Pandora’s US Sales Bounce Back in Q3

Sales increased 5 percent after a down quarter as the brand saw in-store traffic pick up.

Michelle Graff michelle.graff@nationaljeweler.com

Grace Coddington in Pandora’s Diamonds for All campaign

Cat enthusiast and former model and Vogue Creative Director At-Large Grace Coddington is among the faces of Pandora’s “Diamonds for All” campaign, launched earlier this year to promote its new lab-grown diamond jewelry. The jewelry brand said investments in marketing helped propel sales in the third quarter.

Copenhagen, Denmark—Pandora recorded solid third-quarter results despite the overall decline in jewelry sales, with the brand reporting an uptick in traffic it attributes to the money it’s sunk into marketing.

It also noted an “unexpected” increase in demand from tourists, including domestic tourists, a pattern it said may not repeat in Q3 2024.

Globally, Pandora’s sales grew 11 percent year-over-year (9 percent on a like-for-like basis) to 5.57 billion Danish kroner ($799.6 million) in the third quarter, the company reported Wednesday.

Gross margin hit an all-time high of 79 percent, due to Pandora’s decision to raise prices beginning in late 2022, as well as cost efficiencies and channel mix.

Operating profit (EBIT) fell 6 percent from DKK 978 million ($140.4 million) to DKK 920 million ($132.1 million) due to rising costs, but the drop was less than analysts expected, prompting the jewelry company to raise its annual guidance once again.

Pandora now forecasts sales to grow between 5 percent and 6 percent, up from previous guidance of 2-5 percent.

“We are very pleased with our results this quarter,” said President and CEO Alexander Lacik.

“Our investments in the brand are attracting more consumers into our stores. We have delivered strong broad-based growth whilst our all-time high gross margin underpins our unique earnings model. We … continue to see very exciting opportunities ahead for Pandora, as we embark on the next chapter of our growth strategy.”

Pandora is in the middle of a turnaround plan, dubbed “Phoenix.”

At Capital Markets Day in London in October, the company started the next chapter of the plan, investing in global campaigns and fashion events in order make consumers see Pandora as a full jewelry brand, not just a company that makes charm bracelets.

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In the United States, Pandora’s largest market, like-for-like sales were up 5 percent, rebounding from a 4 percent slide in Q2 and a 7 percent decline in Q1.

The company said its marketing initiatives in the U.S. drove more people into its stores in the third quarter and conversion rates were “healthy.”

Wholesale sales also improved, though a gap still remains between the performance of wholesale points of sale and company-owned and -operated locations.

The company mentioned specifically the events it held during New York Fashion Week in late August to introduce the additions it has made to the “Pandora Lab-Grown Diamonds” line (formerly called “Diamonds by Pandora”).

Overall, however, Pandora said the new lab-grown diamond jewelry contributed only incrementally to the company’s Q3 sales growth in the U.S., acknowledging it is still early days for the expanded range.

Pandora now sells lab-grown diamonds in four places: the U.S., Canada, the United Kingdom, and Australia. It said it plans to expand the line into Mexico and Brazil this month.

Like-for-like sales in the category grew 84 percent year-over-year in the third quarter, though Pandora notes that was against a comparatively low base.

Lab-grown diamonds still only accounted for 2 percent of the company’s total quarterly revenue.

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Pandora opened 27 concept stores and 16 shop-in-shops in the third quarter. The company said it remains on track to open a net 75-125 concept stores and 50-100 other points of sale this year.

Pandora is converting a growing number of concept stores to its new store model, called Evoke 2.0.

The new layout and look is intended to emphasize the concept of Pandora as a full jewelry brand by showing all the company’s collections in an “intuitive and engaging” way.

Year-to-date, the company said it has opened 22 Evoke 2.0 stores and is on track to open more than 40 globally this year, including the refurbishment of existing stores.

Pandora also noted that through the first nine months of 2023, it has bought a total of 46 concept stores from franchisees in order to convert them into Pandora-owned retail locations.

Thirty-two of these stores were in the United States, with the remaining 14 in Colombia.