Good morning, everyone, and welcome to the conference call for Pandora's Q2 results. I'm John Bäckman from the Investor Relations team. I'm here with our CEO, Alexander Lacik, our CFO, Anders Boyer, and the rest of the IR team, Kristoffer Malmgren and Mikkel Johansen. There will be a Q&A session at the end of the call. As usual, please limit yourself to two questions at a time and get back into the queue if you have additional questions. Slide two, please. Please pay notice to the disclaimer on slide two and then turn to slide three. Alexander, please go ahead. Thank you, John, and welcome everyone who are joining us in this call today. As you will have seen from our guidance upgrade, the strong momentum continued in the second quarter. In fact, a record revenue quarter for Pandora. We are moving from strength to strength. During the pandemic, we have stayed focused on rebuilding our company and invested for the long term. We have maintained a high marketing investment, continued to bring exciting product innovation, continued to invest in our digital capabilities, as well as strengthening our organization. We have laid a very strong foundation for the new strategy, called Phoenix. We will review this new program in great detail in the upcoming virtual Capital Markets Day on September 14. Let's now drill a bit deeper into the second quarter. As you will see in the presentation, we continue to discuss our performance versus 2019, as this represents a cleaner base without impact from COVID-19. In the second quarter, sell-out growth versus 2019 was +7%. We are very pleased with this result, as yet again, we confirm playing in positive comp territory. The strong performance in the U.S. continued, with unusually high market growth that I will come back to. In our key European markets, we saw clear and sequential improvement when our stores started reopening. The strong growth lifted our EBIT margin above 25% in the second quarter, demonstrating the operating leverage in our business model. All in all, a very strong quarter for the company given the external circumstances. Let's move to slide four, please. As a consequence of the strong results and an updated full year forecast, we upgraded our financial guidance for both organic growth and EBIT margin in 2021, on August 6. Organic growth is now expected to be in the 16%-18% range, driven by better underlying performance and a revised forecast. This is equal to a 3%-5% organic growth rate versus 2019. Anders will shortly give more perspective on our assumptions and corresponding numbers. EBIT margin is now expected to be in the range of 23%-24%. This is driven by the higher expected growth rates turning into higher operating leverage. We are also continuing the distribution to our shareholders with a further DKK 1 billion over the next three months, split evenly between dividend and share buyback. Let's move to slide six, please. Apologies for a busy chart, but it's important to dive a bit deeper into the varying country results and the drivers thereof. Generally speaking, though, the key driver of the variance continues to be how much COVID-19 restricts our ability to operate the physical store network. Using the second quarter of 2019 as the comparison, this quarter, we saw 7% sell-out growth despite that around 15% of our stores were temporarily closed due to COVID-19. In U.S., our largest market, we continued a very high growth of 63%. It's fair to say that a market that historically has grown low single digit has been unusually benefiting from the stimulus checks. In addition to this, we have strong indications that Pandora has been building market share on top of this situation. We do expect that there will be a natural correction once the fiscal stimulus is removed. It is, however, unclear how this demand curve will be shaped. We continue to invest for strong growth in the U.S. to ensure we have momentum over and above those market dynamics. In China, we saw sequential improvement in the quarter. However, growth was still negative versus 2019. Please note that in Q3, China has been impacted both by typhoons, which caused flooding in parts of the country, and new outbreaks of the Delta variant. This will be visible in the third quarter performance. In the second half of 2021, we will take the first significant steps in the transformation to reposition our brand. Timing obviously depends on the recent C-19 development. It doesn't make much sense to invest heavily in media and marketing if there's little traffic in the stores. More on the opportunity in China to come at the Capital Markets Day. U.K., which is our second largest market, was up 1% versus 2019. Since the reopening, traffic started to return to stores and online performance continues to be strong. In our key European markets, we experienced sequential improvements when stores started to open up again, as restrictions eased. Slide seven, please. In May, we launched Pandora Brilliance in U.K. It's our way into the diamond market. Brilliance is the first platform tested under the new Phoenix strategy, with the objective to become a new, sizable, and important concept platform next to Moments. We're roughly 100 days into the test launch and progressing well. We're gaining important insights that are critical to sharpen a potential global launch. A decision of this will be taken later in the year. We will share more details about Brilliance at the CMD as well. Next slide, please. Let's have a look at our underlying performance. As said, we think 2019 is the best comparison base. There are two major and opposing factors at play here. First, there is no doubt that COVID-19 continues to impact our performance, with the lockdown of stores dragging down revenue. Some of that is obviously recovered online. Furthermore, we can also notice a slower recovery in parts of the world where governments have been more restrictive with supporting people as well as businesses. Latin America as a region is one example. Secondly, the unusually strong U.S. growth accelerated by stimulus packages. It is hard to pinpoint the net impact of those two factors. We are confident the underlying sellout growth versus 2019 is positive in the second quarter. Next slide, please. The strong brand momentum is the driving force of revenue growth and EBIT margin expansion. This is no surprise to us, as we continuously have kept our marketing investment at a very competitive level. Our continuous advancements in digital marketing, better advertising quality, more consistent and holistic communication, both on and offline, pays dividends. Our global unaided awareness remains high and even increased the relative gap to competition. We maintain a leading position in five out of seven key markets. In terms of our global share of search, around 1/3 of the Google searches for branded jewelry is for Pandora, well ahead of competition. Next, we continue to stay top of mind as well as engage with our consumer base. I expect that competitors will start to reactivate their efforts as we start moving towards more stable conditions. There is no doubt that the investment we've made during the pandemic will continue to cement our leading position. Next slide, please. Looking back, we are extremely pleased with the accelerated efforts to build out not only our digital