UK growth drives Pandora’s European Q2 revenue


Brand’s second quarter UK sales up 11.6%, European revenue up 59.3%.

The UK lead Pandora’s European revenue in Q2 2013 with concept store sales up 11.6%, according to the brand’s second quarter interim report released today.

The jewellery brand described a strong performance across all regions, with group Q2 revenue totalling DKK 1.93 billion (£223m), an increase of 53.3% compared to Q2 2012.

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Pandora’s European revenue was up 59.3% in Q2, primarily driven by the UK, with the Americas up by 52.1% and 43.5% growth recorded in the Asia Pacific region 43.5%.

Pandora chief executive Allan Leighton said: "As we announced on July 30, when we increased the financial guidance for 2013, the solid performance reported for Q1 2013 has continued across all major markets in the second quarter, with strong sales from newly launched products, high replenishment rates and healthy sell-out from the Concept stores.

"Our strategy of delivering affordable luxury is becoming increasingly relevant, and although there are still many areas in which we can improve we are pleased with our progress."

Sales volumes increased by 40% compared to Q2 2012 and all geographical regions showed double digit growth, which was said to be primarily driven by an increase in sales of newly-launched products, continued high replenishment rates as well as new store openings.

Pandora said that its new products drop structure initiated in the second half of 2012, introducing seven annual drops instead of two, also had a positive effect on revenue.

Based on data from its concept stores that have been operating for 12 months or more, like-for-like sales-out in Pandora’s four major markets have experienced a positive development in the second quarter. This development is due to the success of newly launched products and generally better execution in stores.

Revenue in Europe was DKK 642 million (£74m) for the quarter, an increase of 59.3% or 59.8% in local currency compared to Q2 2012. Growth was primarily driven by the UK and Pandora’s ‘Other Europe’ region, which includes Italy, France and Russia.

Like-for-like sales-out in Q2 2013, based on concept stores in the UK that have been operating for 12 months or more increased by 11.6% compared to Q2 2012. The strong performance is based on continued high end-consumer demand for newly launched products.

Second quarter revenue in the UK (accounting for 9.2% of group revenue) was DKK 178 million (£20.5m), an increase of 74.5% or 81.8% in local currency compared to the same quarter last year.

Growth was primarily driven by a positive reception to Pandora’s newer collections and high replenishment rates. However, Pandora notes that the comparable figure for Q2 2012 was impacted by its stock balancing campaign.

Pandora says it is continuing to develop its global retail network with a focus on branded distribution channels. In Q2 2013 Pandora opened 70 new concept stores and shop-in-shops, with the closure of underperforming unbranded stores in order to improve the quality of revenue and focus on branded store performance.

Unbranded stores in direct distribution decreased 14.3% to 4,486 at the end of Q2 2013 compared to 5,233 at the end of Q2 2012. In the same period, the number of branded points of sale in direct distribution increased by 658 globally. The total number of points of sale was 10,337, an increase of 94 compared to Q1 2013.

The revenue distribution between product categories in Q2 2012 were affected by the aforementioned stock balancing campaign. In Q2 2013 Pandora’s charms remained its strongest selling sector, with charm sales up 44.3% compared to last year, totalling DKK 1.4 billion (£162m). Revenue from silver and gold charm bracelets increased by 31% compared to Q2 2012. The two categories represented 83.2% of total revenue in Q2 2013 compared to 89.5% in Q2 2012.

Revenue from rings also gained strength, growing from a value of DKK 77 million (£8.9m) in Q2 2012 to DKK 91 million (£10.5m) in 2013, up 18.2%, with growth driven by the brand’s improved commercial offering.

Revenue from the brand’s other jewellery categories was DKK 233 million (£27m), an increase of 323.6% compared to Q2 2012. Growth was primarily driven by other bracelets, which were positively affected by campaigns on leather bracelets, as well as the successful launch of a silver bangle. Other jewellery represented 12.1% of total revenue in Q2 2013 compared to 4.4% in Q2 2012.

The company’s EBITDA increased by 140.9% to DKK 530 million (£61.1m) for the quarter, corresponding to an EBITDA margin of 27.4%. Pandora’s net profit for the quarter was DKK 431 million (£49.7m), compared to a net profit of DKK 63 million (£7.3m) in Q2 2012.

The brand bought back 1,149,683 shares in Q2 at a total value of DKK 210 million (£24.2m) as part of its on-going plan to buy back shares totalling DKK 700 million (£80.6m).

Looking ahead, Pandora expects revenue for 2013 to be approximately DKK 8 billion (£922m) and expects an EBITDA margin of approximately 27%.

The brand also expects to open about 175 concept stores by the year-end.

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