Jewellery maker Pandora raises guidance after Q1 revenue beat; slow down brand relaunch in China

DANISH jewellery maker Pandora on Wednesday (May 3) raised its full-year revenue outlook after reporting results for the first quarter slightly above analyst forecasts.

“We have started 2023 well with resilient growth and solid margins,” chief executive Alexander Lacik said in a statement.

“The macroeconomic outlook remains uncertain, but we are confident in our ability to adapt and thrive as we’ve proven over the past few quarters,” Lacik added.

The group now expects to generate organic sales growth between -2 per cent and 3 per cent this year, better than its earlier estimate of between -3 per cent and 3 per cent. Analysts expect 2 per cent sales growth this year, according to a poll provided by the company.

“There are no signs of any noticeable slowdown in sales despite increased macroeconomic headwinds,” Jyske Bank analyst Janne Vincent Kjaer said in a note, calling the quarterly results a “solid start to the year.”

Pandora, known for its customisable silver charms and bracelets, reported 1 per cent organic sales growth for the quarter, above the -1 per cent expected by analysts.

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The group’s sales for the January-March period rose to 5.85 billion Danish krone (S$1.2 billion) from 5.7 billion a year ago, compared to an average of 5.7 billion krone expected by analysts in a poll gathered by the company.

Meanwhile, the company will slow down a planned country-wide relaunch of its brand in China as customer demand has yet to recover to pre-pandemic levels, the CEO said on Wednesday.

Pandora sees China as a potential driver of future growth, but the world’s largest jewellery market is recovering slowly from strict Covid-19 curbs, which were dropped at the end of last year.

“The middle-income earner in China is much more careful as they are coming back to the market versus what we saw in Europa and in the US,” Lacik told Reuters on Wednesday.

“If I look at the traffic volume vs pre-pandemic levels, we still have a long way to go,” he said after Pandora raised the lower end of its full-year growth outlook when it reported first-quarter results slightly above analysts’ forecasts.

While China only accounts for 3 per cent of Pandora’s revenue, the company hopes to grow its business through a brand relaunch in the third quarter of this year.

It had originally planned to do a country-wide marketing campaign, but during the pandemic that was scaled down to a simultaneous launch in major cities. Now Pandora aims to go for one city at a time.

“Given that the traffic volume still is way below where it needs to be for us, we’re probably going to do a sequential launch,” Lacik said.

Shares in Pandora traded down 2.5 per cent at 0821 GMT. REUTERS