marketing efforts, but likewise our e-commerce business. In most countries, our e-store is the largest portal to the brand. Our digital results in Q2 are very encouraging. Online revenue made up a quarter of the total in Q2. Our online revenue more than doubled versus 2019. Comparing to Q2 of last year, online was down as expected as consumers returned to stores. We continue to focus on driving full price sales across all our trading channels. Less promotional activity drove down our online discounts by 6 percentage points compared to the Q2 of last year. Finally, we are expanding our omnichannel features where and when it makes sense due to C-19. There's a very strong consumer interest in, for instance, click and collect in the U.S. That made up 13% of our online sales in the quarter. Digital plays a key role in our new strategy, both as a foundation for the strategy and as a growth driver. More on this to come on the upcoming CMD. Next slide, please. I want to give an update on the situation for our staff and production in Thailand, since the COVID-19 outbreaks there have escalated during the last couple of months and government restrictions have increased. First of all, the health and safety of our employees comes first, always. To protect our employees and to mitigate the risk of disruptions in the supply chain, we have taken a broad range of precautionary measures. This includes regular proactive testing of all employees. If a case is detected, there is immediate quarantine of close contacts and separation, sealing and cleaning of the area where a case is detected. Normally, this procedure is conducted within 24 hours, and then we're back up again. We are in very close dialogue and cooperation with Thai authorities, and we are closely monitoring our suppliers as well. We took a decision earlier this year to hire an additional 1,000 people into the production. One of the key reason was that we wanted to increase our inventory position as an insurance policy against increased C-19 impacts in Thailand. It's safe to say that this was a good decision as we are now in a position where the guidance on the current circumstances is safeguarded. Next slide, please. We look forward to unfolding the Phoenix strategy at our online CMD on September 14. The executive leadership team will then present how Pandora will drive long-term, sustainable, and profitable growth, building on the vast untapped opportunities within our existing business. We will be disclosing our financial targets at this time. We will make material available in advance on our website so you can digest it before the presentations begin. The CMD will be accessed via our website, where you can also find additional information ahead of the event. I will now hand over to Anders to go through the financials in more detail. Thank you, Alexander. Please go to slide 14. We are quite pleased with the financial performance in the second quarter. That's not just on the top line and EBIT, but also on KPIs such as the gross margin, cash conversion, and leverage. As you can see here to the left on this slide, our leverage was only 0.4 x by the end of the second quarter, and thereby actually below our capital structure policy range. This obviously leave some room for future cash distribution to our shareholders. I can't help pointing out the significant uplift in earnings per share, which you can see in the last row in the table. The fact that we have no more restructuring cost and at the same time grow the top lines gives a pretty significant uplift in EPS. We've not shown ROIC or return on invested capital on the slide here, but the improvement would also have been very visible in ROIC if we had put it on the slide up here. ROIC ended at 44% in the second quarter, and significantly up versus the last few years. Let's go to the next slide where I can explain a little bit more about the revenue development in the second quarter, slide 15. Let me start off by saying that we do know that the revenue development is not easy to understand, especially versus 2020. The impact of COVID-19 here in the second quarter is significant and can be difficult to understand. We've provided quite some detail for the same reason in the bridges here and in the company announcement. We hope that you find it useful. All right. In the middle of all of this COVID-19 noise, the most important KPI is the number that we put in the green box, the +7% sell-out growth versus 2019. That's a number that confirms that the company is growing. It's growing versus a clean base in 2019, where we didn't have any pandemic impact. As you can also see in the bridge in the upper part of the slide versus 2019, there's a 7% bucket called normalization of sell-in and other. That bucket includes a few things, such as the commercial reset we did back in 2019 as part of Programme NOW with the purpose of reducing wholesale inventory. Many of you probably recall that. It also includes good performance in other points of sale, as well as higher online freight income. Both of these last two items is not included in sell-out growth, but only included in organic growth, the way that we calculate it. I would like to stress that inventories in the wholesale channel are at healthy levels, and that we don't see any issues with old inventories or excess inventories going out of the quarter. That was the easy bridge, so to speak. The bridge below, where we compare to the second quarter of 2020, is a little bit more complicated. Most of the building blocks in the bridge are hopefully quite straightforward, or you recall them back from our first quarter announcement. There is another slightly more technical tricky building block, which is also a consequence of the pandemic, and that's the 7% bucket that we call shift from online to other points of sale, the plus 7% there. That bucket includes the effect of the lower COVID-19 impact this year leads to a shift of revenue from online last year, which is included in sell-out to other points of sale this year, which is not included in sell-out. Normally, when you have these shifts, that's not really an issue, but when you have shocks to the system, so to speak, like in the second quarter last year, this become visible in the way that the KPIs are calculated. A little bit technical, this should be the only quarter where we have this effect of the pandemic. If you go to the next slide, please, slide 16. Our second quarter EBIT margin was 25.2%, and actually the highest second quarter level that we have delivered in three years. Contrary to the revenue bridge, I'm not going to spend much time on this slide, and I will actually go directly onto slide 18 and the upgraded guidance and put a few more words on that. On slide 18, and then subsequently on slide 19, we are bridging back from 2020 through the old guidance and into the new guidance. This is mostly background information for modeling purposes, and there shouldn't be any big surprises here, but there are a few things that we just want to call out. The first thing is about the pandemic assumptions behind the guidance for the rest of the year, and we assume that around 5% of the stores will be temporarily closed in the second half of the year. That number is obviously associated with high uncertainty. On the other hand, we need to make an assumption