKET ENTRIES

1982 ... 2000

2001

2002 2003

2004 2005 2006 2007 2008

2009 2010 2011 2012 2013

BRANDED NETWORK ONLINE

7 DROPS CATEGORY

EVOLUTION 2nd CORE OTHER

JEWELLERY

Fix GERMANY

Build ITA, FRA, RUS

Prepare JPN, CHN

BRAND & AWARENESS

10 HORIZONS

19

Focus on branded sales channels

Build a global brand

Capitalise on product offering

Tailored approach to new markets


1

2

3

4

+


QUESTIONS AND ANSWERS


SVP AND CHIEF CREATIVE OFFICER, STEPHEN FAIRCHILD

• 2011: SVP, Chief Creative Officer, PANDORA

• 2005: Creative Director, Mexx

• 2002: Design Director/Merchant, IC Companys

• 2001: Pres. & Managing Dir., Stephen Fairchild Srl

• 2000: Menswear Design, Tommy Hilfiger Europe

• 1996: Director of Design, Merchandising and

Licensing, Valentino S.p.A.

• 1994: Design Director, Calvin Klein Inc. New York

• 1992: Design Director, Polo Ralph Lauren New York

• 1984: Design Assistant, Giorgio Armani S.p.A.

Education:

• Cleveland Institute of Art Lacoste, France, Wake

Forest University, North Carolina, USA

BUILDING PANDORA THROUGH DESIGN SVP, CHIEF CREATIVE OFFICER STEPHEN FAIRCHILD

PANDORA BRAND DNA


THE PANDORA CATEGORY CONCEPTS


BUILDING THE SILVER SNAKE BRACELET

PANDORA holds a patent on the unique fixing system for the charm bracelet


PANDORA’S THINKING ON DESIGN

THE ASSORTMENT PYRAMID

EMOTION & BRAND

STORYTELLING TREND & THEME

NEW MATERIAL AND SHAPES

I N N O V A T I O N

S E A S O N A L T H E M E

O C C A S I O N S & G I F T G I V I N G


Occasions

Seasonal themes

OUR MAIN DELIVERIES TO THE MARKET – SEVEN DROPS PER YEAR

MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Spring/ New arrivals

Mother’s day Christmas Autumn/ New arrivals

Summer / travel

3 6

7

JAN FEB

Valentine’s

5 4 1

2

My Story, My Design[Sterling silver charm] – as unique as you are.

Express your story and create your design at pandora.net

DISCOVER THE NEW SUMMER COLLECTION

MY STORY, MY DESIGNDiscover the new Christmas Collection.

Featuring a silver snowflake pendant to celebrate special Christmas moments.

Express your story and create a wish at pandora.net

Celebrate your

Christmas moments

Sterling Silver Charms from $XX


Pre-Autumn

THE PANDORA FUNNEL

THE MERCHANTS REQUEST

MARKET NEEDS

THE CONSUMER DIRECTS

TRENDS & WISHES

THE RETAIL INSIGHT

PRICE POINTS

METALS, STONES & COLOUR

TRENDS & THEMES

THE BRAND DECIDES


GLOBAL SELL-OUT DATA

RETAIL INSIGHT

GLOBAL SELL-OUT DATA GLOBAL SELL-OUT DATA PORTFOLIO ANALYSIS PRODUCT LIFE CYCLE MANAGEMENT GLOBAL SALES-OUT DATA

PRODUCT LIFE CYCLE MANAGEMENT

PORTFOLIO ANALYSIS


RETAIL INSIGHT EXTRACTION (ILLUSTRATIVE)


THE BUILDING OF THE CHARM COLLECTION THROUGH RETAIL INSIGHT


CHRISTMAS OCCASION – ALL CATEGORIES

UNFORGETTABLE MOMENTS


THE DIMENSIONS

EXPRESS THE ESSENCE OF YOU

CELEBRATING MOMENTS

UNFORGETTABLE MOMENTS

CELEBRATING MEANINGS

IN TODAY’S ECONOMIC, SOCIAL AND ENVIRONMENTAL CLIMATE MORE PEOPLE UNDERSTAND THAT THEIR WORLD NEEDS TO BE FILLED, FULFILLED, FUELLED AND NURTURED THROUGH A GREATER CONNECTION TO THEIR WORLD


THE WORLD AROUND PANDORA IS CHANGING.

