Pandora hits record revenue of £992m in 2013

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UK market is brand’s biggest in Europe, with revenue up 33.3%.

Pandora has released its full-year financial results for 2013, with record revenue of DKK 9.0 billion (£992m) and the UK business’ revenue improving 33.3% year-on-year.

The brand reports that revenue, margins and cash flow all exceeded expectations going into 2013, with strong revenue growth was seen across all major regions.

With a view to 2013, Pandora’s group revenue in 2013 hit DKK9.01 billion, compared with DKK6.65 billion (£734m) as reported in in Pandora’s 2012 financial results. By region, revenue in the Americas increased by 25.5%, Europe increased by 47.9% and the Asia Pacific region increased by 37.1%.

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The brand’s gross margin was 66.6% in 2013 and is unchanged compared with 2012. Its EBITDA increased by 73.8% to DKK2.88 billion (£317m) and the EBITDA margin was 32% in 2013 compared with 24.9% in 2012.

Pandora’s net profit increased by 84.7% to DKK2.22 billion (£244m) in 2013 compared with a net profit of DKK1.20 billion (£132m) in 2012.

Its free cash flow was DKK1.95 billion (£215m) in 2013 and Pandora bought back own 3,356,098 shares at a total value of DKK700 million (£77.2m).

The brand said its revenue growth was driven by solid growth across all major regions. The revenue development was driven by strong performance of newly launched products and global network expansion.

FINANCIAL REVIEW
The launch of more frequent and smaller launches of new products in 2013 had positive impact on revenue, with the brand reporting product prices remained stable compared with 2012.

Like-for-like sales-out in its concept stores in Pandora’s four major markets developed positively in all quarters of 2013. The positive development was driven by successful new product launches and generally better execution in stores. About one third of sales-out of the concept stores was generated by products launched within the last 12 months.

With a view to Pandora revenue in Europe, it constituted to 41.7% of total group revenue at a figure of DKK3.76 billion (£415m) corresponding to an increase of 47.9%. Growth was primarily driven by the UK, which Pandora says is the brand’s largest single market in Europe accounting for 12.9% of group revenue, compared with 13.1% in 2012.

Revenue in the UK was DKK1.158 billion (£127m) in 2013, and increased by 33.3% compared to 2012. Growth in the UK was primarily driven by the brand’s newer collections, improved store network and the launch of Pandora’s UK e-commerce site.

The brand reported positive like-for-like sales-out of UK concept stores throughout 2013, with growth in sales was "driven by newness in the stores", with end-consumer demand for new product at a high.

Germany, Pandora’s second largest market in Europe, accounted for 6% of 2013 group revenue, compared with 7.1% in 2012. Revenue in Germany was DKK544 million (£60m) and increased by 16.0% in 2013 compared with 2012.

Revenue in ‘Other Europe’ was increased 70.9% in 2013 compared, the main markets driving the growth being Italy, France and Russia, where like-for-like sales-out continues to be high. The brand also expanded its store network in the three countries, where it opened 74 new concept stores over the year.

The brand also opened e-commerce site in Germany and Austria last year, with France opening in early 2014.

The brand distribution network in Europe decreased by 92 stores in 2013 to a total of 6,414, but the share of branded stores increased compared with 2012 accounting for 39.9% of the total number of stores by the end of 2013 compared with 37.0% in 2012.

CONCEPT STORES AND PRODUCTS
Pandora opened net 205 new concept stores and 107 shop-in-shops during 2013. Underperforming unbranded stores are being closed across all regions in order to improve the quality of revenue and focus on branded store performance and, as a consequence the number of unbranded points of sale decreased 442 stores compared with 2012.

The expansion of the store network in Pandora’s new markets continues, and the network increased with 78 concept stores and 29 shop-in-shops in 2013.

Revenue from charms increased by 26.9% compared with 2012, while revenue from Silver and gold charm bracelets increased by 36.8% compared with 2012. The two categories represented 82.7% of total revenue in 2013 compared with 87.3% of total revenue in 2012. The new Pandora Essence Collection launched in the last quarter of 2013 is included in the charms and the silver and gold charm bracelets categories respectively.

Revenue from Pandora’s rings was DKK550 million (£60.7m), an increase of 28.8% compared with 2012. Pandora said revenue growth in most markets was driven by the improved offering, as well as an increased commercial effort. The category represented 6.1% of total revenue compared with 6.4% in 2012.

Revenue from the brand’s ‘other jewellery’ was DKK1.1 billion (£121m), an increase of 139.9% compared with 2012. The growth was said to have been driven by all subcategories, in particular revenue from other bracelets, which continues to be positively impacted by the silver bangle launched in the first quarter of 2013.

Other jewellery represented 11.2% of total revenue in 2013 compared with 6.3% in 2012.

FINANCIAL GUIDANCE FOR 2014
Following a successful 2013, Pandora anticipates continued growth in 2014. Revenue is expected to increase to more than DKK10 billion (£1.1bn), driven by like-for-like growth in existing stores, expansion of the global store network and further expansion into Pandora’s new markets.

Pandora plans to continue to expand the store network and expects to add more than 175 new concept stores in 2014.

A statement from Pandora chief executive Allan Leighton and its chairman Marcello Bottoli said: "Our new go-to-market strategy [of seven new product drop a year], which ensures freshness in our stores all year round and a portfolio of highly commercial products, resulted in positive like-for-like sales-out to end consumers in all our four main markets in each quarter throughout 2013.

"Growth in 2013 was supported by Pandora’s strategic growth pillars. First and foremost, our focus on increasing the share of revenue from Pandora branded stores continues to pay off with the highest share of branded revenue ever. We reached an important milestone in October with the opening in Paris, France of concept store number 1,000. Secondly, our expansion into new markets and territories continued and markets such as Italy, France and Russia saw significant progress during the year. The online channel also gained a foothold in 2013. Our UK e-store celebrated its one year anniversary in November and Austria and Germany were added during the year.

"Our production facilities in Thailand responded terrifically to the demands of our growth producing a record 79 million pieces of jewellery in 2013. During 2014, we will expand our production capacity, and add an eight production facility building.

"We would very much like to thank our people for their efforts and hard work in 2013 – without them our strong performance would not be possible. With the progress made in 2013, we are well-positioned for further positive development in 2014." 

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