behind the guidance. On August 6, when we upgraded the guidance, around 6% of the stores were closed. Today, it's around 8% of the stores that are closed, as more stores are closed in, among others, China and Australia, compared to August 6. Another C-19 assumption is that we expect no major disruptions or assume no major disruptions in the supply chain in the back half of the year. You should also expect that China will remain a drag on group performance in the second half, and that the third quarter will be impacted by the recent increases in COVID-19 cases, as Alexander mentioned. The flooding in July and the typhoons that we've also seen in China. We have been encouraged to specifically write what the guidance leads to in terms of real money, not just percentages, but kroner. We've added that here, as you can see in the last column, and the guidance that we have given is translating into a revenue of between DKK 22 billion and DKK 22.4 billion for the full year. If you go to the next slide, please. The EBIT margin. As Alexander already mentioned, the higher EBIT margin guidance is driven by operating leverage, and I think the bridge here is quite self-explanatory. I'll just mention two other smaller changes to the guidance, which are mentioned on the slide here as well to the right, and that includes a slightly lower CapEx, and a few more store closures than what we guided previously. These additional store closures should just be seen as normal, ongoing optimization of the network. We want to make clear that this does not indicate any change in our overall network strategy. We still see ample white space around the world and ample opportunity to expand the network, and we'll talk more about that at the Capital Market Day. A few more slides on the guidance. Slide 20 and 21, we have looked at what our full year guidance implies for the second half of 2021. First on this slide, we look at the implied revenue growth. The data that we're showing on this slide is versus 2019. The guidance that we have made versus 2020 of 16%-18% organic growth corresponds to 3%-5% when you look at it versus 2019, and that's the number you can see in the last black box in the upper part of the slide, +3%-5% organic growth. The implied organic growth for the second half is therefore between +2% and +5%, and that's the box in the middle in the upper part of the graph. We break down that 2%-5% implied second half growth in the lower part of the graph. The way that we are thinking about the guidance is that it corresponds to an underlying sell-out growth of between +2% and +6% in the second half of the year. That's the first black box to the left, at the bottom of the slide. That number confirms that we do believe that Pandora is back on a growth track. Compared to the 2019 base, which is obviously clean of COVID-19 impact, that +2% to +6% sell-out will be offset by the continued temporary store closures, driven by the pandemic, and that's the -2% to -3% that you can see in the pink box. Then when you convert it from sell-out to organic growth, you should think about adding around 2 points to the sell-out growth, and this includes, among others, that we were running a commercial reset back in 2019, which reduced sell-in to wholesale partners back then. We have received quite a number of questions about whether the guidance is conservative. Just a few comments on that question. As Alexander already said, we've already obviously put out the guidance there because we think it's a proper reflection of how 2021 could play out. There is a lot of uncertainty coming from the pandemic, and that's not just the direct effect from lockdowns, but it's also secondary effects such as shifts in how consumers are spending their money. It should also be clear that if the U.S. continues at the really high growth rate that we saw in the second quarter or just something close to that, then that would be an upside to the guidance that we have put out. Let's see how that plays out. Next slide, please. For the EBIT, the guidance implies a 23%-25% margin in the second half of the year. There's two cuts on that margin guidance, or implied margin guidance, that we would like to make. First, comparing with the second half margin last year, and then looking at the margin development on a sequential basis versus the first half of the year. If we start out looking at the roughly 3 percentage points lower margin versus the second half of last year, then the big drivers of that 3 points lower margin in our implied guidance, that's first of all that we are starting this year, in the second half, the investments related to the repositioning of the brand in China. That will be a 150 basis points, 1.5 percentage points drag on the margin in the second half of the year. Additionally, there's a 2 percentage points drag from the higher silver prices in the second half compared to last year, and that silver price impact is partly offset by a favorable foreign exchange impact. The net silver and foreign exchange impact in the second half of the year is around half a percentage point drag versus last year. That's 1.5 points from China, 0.5 points from FX and silver, and combined, a 2-point drag on the margin. The rest is smaller bits and pieces, but importantly including less or no government support. You might remember from the numbers last year that we got DKK 110 million in government support last year, or roughly 1 point of government support looking back towards last year. If you turn to look at the margin from a sequential point of view, the margin pickup in the second half, which Pandora is usually seeing, is a bit lower in 2021 than in prior years. The reason for that are twofold. First of all, it's due to that the strong U.S. growth that we have seen in the first half of this year came at very limited incremental cost and lifted the margin in the first half of the year. Secondly, as I just mentioned, it's the investment that we're doing in the repositioning of the brand, in China. There will be a drag on the margin here in Q3 and Q4 of this year. Another way to say it is that there's no underlying structural changes to the business model or in the margins baked into this guidance. Enough about the guidance. Last slide from me on the slide 22. As Alexander already mentioned upfront, we are continuing the cash distribution. During the last three months, we have paid out DKK 1 billion, evenly split between dividend and buybacks, and we still have ample liquidity at very low leverage. Over the next three months, Pandora will distribute another DKK 1 billion, also evenly split between dividend and buybacks. Assuming that the pandemic doesn't worsen, Pandora expects to continue cash distribution also in the fourth quarter. With that, I'll hand it back to Alexander and slide 24. Thank you, Anders. To summarize, our revenue was record strong for the quarter. Sell-out growth and EBIT, as Anders has just gone through in detail, was very strong. We are extremely pleased with the performance given the circumstances. We upgraded our financial guidance ahead of the results and will continue distributions to our shareholders. Phoenix, our new strategy, is in progress and there is more to come at the online CMD on September 14. With those remarks, we are ready for the Q&A. Operator, please go