PEOPLE’S LIVES ARE MORE: • TURBULENT AND UNCERTAIN • OVERLOADED AND FAST-PACED

BUT THEY THEMSELVES ARE MORE: • EMPOWERED AND EDUCATED • IMAGINATIVE AND ENABLED


AS A RESULT, PEOPLE ARE DEFINING WHAT MATTERS TO THEM. PEOPLE ARE: • SETTING MORE LIFE GOALS TO BECOME

ALL THEY CAN BE • SEEKING MEANING AND DEPTH IN THEIR

LIVES


PANDORA’S AUDIENCE IS ALSO CHANGING:

• CURRENT OWNERS WANT MORE FROM PANDORA

• PHASED-OUT OWNERS WANT NEWNESS FROM PANDORA

• NON-OWNERS WANT DIFFERENCE FROM PANDORA


PANDORA NEEDS TO REFLECT THIS REALITY

Current customers want more

People are

setting more life goals

to become all they can be.

People are seeking

meaning and depth

in their lives

Phased-out customers

want newness

Non-customers want a difference

WORLD CHANGES CUSTOMER CHANGES

PANDORA MUST INNOVATE FROM ITS CORE

Current customers want

more

People are setting more life goals to become all they can be


want newness Non-customers want difference

People are seeking meaning and depth in

their lives

‘To inspire women around

the world to express their individuality’


PANDORA MUST CELEBRATE HER INTRINSIC NATURE, HER CHARACTER, HER EXISTENCE, HER ESSENCE

Current customers want

more

People are setting more life goals to become all they can be


want newness Non-customers want difference

People are seeking meaning and depth in

their lives

‘Her ESSENCE’


