Pandora Reaps Strategy Rewards With Q3 Growth

Lily Templeton
·5 min read

Updated 11 a.m. EST

PARIS — Pandora’s strategy is working well.

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This was the key takeaway for president and chief executive officer Alexander Lacik, as the Danish jewelry giant continued to soar in the third quarter, raising its yearly guidance for the second time this year.

The company reported its third-quarter results on Wednesday, with sales growing 11 percent to 5.572 billion Danish kroner, or $798 million, for the three months ended Sept. 30.

Revenue exceeded the high range of consensus estimates, which had projected 5.53 billion Danish kronor in revenues and 8 percent growth.

In the first nine months of this year, the company’s revenues reached 13.77 billion Danish kroner, or $1.97 billion.

Broad in terms of geography and spread across collections, growth could not be attributed to a single factor, and that’s exactly how Lacik wants it.

“[It] is really propelled by traffic — not pricing or mix or any of these funky things,” he told WWD in an interview. “Once we get traffic, the rest is far simpler as we’re really good at converting.”

“Domestic tourism” was one factor the executive named as driving footfall, as consumers diverted spend from travel toward other pursuits — including purchasing Pandora jewels.

Another way to get that traffic is to be “unmissable,” he said.

The 40-year-old brand “has come from nowhere and now we’re sitting firmly at the top of people’s interests,” Lacik said, attributing that to being “a brand for everybody,” unlike high-end brands looking to be exclusive, but also investing in Pandora broadening its reach. “We don’t end up there by chance.”

The jeweler has leaned into earned media efforts in a change of strategy, invested in a raft of events, campaigns, influencers and celebrities like Pamela Anderson who stars in the “Diamonds for All” campaign, and Ashley Park, named global ambassador.

Participating in the New York, Copenhagen and Paris fashion weeks through events brought a 60 percent boost in average media impact value of Pandora’s coverage in the first nine months of 2023, against the same period last year, the company noted using data from Launchmetrics.

Another advantage for Pandora: At 164 million Google searches in 2023, it’s the most searched jewelry — and even luxury, added Lacik — brand in the world, with volumes three times larger than its nearest competitor, the company said, referencing media reports back by Google search data and analysis by retailer Watch Pilot in October.

However, “good marketing only works when the product is resonating with the consumer,” Lacik reminded.

Consumers were interested in Pandora’s offering across the board, with its core Moments and Pandora Me platforms bringing a cumulated 7 percent rise in like-for-like sales, and a 14 percent increase for its “Fuel for More” array, which includes the Timeless range and lab-grown diamonds.

The latter, expanded in the quarter with the launch of three new collections, soared 84 percent, albeit from a low base, while the former’s growth was also helped by viral trends such as the #PandoraPromiseRing on Tiktok.

Growth in the third quarter in like-for-like terms came from most markets.

After a summer of increased tourist traffic, Europe grew 4 percent, driven by Germany leaping 31 percent and France 5 percent, despite the U.K. and Italy’s contracting by 1 percent each. The company pointed out that “an unexpected pick-up in demand driven by tourists,” including local ones, may not repeat in subsequent years.

The U.S., which accounted for 28 percent of the company’s revenue and had suffered from unfavorable comparisons due to pandemic-era stimulus checks, rose 4 percent in like-for-like and 5 percent in organic terms.

The rest of the world, which accounts for a third of revenue, rose 22 percent.

While China was still flat in like-for-like terms and 7 percent down in organic terms, Pandora noted “positive brand momentum in Shanghai” where the brand recently relaunched. This market currently represents a 2 percent share of revenues.

Dragging down organic growth significantly is the lower sell-in from partners, who typically have less inventory and different staffing strategies, executive vice president and chief financial officer Anders Boyer said on a call with analysts.

Another key highlight of the quarter is margins reaching “an all-time high” of 79 percent, which Pandora attributed to channel mix, cost efficiencies and price increases.

Lacik characterized this as “sustainable” and said it was “a really important and very robust marker” of Pandora’s business, which is critical to the earnings model as this high level frees up cash for investments.

All in all, Lacik was “very pleased” with the quarter’s results, saying the company had “delivered strong broad-based growth whilst our all-time high gross margin underpins our unique earnings model,” he continued.

Six weeks into in the fourth quarter, which contains the all-important holiday trading period, sales were so far “up a high-single-digit percentage” year-on-year, which had Lacik looking ahead with confidence.

As a result of these quarterly figures, the company has upgraded its full-year guidance to a 5 to 6 percent bracket, versus the 2 to 5 percent range anticipated last quarter. At the beginning of this year, Pandora had predicted growth to fall somewhere between minus 3 percent to plus 3 percent.

Piral Dadhania, director of luxury goods and premium brands research at RBC Capital Markets, noted that the “magnitude of earnings upgrades could be limited” as consensus was already forecasting a 5 percent increase in organic revenue.

This comes after Pandora’s capital markets day on Oct. 5, where the company said it planned to build its position as a “full jewelry brand” in the affordable luxury space and would increase investments in brand desirability and its store network. At the time, it had also updated profit and revenue projections for the medium term.

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