ahead. Thank you. If you'd like to ask a question, please dial zero one on your telephone keypads now. Once your name is announce, you can ask your question. If you find it answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Fredrik Ivarsson of ABG. Please go ahead. Your line is open. Thank you very much. First question on the U.S. sell-out growth up, I guess 60% during the first six months versus 2019 levels, and I appreciate that it's a very difficult forecast to make, but it would be kind of helpful to understand your base case assumptions for the U.S. market over the second half of the year. Thank you for that. Maybe I can start out there. I think we will not go into details on expectations on the guidance per market. Obviously, I think it would be strange not to assume that there will be a slowdown in the second half of 2020 compared to the very high level that we've seen in the first half of the year. I think the way to think about the guidance for the second half of the year is that it's likely that the U.S. will still be above the average of the group. China will remain a drag. We'll see improved performance in the European markets. Okay. That's helpful. Thanks, Anders. The second one on the sequential improvements in key European markets that you mentioned. Did that trend continue in Q3, or have you seen something else due to the Delta variant, for instance? Yeah. We will expect as the markets are opening up, that we will see continued improvement in Europe. As you can see on all of the data that we have released this morning, in the key European markets, we were at -6% sell-out versus 2019 in the second quarter, with a third of the stores being closed. I think when we look at that number, it feels kind of good in the stomach to assume that, well, hadn't we had a third of the stores being closed, those key European markets would probably have been in a plus. Thank you. Thank you. Our next question comes from the line of Lars Topholm of Carnegie. Yes. Hi, guys. A couple of questions from me. One is on the reduced summer sale, which you mentioned. Two questions in relation to that. I wonder if you can put some words on exactly how much it means in terms of absolute revenue reduction. Maybe can you comment if that particularly hit June, and what does that suggest about your growth in June? Secondly, just in relation to your margin bridge, Anders. In Q2 here, more full price sales dragged up the gross margin. I couldn't see any impact from that in your margin bridge for the full year. Is that because you expect that second half year will have as much discounting as last year, or is it simply so small, so you didn't factor it in? A second question, because now, Alexander, you commented on current trading in China, finding out that floodings and typhoons, et cetera, had hurt revenue. I just wonder if you can put some words on current trading in the U.S. since it's so important for the overall business, but of course also for growth for the rest of the year. Thanks. On the summer sale, maybe we can come back with a specific detail. I can just provide some context, because the end of season sale happens in different weeks across different markets. Some fall in June, some fall in July. But if just going back to 2019, our end of season, that kind of four-week period, which cuts across the two months, represented roughly 1/3 of the sales. Now it only represented 15%. There is a dramatic reduction of the end of season sale, which obviously comes at the back of a much smarter management of our assortment, much better merch policies. Therefore, we simply have less, let's say, bad performing product to put on the summer sale. But maybe John and team can come back to you with a more specific answer on the absolutes, how it cuts across the months. And then- Alexander, maybe to make it easier, can you say something about what growth was in June? We know sell-out for the quarter was up 7% versus 2019, but according to this, I assume June was significantly lower, maybe even down. Is that correct? Can assume that June was pretty much in line with the quarter. Okay, thanks. Hand over the other questions to you, Anders. Yep. Thanks, Lars, for the question about that. On a year-over-year basis, the lower discounts and summer sale is supportive on the gross margin. We have a little bit of wording of that in the company announcement where we talk about the gross margin. The reason that we haven't put it into the EBIT margin bridges, that it was already in the original guidance that we assumed that there would be lower or more full price sell-through this year. When we compare it to the guidance, on a year-over-year basis, it will be supportive of the margin. At least when we compare to 2020, there are so many pluses and minuses. Last year we also had this extraordinary cost of the close down of the production in Q2 of last year that it kind of drowned in all of the other impact. The way to think about it is that it will be supportive of the gross margin on a year-over-year basis, that we are seeing a less discount. We expect to continue having less promotions in the second half of the year compared to 2020, and compared to 2019 for that matter. That's in the plan. Anders, can you just remind me what are the other mitigating factors in terms of gross margins in a situation where commodities are a drag? Are you thinking about specifically for the quarter, Lars? No, I just think going forward, now FX is a mitigating factor. More full price sales is a mitigating factors, but as far as I remember, there are a couple of others. Yeah. If we think ahead for the gross margin. Let me just think about that. When we look at it going forward, hang on a second. We have the silver price, which will be a drag going forward on the gross margin. It will be less so than if you, just a few months back, the silver prices have dropped a bit. It will still be a drag going forward. One way to think about it is that, just from memory, the first half gross margin is just below 77%, 76.8%. I can just see here. If we use that as a starting point, on a run rate basis, we will have the silver prices will be DKK 4 to DKK 4.5 higher than that. We had $19 as the silver prices hitting the P&L in the first half of the year. Right now silver prices are $23.5-$23.7, I think something like that this morning. That would be 150 basis points run rate drag on the gross margin going forward. Foreign exchange, there will be a bit marginal support on the gross margin going forward. The Thai baht is lower than what we have seen in recent times. That would be some 50 basis points support to the gross margin. These two are external factors, commodities and FX. Net-net, that's at 100 basis point drag on the gross margin compared to the first half. The offsetting factors, long answer before getting to what you actually asked about. There will be continued cost savings on COGS. We still see some opportunities on that. As revenue grows, there will be some leverage from the higher production volumes, so simply spreading out the cost of the setup in Thailand across more units. There will be a bit of continued channel mix support. Net-net, long answer, you should expect that the gross margin would be slightly down to flat on a run rate basis. That's the way I would think about it. When the