Pandora Q3 profits near triple as non-charms soar

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Charms revenue up by 93% as non-charm jewellery rockets 345%.

Pandora’s third-quarter profit nearly tripled, driven by growth across all regions and jewellery categories, according to the Danish brand.

The charm offensive continued to roll on with sales of Pandora charms up by 94 percent. Despite high precious metal prices, revenue from silver and gold charms soared 84 percent in the quarter.

Pandora’s other jewellery sectors, such as its high-end Love Pods collection, also fared well showing an increase in sales of 345 percent. The non-charm jewellery lines accounted for 20 percent of revenues in the quarter, up from 10 percent in the same quarter in 2009. When Pandora floated last month analysts had questioned whether the brand could diversify beyond the charm fad so these figures will be welcome news for early investors. 

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Total revenues grew by 117 percent year on year to DKK 1.79 billion (£204.5 million). The best geographical market for the brand in the quarter was Europe where revenue showed an uplift of 191 percent, representing 48 percent of total sales at the jewellery group.

The US market showed a year-on-year rise of 93 percent, representing 41 percent of total sales. The Asia-Pacific region also grew by 30 percent for the brand and now represents 11 percent of total sales.

Net profit at Pandora rose 280 percent to DKK 581 million (£66.4 million) in the third quarter. Gross margin at the group in the quarter was 73 percent, up from 66 percent in the third quarter of 2009 when the gross margin was impacted by an unrealised gain on raw materials derivatives of DKK 3 million (£342,760) and a negative one‐off effect from taking over the company’s Australian distributor of DKK 66 million (£7.5 million).

EBITDA increased by 161 percent to DKK 807 million (£92.2 million) resulting in an EBITDA margin of 45 percent – up from 38 percent in the same quarter last year. EBIT increased by 196 percent to DKK 743 million (£84.9 million) resulting in an EBIT margin of 42 percent, negatively impacted by amortisation of DKK 46 million (£5.3 million) related to acquired distribution rights in Pandora Jewellery Central Western Europe.

Pandora chief executive Mikkel Vendelin Olesen said: “Our strong performance in the third quarter of 2010 is a result of our continued success in upgrading our existing customers, thereby increasing the share of branded sales as well as roll‐out of new stores around the world – particularly in Italy.

“We have seen continued strong momentum in the revenue development from our charms and silver and gold charm bracelets as well as excellent performance from our other jewellery collections. However, it is important to notice that our Q3 also is positively impacted by early Christmas orders from retailers.”

Pandora said that it expects revenue for its second half of 2010 to be higher than revenue in the first half and its EBITDA margin is expected to remain above 40 percent. It added that is expects revenue of approximately DKK 6.2 billion (£708.1 million) for the financial year 2010. Including an IPO‐bonus to all the employees, EBITDA is expected to be approximately DKK 2.5 billion (£285.6 million).

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