ADDING SOUL TO PRODUCT

GENERIC PRODUCT


ADDING A NAME & MEANING


PRODUCT YOU CAN RELATE TO

ADDING SOUL TO PRODUCT ADDING A PHILOSOPHY


PRODUCT WITH A SOUL

MEGA TRENDS TO HER LIFE – FUTURE LABORATORY

Empowerment Harmony

Belonging Commitment

INITIAL SELECTIONS OF MEANINGS

QUANTIFICATION OF MEANINGS

INNER SELF OUTER SELF

Empowerment Harmony Commitment Belonging

Rank Score Rank Score Rank Score Rank Score

13 Freedom 92.6% 3 Health 97.0% 2 Honesty 97.8% 1 Trust 97.8%

16 Confidence 91.4% 6 Happiness 95.7% 11 Positivity 93.4% 4 Love 96.7%

18 Strength 88.7% 7 Wellness 95.5% 14 Compassion 92.2% 5 Respect 96.4%

20 Courage 86.1% 10 Peace 93.4% 15 Hope 91.6% 8 Loyalty 95.3%

25 Vitality 83.4% 19 Energy 87.1% 23 Passion 84.8% 9 Joy 94.0%

30 Prosperity 71.5% 21 Balance 85.7% 24 Generosity 84.5% 12 Security 93.1%

31 Grace 70.9% 22 Wisdom 84.9% 26 Dedication 82.3% 17 Stability 89.4%

33 Journey 69.3% 27 Faith 79.3% 29 Creativity 73.7% 28 Unity 75.6%

36 Fertility 37.7% 34 Reflection 68.4% 35 Change 48.8% 32 Eternity 69.6%

RANK ACROSS MARKETS - TOP 20

USA GER AUS

Rank no. % important % important % important

1 Trust 98.5% Faith 96.4% Happiness 98.3%

2 Honesty 98.4% Health 96.0% Honesty 98.1%

3 Love 98.0% Trust 95.9% Trust 97.9%

4 Happiness 97.7% Honesty 95.9% Loyalty 97.3%

5 Loyalty 97.6% Love 93.0% Respect 97.2%

6 Respect 97.4% Wellness 92.9% Health 97.2%

7 Health 97.3% Respect 92.8% Love 97.1%

8 Wellness 96.4% Joy 91.9% Wellness 95.8%

9 Compassion 96.3% Peace 90.4% Compassion 94.5%

10 Joy 95.7% Security 87.6% Positivity 94.5%

11 Positivity 95.6% Happiness 87.0% Security 94.1%

12 Freedom 95.3% Loyalty 86.8% Peace 93.4%

13 Hope 95.2% Positivity 86.6% Freedom 93.1%

14 Confidence 95.1% Freedom 85.8% Confidence 93.0%

15 Security 94.9% Hope 84.3% Joy 93.0%

16 Peace 94.7% Confidence 80.6% Strength 91.5%

17 Stability 93.9% Compassion 79.2% Hope 91.4%

18 Generosity 93.7% Stability 77.9% Stability 90.4%

19 Wisdom 93.5% Vitality 77.9% Generosity 89.9%

20 Strength 93.4% Energy 73.9% Energy 89.9%

OVERALL RANKING

Rank no. % importance Rank no. % importance

1 Trust 97.8% 19 Energy 87.1%

2 Honesty 97.8% 20 Courage 86.1%

3 Health 97.0% 21 Balance 85.7%

4 Love 96.7% 22 Wisdom 84.9%

5 Respect 96.4% 23 Passion 84.8%

6 Happiness 95.7% 24 Generosity 84.5%

7 Wellness 95.5% 25 Vitality 83.4%

8 Loyalty 95.3% 26 Dedication 82.3%

9 Joy 94.0% 27 Faith 79.3%

10 Peace 93.4% 28 Unity 75.6%

11 Positivity 93.4% 29 Creativity 73.7%

12 Security 93.1% 30 Prosperity 71.5%

13 Freedom 92.6% 31 Grace 70.9%

14 Compassion 92.2% 32 Eternity 69.6%

15 Hope 91.6% 33 Journey 69.3%

16 Confidence 91.4% 34 Reflection 68.4%

17 Stability 89.4% 35 Change 48.8%

18 Strength 88.7% 36 Fertility 37.7%

CHOOSING THE BEST MEANINGS

ADDING A NAME & MEANING

PRODUCT • QUALITY PRODUCT • AFFORDABLE CHARM SYSTEM • PRODUCT WITH EMOTIONAL BONDING

PRODUCT MERCHANDISING • SMART SYSTEM • COHERENT AND CONSISTENT • REPRESENTATIVE ON MEANING • ADAPTED TO LOCAL NEEDS

MARKETING • FOCUS ON MEANING • INCLUSIVE EXPERIENCE VISUAL MERCHANDISING • STYLISH, WARM & FEMININE • INSPIRATIONAL

ALIGNMENT ON TOUCH POINTS


EVP AND CHIEF MARKETING & MERCHANT OFFICER, THOMAS RYGE MIKKELSEN

• 2008: Executive Vice President, PANDORA

• 2013: Chief Marketing & Merchant Officer

• 2011: Chief Merchant

• 2008: Chief Development Officer

• 2001: Private equity director, Axcel

• 1998: Management consultant, Accenture

• 1998: Market analyst, IBM, Raleigh, N.C.

Education:

• M.Sc. International Business

• Copenhagen Business School

• Fuqua School of Business, Duke, N.C.

• Non-executive director, Prokura Consultancy

GLOBAL MARKETING AND RETAIL APPROACH EVP, CHIEF MARKETING & MERCHANT OFFICER THOMAS RYGE MIKKELSEN


MARKETING & RETAIL

Define, Design & Develop

Forecast & Produce Communicate

& Launch Distribute & Service

Sell & Replenish


BRAND BUILDING TRAFFIC GENERATION OFFERING STORE ENVIRONMENT HUMAN TOUCH

MAXIMISING RETAIL SALES-OUT BY GOING TO MARKET WITH THE RIGHT …

12%

2012

63%

2011

52%

2010

38%

2009

26%

2007


ENSURING RETAIL EXCELLENCE & GREAT CUSTOMER EXPERIENCE

VM

VM

Operations

VM

Training

Merchandising

Store Design

Operations

Merchandising

Store Design

Training

We provide systems, processes and tools to monitor and improve performance

We work with our retailers to set and manage the retail assortment according to local circumstances

We ensure that staff is informed and equipped to provide excellent service

We design the stores for an optimal consumer experience aligned with our brand DNA

Visual merchandising We place and display the products for easy navigation and according to the season


STORE DESIGN: CONTINUOUSLY TUNING OUR STORE CONCEPT

Existing ”Great” concept: • Bright • Accessible • Feminine

New ”Evolution” concept: • Warmer atmosphere • More touch & feel • More branding • More human touch • Easier navigation • …roll out from Q2-14

Store Design


MERCHANDISING: OPTIMISING AND LEVERAGING OUR ASSORTMENT AT STORE LEVEL

Merchandising

Global assortment

Market assortment (maturity, taste)