current commodity prices have full impact. That's correctly understood, right? Exactly, yes. Yeah. Fantastic. Thank you very much, guys, for answering my questions. Thank you. Our next question comes from the line of Magnus Jensen of SEB. Please go ahead, your line is open. Thank you for taking my questions. First on Pandora Brilliance, maybe you could tell us how much of marketing has actually been behind the launch in U.K., and also on Brilliance, if you decide to launch outside of the U.K., is it fair to assume that U.S. will be the first market you will go into and then globally following? Secondly, on the stronger top-line performance and other points of sale, you mentioned, I think it's a year ago or so now, that you mentioned you would start doing a bit of a different approach to other point of sales and roll out into other types of point of sales. You haven't talked too much about that since. Is this something that is a result of that? I see that you are back with CHRIST in Germany, for instance. It'd be great to have some flavor on how you're doing, on why you're doing so well on other point of sales. Thank you. I think we will not necessarily disclose our marketing figures for this initial period. We can delve in a little bit more into detail in the CMD. I hope you can appreciate that. Your second question on the other point of sale, of course, given COVID, there's been some restrictions on how much you can do when networks are opening and closing, and potential partners are in or out of this. We have made some moves. In Germany, we have started to work with CHRIST, as you very well mentioned. Again, Germany has been closed to large portions since this cooperation started up. We made some moves with El Corte Inglés in Spain, where we're gradually taking over their shop-in-shops and running them ourselves with very good results. Now, early days, this was wo months ago. That looks like it's working out nice. Other than that, there are no significant movements on that as yet, but it's more driven by COVID than anything else, to be honest. Just to follow up on the other point of sales, remember the former management was sort of careful not to be in too many other point of sales because the products would not be sold in a branded environment. How does that add up with how you're thinking in terms of other point of sales? It's like any sales channel. If you don't manage it well, then we shouldn't be there. I think we're much more operationally clued in, and we are very selective on the opportunities we go after. There is an important insight with people that are new to the category. A lot of these people don't start by going into concept stores, be it ours or Swarovski's or any. They actually start their journey in typically in multi-brand stores where there is a wider selection of brands as they try to kind of navigate the space. That's one of the key reasons why we think playing in some of those channels where the execution is good makes a lot of sense for the brand. I think you just need to be clear on why you're there rather than just running for a revenue grab. That never works in the long run, at least not in this type of business. Okay. Thank you very much. Thank you. Our next question comes from the line of Erwan Rambourg of HSBC. Please go ahead. Your line is open. Yeah. Hi, good morning. I just wanted to follow up on two things. First, if you look at the U.S., we've seen deteriorating consumer confidence with cases being up sharply. I think you were very clear in the presentation that the U.S. saw quite exceptional growth and that this would slow. Have you seen any negative inflection over the past few weeks with potentially consumer confidence or COVID-related stress putting a bit of pressure? Then secondly, I noticed that when you gave the guidance for the year, you had fewer stores being shut than today. The fact that you have a bit more stores shut, does that change anything? Is there a risk that you need to revise your assumption in terms of the average stores being shut in H2? Thank you. On your first question, we have not seen anything, to be honest. It's very recent, the uptick in COVID. Yeah. As you also know, it's focused on two states rather than a national issue, at least at this particular moment in time. No, we haven't picked up anything on that consumer confidence point. When it comes to network, like Anders said in his presentation, the change in the guidance is nothing that is structural in the sense that you should expect us to start closing a boatload of stores. It's probably going to be the other way around once you've passed the capital markets, then you realize how much white space we still believe that there is in pockets of the world. I think that's really the explanation. Excellent. Thanks a lot. Best of luck. Thank you. Our next question comes from the line of Antoine Belge of Exane BNP Paribas. Please go ahead. Your line is open. Yes, good morning. It's Antoine at Exane. Three questions. First of all, regarding Brilliance, from a qualitative standpoint, are there any interesting elements that you can mention in terms of consumer response? Especially, if you've done some surveys about how people think about higher price points for Pandora. The second question relates to online, which was down 16% versus last year. In your new guidance, do you expect online sales in Danish kroner to be down year- on- year? Can you maybe tell us how much online sales could account in 2021? Obviously, the numbers will be down from the 29% we had last year. Thirdly, regarding Q2, you had mentioned some improvement in China. Is it possible to say what went a bit better in China in Q2? Thank you. On Brilliance, as I just remind everybody, we're 100 days in, it's a baby at this stage in terms of a launch. I think the critical question we are asking, not just ourselves, but the consumer is, does this value equation, which is very different from the traditional let's say charms bracelet proposition, does it hold with our consumer base? 100 days in, I would say all good. There doesn't seem to be a major restriction around this type of proposition. Again, it's three months in. We've said to ourselves, and I think we've also been clear with the market that we need at least six months to do a proper evaluation. Of course, we launched it in a relatively low period, let's say. What we understand from the diamond sales is that it follows a similar curve to our own, i.e., Q1, Q2, and Q3 kind of equal, and then the big volumes kick in Q4. So far so good, is probably what I would say. Of course, we have plenty of more data, which we're happy to share with you in the CMD coming up. I'll answer the last question, and then I'll leave the middle one to Anders. The improvements in China in the quarter. What we did better in the quarter was we ran some of the media tests, with pretty good results. We had a better participation with the local key opinion leader, which helped to kind of drive our numbers. We did a fantastic job on 618, which is one of the biggest trading activities in the calendar in a year. I think we outdid all of our competition. We really did a good job in there. We should still remember that we were still in negative territory. I think we're kind of slowly finding the keys on how to unlock the China