Jewellery maker Pandora raises sales forecast after Q3 profit beat

COPENHAGEN (Reuters) – Danish jewellery maker Pandora reported a smaller than expected drop in third-quarter profit on Wednesday as more shoppers came to its stores, and raised its full-year sales outlook, sending its shares up.

The company, known for its bracelets and charms, said that organic sales grew by 11%, beating expectations for 6% growth, and that so far, trading in the fourth quarter was “healthy”.

Pandora said it now forecasts full-year organic sales growth of 5%-6%, up from 2%-5% previously seen, and said it still expects an operating profit margin of around 25%.

Shares in Pandora, which sells its jewellery in more than 100 countries through 6,500 points of sale, of which 2,500 are concept stores, were up 5% at 847 crowns at 0829 GMT.

Operating profit fell to 920 million crowns ($132 million)from a year-earlier 978 million as costs rose, although this also beat analyst expectations for a profit of 875 million crowns in a poll published by Pandora.

Improvement in like-for-like sales was driven by the U.S., as traffic picked up in the region given recent brand initiatives. “This is strong in the context of an overall volatile retail environment,” JPMorgan analysts said in a note.

“Our investments in the brand are attracting more consumers into our stores,” CEO Alexander Lacik said in a statement.

The affordable luxury brand said its gross margin reached a record 79%, helped by cost savings and price hikes.

The operating margin however fell, due to higher commodity prices and foreign exchange rates, but the group said it expects the net impact of these to turn positive in the fourth quarter.

The group said that in the third quarter there had been an unexpected pick-up in demand across markets and collections driven by tourists – a summer holiday pattern it said may not repeat itself in the corresponding quarter next year.

($1 = 6.9798 Danish crowns)

(Reporting by Louise Breusch Rasmussen, editing by Anna Ringstrom and Louise Heavens)

Jessica Weisman-Pitts