Last year, Pandora’s sales grew by 40 percent, but in the second quarter of this year growth slowed to 20 percent, disappointing investors.
Sales have a solid growth of 25 percent in local currencies, but it is weaker than expected and the disappointment is broadly based on all three regions,” Sydbank analyst Soren Lontoft said, referring to the Americas, EMEA and Asia/Pacific.
He said there were economic challenges in Brazil, which put a damper on the sales growth, and a decrease in number of visitors in stores in Canada.
The Americas and the Europe, Middle East and Africa (EMEA)region are the company’s main revenue generators, making up 81 percent of total revenue.
In the United States, sales growth from the company’s main product, charms, turned flat in the second quarter in local currencies and was slightly negative in Danish crowns, mainly due to a successful launch of its Disney collection a year earlier.
In EMEA, revenue rose 28 percent led by Britain, Italy, France and Germany and the company said sales in Britain were not impacted by the EU-referendum in June.
Asia Pacific was the strongest performer with sales growth in the quarter of 43 percent. Sales growth in China jumped by 200 percent and the company is aiming for 40 stores openings per year over the next few years.
“All regions were supported by our continued focus on product diversification into rings and earrings,” Chief Executive Anders Colding Friis said.
In mid-2015, Pandora joined forces with Oracle Investment in China, the world’s biggest jewellery market, to distribute its jewellery until 2018.
“It has only recently started seriously entering the Chinese market with a good development in newly opened shops,” Lontoft said, adding that its expansion plans suggested the Chinese liked Pandora’s jewellery.
The company, which has nearly tripled revenues since its Copenhagen listing, reported net profit of 1,221 million Danish crowns ($181.89 million), just short of analysts’ estimates of 1,233 million in a Reuters poll. It stuck to its 2016 profit guidance.
Pandora increased capital expenditure guidance to 1.2 billion crowns from 1 billion. It expects to add more than 300 new concept stores in 2016, up from more than 275. It has 1,920 Pandora stores.
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