opportunity. Maybe I leave the modeling question to Anders on online and in the back half. Yeah. Without being too specific on this breakdown of the guides, the way I would think about it is that the versus 2019, if you think about that, clearly online revenue will be up both in absolute terms and in percent of total revenue, versus 2020, it's a bit more tricky, because you had the extreme Q2 of last year where online revenue in the second quarter of last year was 52% of total revenue. I think about online revenue for the full year of 2021 as flattish versus last year when you had a significant peak in the second quarter of last year. Year-over-year, sort of give and take flattish. I think that's a good way to think about it. Thank you. Maybe just to follow up on the subject of online, because the fact that online sales are moderating shouldn't have an impact on the gross margin, or it doesn't really matter because, if online moderate, it means that your own retail brick and mortar is also picking up. Yeah, my question is on, in term of channel mix, should we expect a negative impact from the moderation of online or not? You're right that the gross margin in the online channel is a touch lower than in the physical stores. It's higher than in our distributor channel and franchise channel, but lower in our own physical stores. The difference there is simply freight cost, logistic cost. That will be, I think we previously said that you could think about the difference in gross margin between our own physical stores and our online store as a mid to single-digit, maybe a little bit higher, lower in our online channel. Obviously, that has some impact on the consolidated gross margin going forward. Thank you very much. Thank you. Our next question comes from the line of Miles Socha at WWD. Please go ahead. Your line is open. Thanks. Two questions. Just quickly, what's wrong with the brand positioning in China, if you could elaborate a bit on that? Second, if you could identify any best-selling styles, items, categories, or themes in the U.S. Thank you. On China, when the brand was launched with more oomph back in 2015, I think when we had bought back the business from the previous distributor there, it coincided with a larger push in Pandora to try to break out of just being a Moments platform and trying to be a full assortment jeweler. That, let's say, was emphasized across the rest of the world in terms of assets and what type of products were launched. That then was the program in which they took to the Chinese consumer. The Chinese consumer today would kind of understand that we're a full assortment jeweler, but without any particular point of difference. Contrary to if you travel around the globe and speak to consumers pretty much in every other country, and you talk about Pandora, everybody's very clear on this Moments platform and the idea around what the charms and bracelet combination does. We don't see that same level of depth of understanding in China. That's really the cardinal point. What's important to mention here as well is we've done plenty of research, both qual and quant in China, to verify that this positioning indeed is both relevant as well as unique, and that comes through in every piece of research we do. The job here is to convey the core foundational message of Pandora in China as well as we do in every other country. That's kind of the plan of action. On your second question, I will probably have to come back with that specific answer. In general, what's driving the business in the U.S. is the Moments platform. That's kind of the engine that needs to hum, and it is. We can drill into that maybe in a follow-up call. Great. Thank you. Thank you. Our next question comes from the line of Klaus Kehl of Nykredit. Yes, hello. You have a couple of times highlighted that China could take a hit here in Q3 due to flooding and typhoons, et cetera. Could you try to help us a little bit and try to quantify either the impact for the quarter or what you're seeing right now? Secondly, also, could you talk a little bit about what's going on in Australia right now? Because I think we've seen some new lockdowns here in Q3, and also in Melbourne. As far as I remember, you have actually one store in Melbourne that is selling like crazy. That could also potentially impact you in Q3. Any comments would be useful. Thank you. The reason we call— Thank you for the question, Klaus. The reason we call out the impact in China of the flooding, typhoon, and COVID-19 increase, obviously, is that China is strategically important for us and for you and investors as well. We would like to be specific about that. That sort of triangulation of three hits in one quarter, typhoon, flooding, and pandemic, which is being taken really serious also by the Chinese authorities, that will have an impact. Of course, if it had been sort of a question of 1 or 2 points 1 or the other way around, we would not have called it out, but it is visible in the numbers so far in Q3, and then we will see how it plays out and how the society and the pandemic develops in the weeks to come. I'll be hesitant to put a number on it, and it's not out of unwillingness, but simply say, how long are the restrictions lasting in China, and how is the pandemic development? Nobody knows. Just some additional color on that. The difference with the pandemic this time around in China is that it seems to go city by city, versus last year, if you recall, then literally the whole country shut in the month of February. From start to stop then, it took something like six weeks to recover. Now the big view here is, does the city recover in the four to six weeks span, and then how many cities are hit? That's why it's a very fluid situation. It's kind of difficult to actually answer. Australia, the stores actually remain open, but people are asked to stay home, which you just read in the newspapers. There is a certain impact in the Australian business, but likewise, they seem to be very vigilant. The moment there is just the smell of COVID, then they go on lockdown. It also seems like they then open up reasonably quick. Again, it's quite difficult to gauge, versus last year was more like the whole country's closed and then took a long time to reopen. Now it seems to close quicker, and then it needs to reopen a little bit quicker. The impact on the numbers so far, I think should be covered within the guidance that we've provided. Okay, great. Thank you. Thank you. Just as a reminder to participants, if you do wish to ask a question, please dial zero one on your telephone keypads now. Currently, we have one further question in the queue. That's from the line of Piral Dadhania of RBC Capital Markets. Please go ahead. Your line is open. Yeah. Hi, morning. Thank you for taking my questions. I apologize if it's been asked already, but are you willing to provide any insight as to how July and August is trading relative to the +7% you posted for Q2? Secondly, just on new product introductions in the second half of the year, could you provide us with any highlights as to any big, new products that we can expect to see? Are there any risk factors related to the delivery of those launches, just given some of the supply chain disruption and uncertainty in the back half of the year? Finally, just on customer