- Jewellery retailer hikes guidance
- Q1 organic growth of 18%
- But China remains a trouble spot
Danish jewellery brand Pandora (PNDORA:CPH) raised its full-year organic revenue guidance after first quarter sales and profits breezed past estimates with the key US market sustaining its strength.
The rings-to-lab-grown diamonds seller’s confident outlook demonstrated that its ‘Phoenix’ growth strategy, which entails ‘elevating brand desirability’ and a step-up in marketing and investments in new store openings, is paying off.
The charm bracelets-to-necklaces purveyor also stressed that trading in the second quarter to date has ‘remained healthy’ with high single-digit like-for-like growth, sending the shares 6% higher to DKK 1,148 on Thursday, or approximately £131.62.
BLING FOR THE MASSES
Copenhagen-headquartered Pandora is a vertically integrated jewellery maker and seller that plays in the accessible luxury market, making high-quality bling available to the many.
The company now sees annual organic sales growth in the 8% to 10% range, up from previous guidance of 6% to 9%, although operating margin guidance was left unchanged at ‘around 25%’.
The upgrade followed the delivery of 18% organic growth in the first quarter, during which Pandora’s gross margin reached a new record-high of 79.4%, up 190 basis points year-on-year, supported by price increases, efficiencies and tailwinds from silver prices and foreign exchange rates.
Operating profit jumped 20% to DKK1.51 billion, with total sales for Pandora’s lab-grown diamond collection reaching DKK 63 million with sparkling like-for-like growth of 87%.
CHINA DISAPPOINTS
While the US market continued to exhibit sustained strength, with Pandora notching up 9% like-for-like growth in Q1, and key European markets delivered solid growth, China had a challenging quarter.
Like-for-like sales slumped 17% in the Middle Kingdom amid challenging market conditions, although Pandora remains committed to ‘navigating the market’s complexities’ and ‘driving positive change through the gradual relaunch of the brand’ in China.
WHAT DID THE CEO SAY?
CEO Alexander Lacik said: ‘We are very pleased with our start to the year, as we embark on the next chapter of Phoenix. Whilst jewellery markets around us generally remain subdued, our ongoing brand investments allow us to take market share. We raise our revenue guidance and look forward to keep fuelling our growth with exciting strategic initiatives over the coming years.’
Pandora, which initiated a fresh DKK4 billion share buyback in February, sounded upbeat about its prospects in a jewellery market that has historically grown faster than GDP and remains highly fragmented, with global brands set to outgrow the overall market.
