Concerns arose among investors regarding Pandora, the world’s largest jewelry maker, after the company reported sluggish sales growth at its own stores in the third quarter. Despite raising its full-year outlook due to strong sales in the United States, Pandora’s shares suffered a 4.8% drop in early trade. Notably, the company disclosed that sales at its stores only saw a 5% increase in the third quarter, falling notably short of analysts’ projections of 14% growth. This news disappoints considering Pandora’s shares had already surged by 40% this year as the company rebounded from the pandemic’s impact on sales.
Per Fogh, an analyst from Sydbank, expressed disappointment with the sell-out growth in Q3. However, Pandora emphasized that it continued to experience robust sales in the United States, its largest market. This success was attributed to substantial government stimulus and widespread COVID-19 vaccinations, both contributing to increased consumer spending on goods and services. Consequently, Pandora readjusted its 2021 outlook, now anticipating organic sales growth of 18-20%, exceeding the previous forecast of 16-18%. Moreover, the company expects an improved earnings before interest and tax (EBIT) margin of 24-24.5%, surpassing the prior projection of 23-24%. Nevertheless, these figures slightly fell short of the average analyst forecast of 24.6%.
Recognizing the uncertainties caused by the pandemic and the atypically high growth in the United States, Pandora acknowledged the difficulty in providing precise guidance. Regardless, the company reported third-quarter sales of 4.73 billion Danish crowns ($734.92 million), surpassing the expected 4.67 billion. Additionally, the quarterly EBIT of 957 million crowns exceeded the estimated 917 million, resulting in an EBIT margin of 20.2%. Pandora attributed this revenue growth and improved EBIT margin to the strong performance in the United States and gradual easing of COVID-19 restrictions in Europe.
Pandora is set to release its comprehensive third-quarter earnings report on November 3. Although investors’ enthusiasm was dampened by the disappointing in-store sales, Pandora remains optimistic about its outlook, primarily due to the strong performance in the United States. The company’s capacity to adapt to changing market conditions will be crucial as it navigates the ongoing uncertainties presented by the COVID-19 pandemic.
Useful links:
1. Pandora Official Website
2. Pandora on Reuters