insights, obviously with reopenings in Europe, strength in the U.S., is there anything you've learned in the second quarter in relation to consumer trends, which may have changed, relative to the previous few quarters? Are consumers behaving differently when they come into stores? Anything around KPIs on retail would be helpful as well. Thank you. I'll pick off the last two and then I'll leave the Q3 question to Anders. In terms of major initiatives in the back half, it's Pandora ME, which I think we detailed briefly in the May announcement. I know that the focus ended up being a lot on Brilliance because that was kind of happening there and then. That's a major push on another attempt to create a new platform for the company. In terms of supply chain, as I mentioned before, we have no disruptions that will affect the guidance as it stands today. We have put in a lot of efforts to safeguard this. We've increased inventory position, as I mentioned as well. We hired another 1,000 people in the quarter. We do not foresee any disruptions unless, of course, we get something which is completely unexpected. Right now, there is no view on that. In terms of customer insights, there is really nothing major that we're picking up. I think we've spoken about this in the past. Of course, when the shops were closed, people moved on. A lot of people migrated online. When the shops reopen, they migrate back to the store. We see this happening pretty much everywhere. Within that, we probably see that we used to have a lot more browsers coming into the stores without necessarily purchasing anything. Today, we see conversion rates are significantly higher, obviously, on a slightly lower traffic volume, which suggests that there's a lot less browsing, at least entering the store. How many people are browsing the windows? We don't have counters on the outside, so that's very difficult to gauge. Of course, there are limitations to how many people we can bring inside the store due to COVID restrictions. If you're a browser, there's a queue outside, likelihood is that you move on somewhere else. I think those are probably the two only major things we have picked up so far. Maybe there's going to be more in the future, but that's what we have so far. Maybe to you, Anders, on the first question. Thank you, Piral, on the first question about July trading. We'll not sort of comment on current trading. Obviously when we put out the guidance on August 6th, everything that happened all the way up until August 6th is reflected in the guidance. When we went through the guidance, and the implied growth in the second half of the year, you could see that the guidance assumes that we will remain and continue to be on a growth track, positive sell-out growth, underlying sell-out growth of between +2% and +6% in the second half of the year. That's a reflection of also what we have seen up until when we made the guidance. Okay. That's great. Thank you. Just coming back to the sort of customer insights point that Alexander referred to. If we take the U.S. market as a lead indicator, is it fair to assume that the relationship between your store network likes for likes and online is similar to what's happening at the group level? Is it more pronounced in that the online deceleration is more aggressive just because more of the U.S. is open, in terms of the store network? Let's see what the numeric answer to that is. The only complication there, I think, is that the U.S. with this abnormal market growth might not necessarily be representative, but I probably have to come back. I don't know exactly top of my head to answer your question. Maybe we can come back separately on that. Sure. That's fine. Thank you very much. Just one other follow-up, if I could quickly just squeeze it in. Supply chain, very clear on what you're seeing, which is nothing at the moment. Could you just give us an indication of what the balance between air freight and sea freight is? Are you having to put more products on planes to get it into the U.S., just given some of the tightness in the container availability and freight costs? Generally speaking, we don't sea freight. We essentially air freight pretty much everything. Okay. Okay, brilliant. Thank you very much. No, this container issue, fortunately enough, is not a limitation for us. That's great. Thank you. We just have a few more questions come through. The first is from the line of Thomas Chauvet of Citi. Please go ahead. Your line is open. Good day. Morning. Thank you. Firstly, coming back to Pandora Brilliance, can you reconfirm that U.S. would be logically the next market to roll out and how quickly can you scale these DDs in the U.S. and globally ahead of the fourth quarter? Just on Brilliance also, is Brilliance included in your upgraded revenue guidance? I've seen it had a 3% contribution to U.K. sales in the quarter. Would you expect that penetration in other markets in H2 to be broadly similar or even slightly higher given the Christmas period? Secondly, on China, you're talking about the first steps in the transformation in H2 2021. Can you just elaborate a little bit on some of these first initiatives? Alexander, did you say you will not step up marketing in China in Q3 because of your concerns on weaker traffic from the typhoon and the new lockdowns? Thank you. Okay. On Brilliance, I think we have never spoken about any rollout countries, so I cannot confirm something which we have never actually stated. We may cover some of that in the CMD, but as I said, the decision to go for a global rollout will be taken a little bit later in the year when we have more months under the belt. On the assumptions on penetration, this is way too early to comment on, to be perfectly honest with you. As I say, we need to see through the U.K. launch, draw the learnings, and from there start the modeling. The specifics on China in the back half. I take your last question first on initially we planned to kind of kick off this additional investment a little bit earlier, but of course, when shops are closed, then it doesn't make an awful lot of sense. That will probably be pushed out a little bit. We are ready to go. We have our assets, the plan is there, but we just need to wait for the situation in China to stabilize a bit before we push the button. Specifically, what we are doing is going to be an increased investment in media. We're developing new assets in terms of advertising. We're kind of reworking the sales narrative for our sales staff in the stores. Then finally, we are increasing the cooperation with specific key opinion leaders. Those are the more tangible things. There's a boatload of other things as well, which we can cover maybe in the CMD. It's a marketing push if you try to find a headline for it, which is now a little bit, we're waiting for the situation to clear up in China. That's it. Okay. Thank you, Alexander. Just so to clarify, Brilliance is included at least for the U.K. in your upgraded revenue guidance for the second half? Hi, Thomas. It's Anders. Yes, it is included, but it's given that it's one market only, it's bits and pieces. Only one market? Yeah. It's bits and pieces. Yeah. It's tiny. Okay. Thank you. Thank you very much. Thank you. Our next question comes from the line of Louise Singlehurst at Goldman Sachs. Please