Stimulus, indeed. Pandora is the latest European fashion firm to credit robust U.S. business for robust second-quarter gains.
The Danish jewelry maker said sales in the three-month period zoomed 63 percent versus 2019 in its most important market, outpacing overall U.S. luxury sales growth of 53 percent, according to Bank of America data.
Pandora’s sterling-silver bangle with a heart-shaped clasp and heart-themed charms, including some for Mother’s Day, were among best-selling items in the U.S.
The U.K., Pandora’s second-largest market, was also in positive territory, growing 1 percent. There, Pandora has been testing its new range of jewelry employing sustainable laboratory-created diamonds, dubbed Brilliance. “So far, so good,” noted Alexander Lacik, president and chief executive officer of the company, declining to detail any further rollouts until the end of the 2021.
Other markets were less rosy.
Q2 sales shriveled 13 percent in China versus 2019, dented by typhoons and fresh outbreaks of the Delta variant of the coronavirus. Sales fell 14 percent in France, 9 percent in Australia and 8 percent in Italy and Germany, reflecting pandemic-related restrictions.
About 15 percent of the company’s physical stores were closed for part of Q2 and 8 percent remain shuttered temporarily. The brand boasts a store network of 2,630 locations worldwide, a mix of company-owned, franchise and third-party locations.
Overall revenues jumped 84 percent versus 2020 to 5.16 Danish kronor, or $820 million, a 13 percent improvement versus 2019, prompting Pandora to raise its forecasts.
It now expects organic revenue growth of 16 to 18 percent for full-year 2021, versus prior guidance of 12 percent, and an EBIT margin of 23 to 24 percent, versus 22 percent previously.
While stimulus packages added to the “underlying strong performance” in America, Pandora said China remains weak and it will take the “first steps to reposition the brand” in the second half.
During a conference call, Lacik explained that the brand is perceived in China as a “full-assortment jeweler” with no particular point of differentiation, whereas most other markets are aware of its “moments” approach and emphasis on collectible charms.
He said the company would activate new advertising campaigns, ramp up its cooperation with key opinion leaders, and retool the sales narrative — as soon as conditions in China stabilize and store traffic improves.
China is expected to remain a drag on Q3 tallies, noted Anders Boyer, executive vice president and chief financial officer.
The company cited sequential improvement in Europe as pandemic restrictions eased.
Meanwhile, online sales rocketed 132 percent in the quarter versus the same period in 2019.
EBIT margin during the three months stood at 25.2 percent, “lifted by unusually strong U.S. growth,” Pandora noted.
Click-and-collect proved extremely popular in America, accounting for 13 percent of online sales in America, Lacik said.
Asked how consumer behavior has been shifting, the executive cited fewer browsers in its stores and higher conversion rates.
Key product launches in the second half include the Pandora Me range, hinged on a link bracelet and such favorite charms as four-leaf clovers, horseshoes and Hamsa hands.
The company is planning a capital markets day in September to “present how Pandora will drive long-term sustainable and profitable growth, building on the vast untapped opportunities within our existing business,” said Lacik.
Separately on Tuesday, the company unveiled a new share buyback program under which Pandora will repurchase shares for an aggregate maximum amount of 500 million Danish kronor. The program is to commence on Wednesday and conclude no later than Oct. 29.