Retailer assortment (size, location)

Opening stock

Replenishment tools & processes

Activation toolkit

Retirement process

66 10 DECEMBER 2013

VISUAL MERCHANDISING: CLEAR NAVIGATION THROUGH CATEGORY & ACTIVITY ZONING

Activity zone

• Each product category has its own permanent category colour and permanent zone in the store to ease navigation

• Size of zone depends on category focus

• 20% of the store is dedicated to an ”Activity zone” used for seasonal and promotional campaigns

Visual merchandising

Charms & Bracelets

Charms

Rings Earrings

Necks

Watches

Example


TRAINING: ENSURING THE RIGHT ”HUMAN TOUCH” IN OUR STORES

Store staff Face-to-face training “PANDORA Way of Selling” approach

PANDORA provides sales and product training face-to-face and via eLearning to tens of thousands of retail staff in our sales channels worldwide

“The POD” PANDORA ON DEMAND eLearning system

Training

Competence level:

Professional level

Competence level:

Advanced level

Competence level:

Expert level

68 10 DECEMBER 2013

OPERATIONS: PROVIDING ”BACK OFFICE” OPERATIONAL SUPPORT

Operations


JAN

FEB

APR

MAR

MAY

JUN JUL

NOV

SEP

OCT

AUG

DEC

SPRING

MOTHER’S DAY

HIGH SUMMER

AUTUMN

CHRISTMAS

VALENTINE’S DAY

PRE-AUTUMN

CONTINUOUS RELEVANCY VIA SEVEN ANNUAL LAUNCHES (DROPS)


ALIGNED 360° GO-TO-MARKET APPROACH FOR EACH SEASONAL LAUNCH

EARNED MEDIA PR LOOKBOOK

PR KITS BLOGGERS

STYLIST CELEBRITY

ACTIVATION

BOUGHT MEDIA PRINT

TV, CINEMA OUTDOOR

DIGITAL RADIO

OWNED MEDIA INSTORE

BROCHURES .NET/MOBILE

CLUB SOCIAL MEDIA ECOMMERCE

TRAINING

CONSUMER TOUCHPOINTS



PR KITS BLOGGERS

STYLIST CELEBRITY

ACTIVATION

BOUGHT MEDIA PRINT

TV, CINEMA OUTDOOR

DIGITAL RADIO

OWNED MEDIA INSTORE



TRAINING


EXAMPLE 360° GO-TO-MARKET: HOLIDAY LAUNCH 2013

72 10 DECEMBER 2013


PR KITS BLOGGERS

STYLIST CELEBRITY

ACTIVATION

BOUGHT MEDIA PRINT

TV, CINEMA OUTDOOR

DIGITAL RADIO

OWNED MEDIA INSTORE



TRAINING


EXAMPLE 360° GO-TO-MARKET: PANDORA ESSENCE COLLECTION LAUNCH

73 10 DECEMBER 2013

PANDORA ESSENCE COLLECTION LAUNCH ADVERTISEMENT


PANDORA ESSENCE COLLECTION OUTDOOR ADVERTISING


PANDORA ESSENCE COLLECTION INSTORE TOUCH & FEEL FIXTURE WITH MINI IPAD


PANDORA ESSENCE COLLECTION PACKAGING


PANDORA ESSENCE COLLECTION SHOPPING BAG


EMBRACING DIGITAL OPPORTUNITIES

DIGITAL PLATFORMS

+1.9 million PANDORA fans on Facebook

+4.3 million PANDORA Club members

+440,000 digital PANDORA Magazine readers

40 million visitors on www.pandora.net in 2012

Digital wish list available through PANDORA Club

PANDORA iPhone and Android apps downloaded more than 1.5 million times

Other current social media platforms


PANDORA ESTORE PLATFORM

ESTORE

• PANDORA eSTORE launched in the UK, Germany and Austria

• Product very suitable for online: • Great gift giving item • Large selection • Affordable prices • Limited size issues • High quality, few claims

• Great functionality:

• Easy to navigate • Efficient check out • Good customer service (packaging,

free and easy returns, call centre)

• High conversion rates, single digit returns, higher share of male buyers



PRESIDENT, PANDORA AMERICAS, SCOTT BURGER

• 2012: President PANDORA Americas

• 2007: Vice President, Operations & Finance,

PANDORA North America

• 2005: Chief Financial Officer, Dormia

• 2000: Senior Director, Royal Ahold (Giant Food &

US Food Service)