go ahead. Hey, morning everyone. Thank you very much. Just a follow-up from me, if I could please, on channel and just distribution. You talked about the store closures. I just wonder whether, is it a message about a bit more shift towards the online and a bit of housekeeping in terms of some of the low store densities in some of the underperforming stores, or is this more of a shift in terms of regional mix? I know Alexander, I did pick up on the fact you talked about the white space in the presentation, in terms of some of the cover, and I'm sure we'll hear more about that in September. Just thinking about the longer-term channel mix online, if there's any change in view versus history. Thank you. No. Hi. As I said, you should not read into this any structural change to the network. It's bits and bobs, a store here, a store there. There are a couple of stores in China which are being relocated, and it's just a gap because when I shut the store then it reopens somewhere else. It's just a phasing thing. Please do not read into the guidance any structural change to our network strategy. Great. Thank you for clarifying. Thanks. Thank you. Our next question comes from the line of Elena Mariani from Morgan Stanley. Hi. Good morning. Just two very small questions from me, which have got left on my list. The first one is on management changes. I've seen that recently Luciano Rodembusch joined Pandora to lead the U.S. market. Can you comment on why do you think he's the right person to manage the brand there, and whether you have completed the internal management changes across the different countries or the different functions? Maybe there were also other changes recently that were not disclosed. Can you comment a little bit on where you stand in terms of having the right talent across the group? A second question, a very simple one. What should we expect from your capital markets day? Are you going to provide five-year guidance for top line and margins? What do you expect to disclose, and how should we expect the day to progress? Thank you. There are three questions in that, let me kick it off. When it comes to Luciano in North America, why is he the right guy or the right talent for us? First of all, he's got a extensive blue chip background. He's got international background, he kind of understands retailing at a wider scale. Not least, he's been very successful in the last few years heading up the Tiffany business in the U.S. I think there you have three very strong components why he will be a good addition to Pandora. I will not comment on whether we make other changes or not. There's obviously a continuous job when you have 30,000 employees to upgrade the bench. That's kind of ongoing work, which we've been doing since I came here. Over time, of course, we're getting stronger and stronger. I look around and I think we are now managing to attract world-class talent across all the key functions in the company. I think we sit there with a team that is very strong. I think, in terms of structural organizational changes right now, I don't foresee anything. We did the big reset last year. I think the structure is proving to be very effective. That's probably in a good place now. There can be small adjustments as we go, but the framework is in shape. Maybe I'll hand it over to Anders for the CMD question. Hi, Elena. It's Anders here. On the CMD, you should expect that it's a virtual event only. Unfortunately, we had rented a fun space in London, but we will have to save that for another time. Four-hour online event only. We will go through all of the value chain, all of the Phoenix strategy elements. You should expect to see the executive leadership team on stage virtually, and from one end to the other. On the length of the target is five. I think five years is a bloody long time horizon in a business like this. Sorry for the language. Obviously, we won't talk about numbers beyond the current guidance and a little bit out. Five years feels quite too long. We are in the early part of the Phoenix strategy with a lot of growth opportunities that we are working on in parallel, and we would like to see how that plays out before looking that far out in the future. Okay, understood. Thank you very much. Looking forward to the event. Thank you. We have one final question in the queue. That's from Lars Topholm at Carnegie. Please go ahead. Your line is open. Just a follow-up on store acquisitions in the U.S., because I can see from note 8 to the Q2 report that in the quarter you bought 22 concept stores for consideration of $14 million, and then in July you bought another seven, but paid $52 million. Just wonder if you can come up with some indications how do you actually put a value on these, and why this very significant difference in purchase price? I would assume it's because the seven stores perform better than the 22. Will this have any implications for inorganic growth in the U.S. in Q3? Thanks. That's a good catch, Lars. A very big difference by store on those two different pieces of forward integration. There's a couple of comments there. One is that the starting point is when an agreement expires, in many jurisdictions around the world, Pandora will be able to take over the store without any payment of goodwill. We will be paying for inventories and fixtures, et cetera. There are a few exceptions to that sort of starting point, either due to local legislation of how to deal with the franchisee-franchisor relationship, or because of legacy agreements that's in place. The difference between the takeovers that are in the notes here is a reflection of that there are certain agreements in place where there are agreements on a specific purchase price that has been put in place in the past. That's why on one of them, the per store purchase price can look quite high. What happened to the inventory in those 22 stores? You didn't pay for that according to the note. Yeah. I think it's saying that we're still looking at the exact, what is called purchase price allocation. We are taking over the inventories. We would prefer not to have that floating around when we take over a store. The DKK 14 million includes that we're taking over the inventory. Okay. The way that it actually works, I think if you go back in the past and you remember that definitely then all forward integration would count, not inorganic growth, but only towards total growth, local currency growth. Going forward, there will be a split that to the extent that we do not pay any goodwill, and only pay for inventories and fixtures, then it counts as organic growth. To the extent that goodwill is being paid, it does not count in organic growth. Fantastic. Thanks, Anders. Thank you, Anders. There are no further questions. I'll hand back to our speakers for the closing comments. First of all, thank you for spending time with us today. As we opened up today, we said that we've had a strong quarter with us. We think that there's a good underlying growth, of course, propelled by this situation in the U.S., which we believe is going to normalize. On top of that, we are having a good momentum there. We believe that kind of the reopening in Europe is moving from strength to strength. That's kind of where we stand today. I think on that note, we will close the call. Thank you very much.