By Dominic Chopping
Shares in Pandora rose to the top of the Stoxx 600 Europe index in early trade after the Danish jeweler presented a well-received strategic plan and new financial targets.
The company launched a turnaround program in 2021 to begin delivering sustainable and profitable revenue growth after seeing many of its stores closed due to the Covid-19 pandemic. It pledged to invest in building its brand desirability, digital capabilities and store network and made a commitment to halt use of mined diamonds in its jewelry and instead use only laboratory-made diamonds.
The plan has seen shares double in value over the last year, buoyed by its new collections and network expansion which boosted market share.
With the first phase of the strategy complete, Pandora said it will now start scaling up investments to accelerate revenue growth, delivering operating margin expansion and pressing ahead with strong cash returns.
It plans to build its position in the affordable luxury space and increase investments in its store network as well as boost marketing.
As part of the announcement, Pandora said it is targeting organic growth of 7%-9% from 2023 to 2026, an earnings before interest and tax margin of 26%-27% by 2026 and revenue of between 34 billion and 36 billion Danish kroner ($4.79 billion-$5.07 billion) in 2026.
“Expectations into today’s release were high,” Jefferies analyst Frederick Wild said in a note. “To our minds this release clears that high hurdle.”
Pandora’s EBIT is expected to reach between DKK8.8 billion and DKK9.7 billion by 2026 and it aims to return between DKK14 billion and DKK17 billion in cash to shareholders during 2024 to 2026.
On his preliminary calculations, Wild expects 2025 consensus earnings expectations to rise by around 15%.
At 0924 GMT, Pandora shares traded 9.4% higher at DKK773.40.
Write to Dominic Chopping at [email protected]
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