• Board of Directors, Jewellers for Children

PRESIDENT, PANDORA AMERICAS SCOTT BURGER

EXECUTING ON THE STRATEGY IN THE US



• HOW WE WIN

• WHERE WE PLAY

• MARKET OVERVIEW

84

MARKET OVERVIEW


SERVING ONE OF THE WORLD’S LARGEST CONSUMER AND JEWELLERY MARKETS

United States

Canada

South America

PANDORA AMERICAS

• Established in 2003

• Offices in Columbia (US), Toronto and São Paulo

• More than 500 employees

• Serving more than 3,000 retail outlets, primarily in

the US and Canada

• Revenue: DKK 3.3 billion (2012)

• Population served: +550 million

(US, Canada and Brazil)

• Total jewellery market: +USD 70 billion


http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=m514OZpkrGrUqM&tbnid=KjkzryAXmpKiEM:&ved=0CAUQjRw&url=http://en.wikipedia.org/wiki/Americas&ei=6SeBUpfsH_XJsQST5oKIBg&bvm=bv.56146854,d.cWc&psig=AFQjCNF8pb95eEjxGX8MUogDThkQhjFRZw&ust=1384282454362108

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PANDORA’S GROWTH IN AMERICAS HAS BEEN SOLID DESPITE RESETTING THE BUSINESS

646

1,459

2,518 2,537 2,579 2,363

0

500

1,000

1,500

2,000

2,500

3,000

2008 2009 2010 2011 2012 9M2013

DKKm Revenue in the US

48 99

396

607

733 729

0

100

200

300

400

500

600

700

800

2008 2009 2010 2011 2012 9M2013

DKKm Revenue in Other Americas

AMERICAS CHANGES 2008-2013

• Revenue: From DKK 694m to DKK 3,312m (2012)

• Stores: From 2,068 to more than 3,000

• Employees: From 115 to more than 500

• Channels served:

2008: Independent jewellery & gifts

Limited regional chains

2013: Independent jewellery & gifts

National jewellery chains

Regional jewellery chains

Department stores

PANDORA stores

Airport locations

Owned & Operated outlet stores



87

• HOW WE WIN

• WHERE WE PLAY

• MARKET OVERVIEW

WHERE WE PLAY


SALES MIX BY RETAIL CHANNEL, TOTAL US MARKET (2011) # OF US SPECIALTY JEWELLERY

STORES

41%

16%

9%

9%

8%

6%

5% 5%

Jewelry Specialists

Personal GoodsSpecialty

Department Stores

Mass Merchants

Apparel Specialty

Internet

Home Shopping

Other -0.4

0.2

0.4

0.4

0.2

-0.4

1.6

-2

Change vs. 2007

Source: “Jewelry in the US”. Euromonitor International – October 2012

28,500 26,200

24,500 22,200 21,500

1995 2000 2005 2010 2011

US JEWELLERY A FRAGMENTED INDUSTRY WITH INCREASING IMPORTANCE OF BRANDS


0 1,000 2,000 3,000

Jared

Gordon's

Helzberg

Fred Meyer

Zales

Kay

PANDORA

Top US specialty jewellery chains 2012 Store Count

Top US specialty jewellery brands Sales Estimates 2012 (USDm)

0 1,000 2,000 3,000 4,000

Fred Meyer

Helzberg

Cartier

PANDORA

Zale Corp.

Tiffany & Co.

Signet

Source: “Understanding the Jewelry Industry”. JIRI

DISTRIBUTION IS A SIGNIFICANT ASSET FOR PANDORA IN NORTH AMERICA

KEY INSIGHTS

• PANDORA has distribution equivalent to the

largest jewellery chains in North America based on

the number of retail locations

• Most chains are closing stores/rationalising base

• PANDORA store growth gives us new presence in

mall locations

• PANDORA’s growth has quickly made it one of the

leading jewellery brands in the region

• Retail brands are outperforming


INDUSTRY GROWTH IN THE US IS PROJECTED TO SLOW DOWN

40

45

50

55

60

65

2007 2008 2009 2010 2011 2012 E2013 E2014 E2015 E2016 E2017

USDbn The US jewellery market (value)

