Pandora hails strong Q4, but uncertainty means 2023 sales could rise... or fall

By

Sandra Halliday

Published
Feb 8, 2023

Danish jewellery giant Pandora said on Wednesday that its full-year and Q4 results were at the high-end of its guidance as its strong brand drove “resilient growth”.

But the company is less clear about the current year, as reflected in its very wide guidance range. So how uncertain is it? Well, with organic sales predicted to be anywhere from down 3% to up 3%, it’s clear that anything could happen.

Looking back at last year, and particularly at Q4, CEO Alexander Lacik said: “We ended 2022 on a high note. Despite the macroeconomic pressure on consumers and Covid-19 headwinds in China, we continue to deliver solid growth vs pre-pandemic levels.”

Pandora reported Q4 sales of DKK9.9 billion (€1.33bn/£1.18bn/$1.43bn), beating analysts’ expectations. The company also said that Q4 organic growth was 4% year on year and 19% when compared to the pre-pandemic Q4 in 2019, even though it was negatively affected by a fire in its European Distribution Center.

The gross margin was up 0.5pp year on year, “reflecting good discipline despite a heavily promotional external environment”. The EBIT margin in Q4 2022 was 32.5%, an increase of 2.8pp vs Q4 2021 with good cost control.

As mentioned, the Pandora brand looked strong with the company citing “good resilience in macroeconomic uncertainty”. US sell-out growth (or comparable/like-for-like growth as it’s perhaps better known) “improved sequentially” to -7%, and Europe was “resilient” at +2% sell-out growth “despite some pockets of macro-driven consumer weakness”.

For the full year, it managed to beat its own guidance having forecast organic growth of 4%-6% with the figure coming in at 7% as revenue reached DK26.463 billion. Meanwhile the EBIT margin was 25.5%, spot on the top end of the forecast range of 25%-25.5%.

The company added that it “continues to make good progress on its Phoenix strategy. Moments delivered flat sell-out growth vs Q4 2021, underpinning its resilience and position as a leading product category in jewellery”.

Prices were “successfully adjusted” in Q4 (by 4% on average) with a “positive financial impact”.

The Diamonds by Pandora launch in North America is “tracking as planned” and new collections are coming for 2023 and with further geographical expansion due.  

As for that uncertainty about the year ahead, the company said it’s “confident in its ability to adapt to the uncertain environment whilst driving strategic priorities”.

Its trading so far this year has been “solid with a good, broad-based pick-up in sell-out growth”. This has been helped by an easier comparative base due to the Omicron variant a year ago, and earlier product launches than last year. Nonetheless, “Pandora is pleased with underlying trading, which continues in line with Q4 2022”.