PARIS – Pandora continued to grow in the second quarter of 2022 despite headwinds from the United States and China.
The Danish jeweler enjoyed its “third consecutive quarter of record sales”, with sales during the three-month period reaching 5.66 billion Danish kroner, or $771.8 million.
This represents an increase of 3% compared to the corresponding period of 2021, in line with consensus estimates. Revenue was 17% higher than in 2019, before the COVID pandemic hit.
Chief executive Alexander Lacik said he was pleased with the results given the new uncertainties brought by the war in Ukraine and store closures linked to China’s zero Covid policy.
In an interview, he said the second quarter results were in line “with how we expected the year to go.” The US government’s stimulus checks amounted to “the best marketing plan ever,” but they were only a one-time boost.
During the three-month period, the United States recorded a 12% decline compared to the second quarter of 2021 compared to difficult comparisons with the previous year. Sales were 59% higher than 2019 figures.
Performance in China continued to be impacted by the country’s strict zero Covid policy as closures impacted stores as well as Pandora’s online distribution in Shanghai, resulting in an overall drop of 58% in second trimester.
Pandora recorded the strongest growth in Europe, with double-digit leaps in its key markets of the UK, Italy, Germany and France, where the launch of the My Pandora loyalty program supported a 13% growth despite weak sales for Mother’s Day.
In the rest of the world, growth was strong, totaling 26%. Mexico led the charge with a 50% jump to 210 million Danish kroner, or $28.68 million, while Spain was described as having “revenues the size of France” and increased by 32%.
The second quarter was also affected by the shutdown of activities in Russia and Belarus, where most of the impact was seen in wholesale distribution, and translated into a 1% decline in overall figures. in the quarter and lower online freight revenues.
Overall, the EBIT margin in the three months “remained strong” at 22.1%, Pandora said. The consensus estimate ranged from 21% to 24.3%.
The company maintained its EBIT margin forecast between 25% and 25.5%, but added that the macroeconomic outlook “is associated with high uncertainty”.
With the easing of COVID-19 related restrictions in all areas except China, consumers returned to prevailing physical stores and supported the growth of the channel.
In the three months, wholesale distribution took a hit, falling 13%, especially given the dominance of the United States in its market mix.
Third-party distribution decreased by 8% following Pandora’s takeover of a number of wholesale accounts. The company said the consequences of Russia’s war in Ukraine could not be fully offset by “strong performance in some Asian markets”.
Lacik said Pandora is on track with 100 to 150 openings planned, and the company is accelerating its expansion in the United States and Latin America to offset current difficulties in China, where the focus has been on relocations rather than new stores.
Pandora’s online channel continued to grow and doubled compared to 2019. Despite a return to physical shopping, there is “greater acceptance of the online store as a purchase channel” in most markets, the company noted.
Lacik cautioned against putting too much weight on the battle between online and offline.
“We have the luxury of not worrying about where the final transaction takes place,” the executive said, adding that the company is “agnostic” when it comes to sales channels. He added that online “will grow naturally” due to incoming consumer cohorts, including a generation of digital natives.
“The right question to ask is what is the quality of the experience we provide, regardless of [where] our customers engage with us,” he continued, pointing to traffic and conversion rates as benchmark metrics.
He said all touchpoints were important given that “many of our customers and consumers are not the same person”, with around 60% of the former being men looking for a gift for a female consumer.
Physical retail represents a more “efficient, interesting and engaging” experience than the “flat, self-curated” online environment, he added.
Pandora Me, relaunched in late 2021, jumped 72% and took a 3% share of revenue in the quarter, thanks to good traction in continental Europe.
The Moments product platform and ongoing collaboration with Marvel continued to be successful, especially with strong Mother’s Day business activity. The latter represented 2% of the quarter’s activity. The newly introduced Pixar designs were also a hit.
In the second half of the year, a key launch will be the Diamonds by Pandora category, which relies on lab-grown diamonds and recycled silver and gold, which will launch in the United States and Canada on August 25.
Communications channels and in-store materials have been revamped to “give a diamond feel” to the experience, the executive said, while emphasizing the “totally unique proposition” in terms of enduring credentials and affordable prices.
Lacik objected to sharing new developments for the category, but said Pandora is preparing to add more collections in this new category.
Separately on Tuesday, Pandora announced the appointment of Mary Carmen Gasco-Buisson as chief marketing officer, starting this fall.
Formerly a global vice president at Unilever, the new executive was previously managing director of consumer healthcare at P&G Ventures; and Global Director of Marketing and Innovations for Hugo Boss Fragrances. She also held a management position at the venture capital firm M13.