FinancialsAug 15, 2023
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Pandora’s US Sales Improve in Q2
Mother’s Day and “The Little Mermaid” helped make a difference, though the company’s U.S. sales are still lagging behind last year.
A 14-karat gold-plated shell charm from Pandora’s “The Little Mermaid” collection, released earlier this year in conjunction with the live-action remake of the 1989 animated classic. Pandora said the collection positively affected U.S. sales performance in Q2.
Copenhagen, Denmark—Mother’s Day and the end-of-season sale helped boost Pandora’s second-quarter performance in the United States, though sales are still ringing in below 2022 levels.
On Tuesday, the Copenhagen, Denmark-based jewelry company reported its results for the second quarter.
In the U.S., Pandora’s largest market, sales were down 5 percent on a like-for-like basis to 3.49 billion Danish kroner ($500.3 million)—an improvement over Q1’s 7 percent decline—while organic revenue growth was flat.
The company said foot traffic picked up in the second quarter and in-store conversion rates were strong.
In addition to Mother’s Day and the end-of-season sale in June, e-commerce sales, particularly of the new “The Little Mermaid” collection, played a significant role in driving sales.
Pandora noted that wholesale sales also improved during the quarter.
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Globally, Pandora’s revenue totaled DKK 5.89 billion, up 2 percent on a like-for-like basis compared with Q2 2022 and up 5 percent organically.
Operating profit fell to DKK 1.19 billion ($174.3 million) compared with DKK 1.25 billion ($183.1 million) in the prior-year period.
Gross margin improved to 78.1 percent from 76.4 percent due in part to the fact that Pandora recently raised prices on certain items.
The company said the recovery of the Chinese market, where like-for-like sales grew 5 percent in the quarter, and another quarter of strong sales in Germany, where like-for-like sales were up 11 percent, contributed to the results.
Product-wise, Pandora said its new studded chain bracelet introduced in Q1 got good traction in the second quarter.
Also helping to boost sales was demand for the sun and moon stacking rings from the “Celestial” collection, the company said. The rings exploded in popularity after they went viral among Taylor Swift fans, who pointed out in TikTok posts how well they fit the lyrics of Swift’s song “Midnight Rain.”
Revenue for the company’s lab-grown diamond collection held steady at DKK 32 million ($4.7 million).
Pandora announced Tuesday it is introducing three new collections of lab-grown diamond jewelry just ahead of New York Fashion Week in late August and is expanding the collection to three new countries: Australia, Mexico and Brazil.
During the quarter, Pandora opened a net 33 concept stores and 24 shop-in-shops.
It also opened its new concept store, Evoke 2.0, by retrofitting an existing store in Italy.
The company followed by opening seven Evoke 2.0 stores across Italy and the United Kingdom, as well as one in the Copenhagen Airport.
Looking ahead to the remainder of 2023, Pandora said it is raising its guidance based on its performance so far this year and the steps it has taken internally—driving brand desirability, expanding its network and acquiring new customers—to ensure sustainable growth.
It now predicts organic revenue growth of 2-5 percent for the year, up from 2-3 percent. It noted that it would take a “consistent worsening” of macroeconomic conditions for sales to come in at the low end of this range.
“We are pleased with delivering yet another solid quarter against a backdrop of macroeconomic uncertainty,” President and CEO Alexander Lacik said.
“We have consistently demonstrated that the foundations built under the Phoenix (turnaround) strategy are yielding positive results. We will continue to push ahead with our strategic initiatives for the second half of 2023 and beyond, including the expansion of our assortment in (lab-grown) Diamonds and the ongoing roll-out of our new store concept, Evoke 2.0.
“Given our solid performance so far, our updated guidance now sees another year of positive organic growth.”
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