(6)% CAGR

2% CAGR

6% CAGR

Source: Euromonitor, 2013


18.8

14.1

15.3

7.9

1.5

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Shar

e o

f co

stu

me

jew

elle

ry

Share of genuine jewellery

2008 – 2012 CAGR


Earrings

Necklaces

Rings

Bracelets

Earrings

Rings

Necklaces

Bracelets

Other

Total

3%

2%

3%

6%

(20)%

2%

US jewellery market 2012 (values, USDbn)

Other

EARRINGS AND RINGS ARE THE LARGEST JEWELLERY CATEGORIES WHILE BRACELETS HAVE GROWN THE FASTEST


• Average age: 38.5

• Married: 58.9%

• Have kids in the household: 58.4%

• Live in suburban areas: 72%

(population less than 500,000)

• Mid-Upper/High income level: 61.6%

(Average household income of USD 83.7K)

• Own more than one bracelet: 34.5%

(compared to 15% on 2011)

• Lifetime retail value of a consumer is USD 850

PANDORA US REVENUE SPLIT

AGE OF PANDORA OWNERS IN THE US

92

25%

37%

23%

15%

32%

37%

16% 15%

18-30 31-44 45-54 55+

2011

2013

THE PANDORA CONSUMER

34%

26%

40% Female Self

Female Gift

Male Gift


THE TYPICAL PANDORA CONSUMER


93

• HOW WE WIN

• WHERE WE PLAY

• MARKET OVERVIEW

HOW WE WIN


PANDORA growth drivers

Talent & Competencies

Data & Analytics

PRODUCT

DISTRIBUTION BRAND

GROWTH WILL CONTINUE BEING DRIVEN ON 3 FRONTS: PRODUCT, BRAND AND DISTRIBUTION


• Continued focus on commercial products • Introduce personalisation (e.g. destination, licensing, etc.) • Expand style designs & applications • Increase innovation

Grow the core

• Update offering • Leverage best sellers • Introduce “iconic” design • Increase innovation

Increase share of

other jewellery

• Confirm relevancy • Enhance presence in gifting industry • Increase innovation

Explore adjacent

categories

2

3

4

• Right price architecture • Permanent product exchange program • Product newness

Deliver Fundamentals

1

HOW WE WIN: PRODUCT OBJECTIVES



• Visual merchandising • Category management • Merchandising

• Vendor managed inventory

• Category planning

What got us here What’s next

Data & Analytics

• Visual merchandising compliance

• Sell through % • DV performance by store • Logility

• Consumer testing • Retail inventory turns • Merchandise planning

system

DEVELOPMENTS IN FOUNDATIONAL ELEMENTS WILL BE CRITICAL TO OPTIMISING PRODUCT RELATED GROWTH


VISUAL MERCHANDISER EMPLOYEES

LAST 12 MONTH SELL THROUGH* New Products

BEFORE/AFTER VM

105

81 80 71

2010 2011 2012 2013

The VM team conducts an average of 1,800 store visit every month.

TURN IMPROVEMENT

1.8 2.4

2012 Projected 2013 YE

• New product assortment plans • Improved sell-in recommendations on promotions • Revised dealer level guidelines • Start kit order forms • Retailer partnership & co-managed inventory

19%

26%

32%

2011 2012 2013

*Year marks Q4 of previous year through Q3 of current year.

US STATS


• Address regional differences in awareness and maturity • Expand and optimize COOP

Tailored regional

approach

Gain prominence

in gifting

Enhance relevancy

2

3

4

• Quality reach based marketing • Improve conversion • Target men • Expand demographic

Build awareness

1

• Extend brand to other jewellery categories

• Enter new competitive realms • Develop & implement optimum customer

experience

• Grow occasions • Expand competitive realms

HOW WE WIN: BRAND OBJECTIVES




Data & Analytics

• Cooperative advertising • Public relations

• Trade marketing • Consumer relationship

marketing • Social media

• COOP AD development • Build impressions • Key metrics: awareness,

purchase intent, ownership

• Key metrics by region • Key metrics by product

category • Last 12 month purchases • Consumer analytics

CONTINUED DEVELOPMENT IN FOUNDATIONAL ELEMENTS WILL SUPPORT “BRAND” GROWTH


103

487

931 1,116

2,000

2009 2010 2011 2012 2013Projection

24.0%

39.8%

55.7% 64.5%

73.0%

2009 2010 2011 2012 2013

3.0% 4.7%

7.0%

11.8%

18.9%

2009 2010 2011 2012 2013

WOMEN 18+ OWNERSHIP 2133 Respondents

EDITORIAL IMPRESSIONS (millions)

