Pandora jewelry

Pandora posts strong first quarter but warns of upcoming US slowdown

Copenhagen, Denmark—Pandora released strong first quarter results and raised its sales guidance for the year ahead.

Still, the company remains cautious about its fiscal future, noting that the war in Ukraine, COVID-19, inflation and rising interest rates could all negatively impact consumer demand.

“We are very pleased with the good start to the year which generated record first quarter sales,” said CEO Alexander Lacik. “All of our product platforms are supporting growth in the first quarter as our ability to continuously deliver new innovation pays off.”

Here are five key takeaways from the Danish jewelry company’s quarterly results.

Pandora’s quarterly revenue soared into double digits.

First-quarter revenue increased 26% year-on-year to 5.7 billion Danish kroner ($805.4 million) from 4.5 billion Danish kroner ($637.1 million) in first quarter of last year.

It posted organic sales growth of 21% year-over-year.

Its sales growth (sales at Pandora owned and operated stores) was 17% year over year.

The company had a great Valentine’s Day, with sales up around 30% year-over-year.

By sales channel, Pandora-owned retail stores, including the online store, brought in 3.9 billion Danish kroner ($555.7 million) in the first quarter, up 33% from the previous quarter. ‘last year.

Wholesale sales in the first quarter rose 15% to 1.6 billion Danish kroner ($221.8 million).

Pandora said its online sales performed well compared to 2019 levels, but were down from the previous first quarter when COVID-19 lockdowns were in place.

Organic growth online was around 155% compared to the first quarter of 2019 and was the main contributor to growth from a channel perspective compared to 2019, Pandora said.

Given its excellent first quarter, Pandora has raised its budget forecast for the coming year.

It now expects organic revenue growth of 4-6%, up from its previous forecast of 3-6%. Its EBIT margin of 25 to 25.5% remains unchanged.

The US market remains solid, but Pandora predicts a downturn ahead.

In the United States, Pandora’s largest market accounting for 29% of total sales, sales increased 19% in the first quarter.

Quarterly revenue in the United States totaled 1.7 billion Danish kroner ($233.6 million), up 19% year-on-year.

The US market grew 62% organically from the first quarter of 2019 and performed in line with Pandora’s expectations, the company said.

The Marvel collection did particularly well in the United States

However, Pandora said it expects the U.S. market to “slow down” in 2022, noting that stimulus checks handed out in March 2021 boosted sales, making year-on-year comparisons difficult. another in the second quarter of 2022.

“The data indicates that the overall jewelry market in the United States grew by 11-18% in the first quarter of 2022 and therefore above Pandora US. However, the data also suggests that the affordable jewelry market has grown much slower than the overall jewelry market,” Pandora said.

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Pandora has expanded its presence in North America.

In January, Ben Bridge Jeweler announced it was returning 37 Pandora stores, including 32 in the United States and 5 in Canada, to Pandora, seeking to focus on its core business.

Pandora’s presence has grown particularly on the West Coast, as 20 of the acquired Ben Bridge stores are located in California.

The acquisition is expected to bring Pandora 170 million Danish kroner ($24.1 million) in additional revenue for the full year, converting wholesale revenue into retail revenue.

The company also announced plans in February to open 28 stores in Macy’s, with the aim of increasing its market share in the United States.

“The long-term goal is to double U.S. business from 2019 and organic growth of 62% from 2019 this quarter is an encouraging path to that goal,” Pandora said.

The “Pandora Me” and Marvel collections were the best performers.

Pandora has divided its sales into “global business units” or collections.

The “Pandora Me” collection saw revenue more than double, up 144% for the quarter.

Revenue from his “Collabs” collection, i.e. collaborations, soared 54%.

The company launched a Marvel collection in February, drawing inspiration from jewelry from Avengers characters like Iron Man, Black Panther, The Hulk and Captain America.

“The Marvel collaboration builds on Pandora’s strong relationship with Disney and proved an imminent success during the quarter. Marvel alone accounted for 3% market share and has so far outperformed the initial launch of Star Wars and Harry Potter,” Pandora said.

Sales of the “Pandora Moments” collection increased by 26%.

The “Pandora Brilliance” collection, which includes its synthetic diamond jewellery, saw sales increase by 9%.

It has been tested in the UK to positive reception and the company plans to roll it out this year, but said no new tests were carried out in the first quarter.

The company has trialled a new loyalty program, My Pandora, in France, with plans to introduce it to more markets in 2023.

The test launch was conducted online and in 20 stores, with 50,000 consumers signing up in the first four weeks.

“My Pandora will further enhance Pandora’s access to quality consumer data and with the new loyalty program, Pandora will be able to directly target consumers with content that interests them,” the company said.

Pandora is also creating a digital hub in London to attract digital and marketing talent.

Pandora has taken a strong stance against Russian products.

Pandora made headlines last month when she announced she was leaving the Responsible Jewelery Council, citing the organization’s refusal to cut ties with Russian companies.

It was one of the first to do so, alongside Richemont, and followed by Kering, Watches of Switzerland, and others.

Pandora said it did not see a “major impact” on performance due to the war, but suspended operations with Russia and Belarus.

Russia, Belarus and Ukraine combined accounted for about 1% of revenue in 2021, Pandora said.

“The 153 concept stores and 66 other outlets in these markets are no longer considered part of Pandora,” the company said.

Pandora operated 2,432 concept stores at the end of the first quarter, down 227 from the previous first quarter.

Pandora plans to continue expanding its store network, expecting to open a network of 50 to 100 concept stores globally.