Pandora’s Moving from Natural to Lab-Grown Diamonds

Copenhagen, Denmark—Pandora is moving into the lab-grown diamond jewelry market, starting with the launch of a new collection in the United Kingdom this week.

The company announced Tuesday that it will no longer be using natural diamonds in its jewelry amid its push for “sustainably created” and affordable products.

The “Pandora Brilliance” collection of lab-grown diamond jewelry will be introduced to the U.K. market Thursday and is expected to expand into other markets in 2022.

“They are as much a symbol of innovation and progress as they are of enduring beauty, and stand as a testament to our ongoing and ambitious sustainability agenda,” CEO Alexander Lacik said Tuesday in announcing the new line. “Diamonds are not only forever, but for everyone.”

Pandora Brilliance includes rings, bangles, necklaces and earrings, each featuring a lab-grown diamond hand-set in sterling silver or 14-karat yellow or white gold. The collection’s motif is a take on the infinity symbol.

“The concept is about infinite possibility—that the future is yours to shape,” said Pandora.

Actress Rosario Dawson and model Ashley Graham will promote the line in the U.K., Professional Jeweller reported.

The pieces start at £250 ($346) and each stone ranges from 0.15 to 1 carat.

Pandora has been working toward greater sustainability and recently put a lot of money behind this goal, tying borrowing costs on a new €950 million credit facility to reducing its carbon footprint and using recycled metals. It set goals of becoming carbon neutral in its own operations and using only recycled silver and gold by 2025.

The company said the Pandora Brilliance collection has been certified as a CarbonNeutral product by The Carbon Neutral Protocol, a certification that covers the jewelry as well as packaging and transportation.

Pandora said the diamonds in the Brilliance collection are currently grown with more than 60 percent renewable energy. The collection is expected to be created with 100 percent renewable energy by its global launch.

The news about the lab-grown diamond collection came as the company announced its first-quarter results.

Pandora posted strong first-quarter revenue as online sales surged and select physical stores reopened. 

First-quarter revenue was up 8 percent year-over-year to 4.5 billion Danish kroner ($729.9 million) compared with 4.17 billion Danish kroner ($606.5 million) in the first quarter last year.

Quarterly like-for-like sales were up 36 percent year-over-year. (Like-for-like represents true comparable sales from stores that have been open for at least a year, excluding currency fluctuations.)

“We have had a good start to 2021, not least considering that many of our stores have been closed,” said Lacik in a press release about the results. 

“Performance in the U.S. and online continues to be strong, and we keep investing in building brand desirability, digital capabilities and operational excellence.”

By product category, sales of charms and bracelets both rose 7 percent in the quarter.

Ring sales rose 9 percent while earring sales were up 10 percent. Sales of necklaces and pendants were up 9 percent.

By sales channel, Pandora-owned retail stores, including the online store, brought in 2.96 billion Danish kroner ($478 million) in the first quarter, up 13 percent from the previous year.

Overall traffic into its physical stores was down by around 50 percent year-over-year, though Pandora noted the conversion rate is high.

In the United States and Australia, as physical stores began to reopen, store traffic was positive. It was the same story for its U.K. stores, which reopened in early April.

During the first quarter, around 30 percent of Pandora’s physical stores were temporarily closed due to COVID-19 restrictions, growing nearer to 35 percent by the end of March.

The company operated 2,659 stores as of the first quarter, 87 fewer when compared with the previous first quarter. 

It has 543 fewer other points of sale year-over-year, fueled by closures in the U.S. and Spain and the termination of 230 accounts with Signet-owned Jared the Galleria of Jewelry.

Wholesale sales in the first quarter were up 3 percent to 1.37 billion Danish kroner ($220.7 million). 

Online sales surged 136 percent year-over-year to 1.42 billion Danish kroner ($229.1 million) and accounted for 31 percent of total revenue.

Pandora invested in driving online traffic, including email marketing and trying out new platforms in the U.S. like TikTok and Twitch, a live streaming video service usually reserved for video games.

In the U.S., Pandora’s largest market accounting for 31 percent of total revenue, sales were strong in the first quarter following Valentine’s Day and a rise in demand for discretionary goods due to stimulus checks.

Quarterly revenue in the U.S. totaled 1.39 billion Danish kroner ($224.9 million), up 49 percent year-over-year.

Looking ahead, Pandora upped its financial guidance for the fiscal year. 

It expects organic revenue growth to top 12 percent, compared to its previous estimate of about 8 percent. 

Guidance for EBIT margin rose to about 22 percent from about 21 percent.

The updated guidance is dependent on 20-25 percent of stores being temporarily closed during the first half of 2021, compared with prior guidance of 25 percent. In the second half of the year, that number is expected to drop to 5-10 percent. 

Temporary store closures are expected to negatively impact organic growth by 6 percent for the full year.

The company does not expect to see any major changes to its overall store network.

Pandora has completed its two-year “Programme” Now turnaround plan, which aimed to stabilize its topline, increase brand relevance and access, and reduce costs.  

It is set to move onto a new strategy, dubbed “Phoenix,” that is focused on sustainable growth. Details of the plan will be shared during its Capital Markets Day in September.