COOP ADVERTISEMENTS USED

WOMEN 18+ AWARENESS 2133 Respondents

Source: “Annual Band Tracking Survey”, Fall 2013. US Only Source: “Annual Band Tracking Survey”, Fall 2013. US Only

US STATS


2,500

7,000

22,000

29,000 31,000

2009 2010 2011 2012 2013Projection

Channel expansion

Explore new retail formats

2

3

4

• Grow PANDORA store footprint • Upgrade successful partners • Focus on healthy square footage – successful partners are CRITICAL

Emphasize branded

retail

1

Achieve optimum footprint

• Increase presence in underpenetrated geographies • Achieve the right partner mix (inventory, staff, marketing & data sharing) • Address excessive distribution – quality wins

• Outlets • Department stores • E-Commerce • Owned & Operated

• Kiosks • Pop-up stores • “Interactive” store • “City” store • Explore new retail partners

FUTURE REVENUE EXPECTED TO BE ALMOST ENTIRELY THROUGH BRANDED ENVIRONMENTS AND NEW DISTRIBUTION ENVIRONMENTS WILL BE EMERGING




Data & Analytics

• Retail operations managers

• Sales trainers • PANDORA Specialists

• Account management business development

• National account development

• Retail metrics • Revenue per door • Mapping analytics

• Increased visibility of retail performance in multi-brands

• “Optimal” distribution for Latin America

DEVELOPMENTS IN FOUNDATIONAL ELEMENTS WILL DELIVER THE “RIGHT” NETWORK WITHOUT SACRIFICING ORGANIC GROWTH


PANDORA CONCEPT STORES (AMERICAS)

TRANSACTION LFL% EXTERNAL TRAINING

505

314 319 286

2010 2011 2012 2013 YTD (Q3)

TOTAL STORE UPGRADES (AMERICAS)

68

136

212

285 320

2009 2010 2011 2012 Q3 2013

6.2%

10.5%

2012 2013 YTD (Q3)

US STATS


2,898 3,403

4,014

6,661

Spring/ Summer Autumn/ Winter

2012

2013

96 Roadshows + 118 webinars

110 Roadshows

MAPPING ANALYTICS PROVIDES A DATA DRIVEN PLATFORM FOR ASSESSING NETWORK OPPORTUNITIES

CURRENT DISTRIBUTION OVERVIEW OF THE PROCESS

OPTIMAL DISTRIBUTION REGIONAL HEAT MAP

• US map is divided into 2.5 mile grids • Sales are allocated to the grid by % of households within

a 15 minute drive • PopStats & Environics Analytics creates a market

potential amount based on per capita spending, market demand and market supply

• Penetration recommendation based on the distribution of share across each grid cell

• “Potential” is the point at which the brand has realised the majority of opportunity in an area


SHARE OF BRANDED REVENUE $ PER DOOR (BRANDED)

13% 9%

15% 7%

5% 3%

7% 17%

11% 19%

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

US

Q2 10 to Q2 11

Q3 10 to Q3 11

Q4 10 to Q4 11

Q1 11 to Q1 12

Q2 11 to Q2 12

Q3 11 to Q3 12

Q4 11 to Q4 12

Q1 12 to Q1 13

Q2 12 to Q2 13

Q3 12 to Q3 13

LIKE FOR LIKE SALES-OUT CONCEPT STORES – 11 CONSECUTIVE QUARTERS OF GROWTH

THE “CRITICAL FEW” METRICS MEASURE THE HEALTH OF THE BUSINESS

$132,043 $148,059

$121,585

$153,924

2010 2011 2012 2013

80.3% 80.7% 81.8%

86.1%

2010 2011 2012 2013

All years shown Q3 YTD.

YTD YTD


PANDORA growth drivers


Data & Analytics

PRODUCT

DISTRIBUTION BRAND

To several core products From one core product…

To optimal From accessible…

To gift of choice

From a jewellery choice…

SIGNIFICANT PROGRESS IN ALL THREE GROWTH DRIVERS IS EXPECTED TO DELIVER SUSTAINED GROWTH IN PANDORA’S LARGEST REGION


pandora company presentation

Documents