Pandora’s net profit rose 38.7 percent in the third quarter on the back of double-digit sales growth as the maker of charms and other jewelry continued to expand its store network worldwide.

Pandora said its performance in the United States suffered from a switch in promotional strategy, but chief executive officer Anders Colding Friis described the change as a positive factor designed to grow the brand in the long-term.

The Copenhagen-based jewelry firm said it was maintaining its guidance for full-year sales unchanged at more than 16 billion kronor, or $2.38 billion at current exchange, but it now expects a tailwind effect from currencies on revenue growth of around 10 percent in 2015, down from an earlier forecast of a 12 percent boost.

Pandora also increased its guidance for capital expenditure to about 1 billion kronor, or $149 million, from 900 million kronor, or $134 million, citing a faster-than-expected increase in investments in its production facilities in Thailand, where it employs more than 10,000 people, as well as IT-related projects.

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The group posted a net profit of 1 billion kronor, or $149 million, in the third quarter. Its EBITDA margin rose to 37.2 percent from 35.9 percent a year ago, lifted by more favorable raw material prices, which more than compensated for a negative impact of around 50 basis points from currency fluctuations.

Sales in the third quarter totaled 3.9 billion kronor, or $583 million, up 37.5 percent year-on-year. Stripping out the impact of exchange rate variations, revenues rose 28 percent.

“The strong top-line development has continued in the third quarter of the year, and again all regions contributed to the growth,” Friis said.

“Europe and Asia-Pacific in particular did well, with both established as well as less-developed markets continuing the positive momentum. Growth in the U.S. was slightly softer than previous quarters, primarily due to a change in promotion strategy in the region to further enhance our brand,” he added.

By category, sales of rings grew the fastest with a 79.1 percent increase during the quarter, followed by other jewelry, up 36.9 percent; charms, which rose 35.8 percent, and silver and gold charm bracelets, which progressed 8.8 percent.

Revenue rose 40.7 percent in Europe, 74.8 percent in Asia-Pacific and 22.7 percent in the Americas.

Sales in local currency terms were up 50 percent in Germany, where the company’s restructuring is beginning to bear fruit. “Our effort to improve the German market appears to be working,” Friis told analysts during a conference call.

Revenues in the U.S. rose 5.7 percent, impacted by Pandora’s decision to launch a charms promotion in the third quarter instead of offering a free bracelet with minimum purchase, as it has done at the same period for the last 10 years.

“One of the things that, in my opinion, is damaging to a brand is if we get too predictable, so therefore we changed that. If we take that part of the quarter out of the equation, the U.S. did very well,” said Friis.

“I actually think that is what we need to do to support our brand in the U.S., so at least in my world, this is something which is helping us build our brand even stronger in the U.S. market,” the executive added.

Sales in local currencies were up 45 percent in Australia and 77 percent in other countries in Asia-Pacific, driven by a strong performance in China and Hong Kong.

Pandora said last month it has expanded its strategic alliance with The Walt Disney Co. to include 13 markets in Asia-Pacific, including China, Japan and Australia. It plans to launch the first Disney products in the region in November.

Sales in Russia were down 84 percent during the quarter, and Friis maintained his forecast that Russia would close the year with a drop in revenue of 25 percent to 50 percent. Nonetheless, he said Pandora was happy with its local distributor, PanClub.

“The reason we see these very low sales numbers from Pandora is actually because the inventory level in Russia is getting smaller,” he noted.

“But the distributor’s sales to consumers are actually, in broad terms, roughly flat, even though they have a slightly negative development in like-for-like, and that is of course because they are continuing to open stores, and profitable stores,” Friis added.

Pandora said like-for-like growth accounted for roughly one-third of overall revenue growth in the third quarter, while network expansion contributed the remaining two-thirds.

The group has been closing unbranded doors, buying back stores and reacquiring distribution rights. Owned and operated stores, including e-commerce sites, accounted for 26 percent of total revenues in the third quarter, up from 15 percent during the same period last year.

Pandora opened 112 new concept stores in the three months ended Sept. 30, bringing the total worldwide to 1,666. This included 83 new owned-and-operated concept stores, of which 38 were added in China — including 30 stores taken over from its former distributor — and 29 in Germany.

All dollar rates are calculated at average exchange rates for the period concerned.

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