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Danish jewelry retailer Pandora reported 2Q 2023 results. Ebit and organic sales beat expectations and the company raised its organic sales guidance. The company also decided to expand its lab diamond sales into the US, UK and Canada.

2Q results

Organic sales grew by 5% against an estimate of 3.06%. Pandora achieved Ebitda of DKK 1.69bn against an estimate of DKK 1.7bn. Gross margin continued its upward trend and increased by 170 basis points to 78.1% year-on-year. EBIT margin declined 190 bps y-o-y to 20.2%, as expected by the company. This decline reflects planned investment in growth.

Revenues by region

According to the results, the US region accounted for the largest share of the company's sales at DKK 1.83 billion. The UK came in second with sales of DKK 656m. DKK 2,000. Next was Italy with DKK 584 million. Germany with sales of USD 295 million. USD 295.

Pandora - Sales by region

Increased outlook for organic sales

Pandora raised its organic sales guidance to a range of 2% to 5% on an analyst estimate of 3.08%.

Pandora still expects an EBIT margin of 25% in 2023 vs. analyst estimate of 25.6%.

CEO Statement

"We are pleased with another solid quarter in a time of macroeconomic uncertainty. We have consistently shown that the fundamentals of our Phoenix strategy are delivering positive results. We will continue to execute on our strategic initiative in 2H and beyond. Including the expansion of our diamond assortment and the ongoing launch of our new store concept, EVOKE 2.0. With solid performance, we expect another year of positive organic revenue growth," said Pandora President and CEO, Alexander Lacik.

Lab Diamonds

The company will begin selling synthetic diamonds in Mexico, Brazil and Australia later this year. Pandora already sells lab diamonds in the US, UK and Canada with a price tag of up to $4,450 for two-carat diamond rings. The company uses renewable energy and recycled gold and silver to produce the diamonds, which significantly reduces the product's carbon footprint. A one-carat gold diamond ring has a carbon footprint similar to that of a pair of jeans.

Analysts' recommendations

RBC Capital Markets' Piral Dadhania, with an "underperform" recommendation, says Pandora posted better-than-expected results, with revenue and gross margin above forecasts.

Frederick Wild of Jefferies, with a "hold" recommendation, says Pandora is handling the complicated U.S. market surprisingly well.

Pandora shares

Shares of jewelry maker Pandora are primarily traded in Denmark. The stock also trades in Frankfurt under the ticker 3P7. On the American stock exchange, Pandora's depositary receipts trade under the ticker PANDY and one ADR is equivalent to a quarter of a share.

A luxury brand and expensive goods is just a great business and it's not only Pandora that confirms it.

Totally agree, this is confirmed for me by LVMH, for example, which is one of my best investments in the long term.

Synthetic diamonds... that's terrible! It loses all the charm of a natural diamond... why on earth would anyone buy it? :-D

And the price....

So the price is absurd in itself... to me a synthetic diamond is not worth a single $... I just don't get it... I'd rather have none than play with something :)

I'm not a fan of synthetics either, but people love to buy them.