Pandora

Pandora traveling the world. But, unlike the Pandora’s box of Greek mythology, which contained all the evils that have poured into the world, the Danish jewelery brand of the same name distributes more and more bracelets and rings, necklaces and earrings on the globe. The economic results of the second quarter 2023 indicate an organic growth of 5%. Analyzing the result, it emerges that the growth on a like-for-like basis is +2%, while the +4% is due to the expansion of the network, i.e. the opening of new points of sale.

Business is not going the same way everywhere: in Europe sales are substantially the same as last year and in the United States Pandora has to resign itself to -4%, although it is improving. What is strong is the rest of the world, growing by +12%. The financial data also indicate a gross margin up to 78.1%, an increase compared to the corresponding period of 2022, but an Ebit (gross profit) of 20.2%, down by almost 2% compared to the previous year, due to a redistribution of costs and investments foreseen for growth. The company expects that at the end of the year it will be broadly in line with that of 2022.

The Danish company has released the data together with the guidelines of its strategy. Phoenix is the name given to the journey to make Pandora a global brand of affordable jewelry. The new jewels, according to the management, have a positive response. In particular, the geometric mesh bracelet is in good demand and supports the resilience of Moments, which neither grows nor decreases. Other platforms continue to post solid growth, with Pandora Me posting another double-digit quarter (+17%) and Timeless +7% LFL. Also arriving are new collections of diamonds produced in the laboratory. For the whole of 2023, Pandora expects organic growth between +2% and +5%, with EBIT at around 25%.

Pandora is the most popular jewelry brand in the world. Everyone has worn or at least seen a Pandora jewelry up close. In 2022 Pandora sold three jewels per second. Yet not everyone knows the history of this company. For example, did you know that Pandora jewelry, which is a Danish company, is made in Thailand? And that its founder is a maniac of confidentiality, who doesn’t give interviews or even let himself be photographed? So much so that he bought a house in Singapore.

Pandora is the world’s largest jewelery brand with a turnover of DKK 26.5 billion in 2022 (approximately €3.5 billion or US$3.8 billion) and a retail network of approximately 2,500 stores, with 600 million customers on online stores alone, and more than 32,000 employees. But it was born from a simple family business. To be precise, by a couple: the Copenhagen goldsmith Per Algot Enevoldsen and his wife Winnie. After opening a small jewelry store in 1979 in Copenhagen, the two often traveled to Thailand to buy materials and jewelry to import. But, before Pandora became Pandora, the couple focused on wholesale. Indeed, in 1987 the retail was stopped.

After hiring a dozen designers, production was brought entirely to Thailand in 1989, where production costs were, and still are, much lower. The two, Per and Winnie Enevoldsen, moved to live in Bangkok with their son Christian, and were supplying affordable jewelery for the European mass market. The company has grown to include an assortment of rings, necklaces, earrings and watches, but has currently stopped producing them. One of the features of Pandora is also to protect some solutions, such as the metal alloys used, with a patent. The success of the bracelets with charms convinced the couple to focus on direct sales in the 2000s.

The bracelet with charms to compose and customize was the key to success. It was first launched in the Danish market. The couple first came up with the idea of creating a piece of jewelry with interchangeable charms that can be added and removed according to the wearer’s preference. The success convinced Pandora to focus on foreign markets, starting with Germany and the United States, then Australia in 2004. In 2005, the Danish company opened a large-scale artisanal facility in Gemopolis, the jewelery industry area in Bangkok. In 2017 it opened a factory in Lamphun, near Chiang Mai, in northern Thailand, and in 2018 another Triple A production site also in Gemopolis.

The Lamphun site is a real citadel. It employs over a thousand employees, almost all very young, who wear a burgundy uniform. Pregnant women add light blue aprons. There is also a spirit house, a small votive altar to the Buddha where employees can recite a prayer in the morning before going to work, but a room dedicated to Muslim prayers has also been provided. Not only. In addition to the canteen, there is a grocery store, a nursery, an infirmary, and even a DJ who creates music for the employees on the console and a digital space where programs are produced. In Thailand Pandora produces the jewels, but they are designed in Italy and Denmark.

Since its foundation almost a quarter of a century ago, Pandora has grown to become listed on the stock exchange, also thanks to the idea of creating a widespread chain of franchised stores. In 2008, the private equity fund Axcel acquired 60% of the company and two years later, in 2010, Pandora was listed on the Copenhagen Stock Exchange. The founders and their son Christian are now based in Singapore, where they have purchased two luxurious apartments in the Orchard area, in a condominium on Boulevard Vue. Facilities include a swimming pool, jacuzzi, spa suite with heated stone bed and sauna.

How to recognize the real Pandora jewels?
As with all successful things, there are those who copy. And there are also those who sell fake Pandora jewels. How to recognize the real Pandora jewels? The company itself explains it: all sterling silver jewelery is stamped with the capital letter S for silver, followed by the declared purity in parts of pure silver per thousand: S925 (92.5% pure silver). Additionally, all Pandora gold jewelry is stamped with a capital G for gold, followed by the purity, expressed in parts of pure gold per thousand in the gold alloy: 14k, G585 (i.e. 58.5% pure gold) or 18k: G750 (75% pure gold). However, the quality marks on Pandora jewelry manufactured before June 2011 only contain numbers, not letters.
The standard trademark on Pandora jewelry is ALE, which stands for Algot Enevoldsen, the father of the brand’s founder, Per Enevoldsen. The letters ALE are stamped on the jewels, except on some of the smaller pieces. However, some countries require other specific stamps for jewelry and Pandora obviously complies with the requirements by adding additional stamps.

Why is it called Pandora?
According to Greek mythology Pandora was the first woman. Zeus, the king of the gods, commissioned Hephaestus (a god of fire) to fashion a woman from the earth, upon whom the gods bestowed their choicest gifts. Pandora thus had a box with all sorts of misery and evil inside. When the jar was opened, out of curiosity to see what was inside, evils flew to Earth, except hope.

Monitoring Pandora accounts also means keeping an eye on the trend of the entire jewelry market. Pandora is a global company and records, beyond its own managerial choices, also the trends that cross the precious sector. The Danish group, according to the financial results for the first quarter of 2023, seems to be going through a phase of slow growth. From what? From the problems of the world economy, it is the response of the company, which defines its performance as positive, but resilient. The increase in the cost of raw materials, especially gold and silver, is being felt. And in an environment of inflation it is difficult to make sales of mid-range jewels shine.

Specifically, organic growth in the first quarter of the year was 1%. But if the assets are compared with those of the corresponding period, on a like-for-like basis, the balance sheet indicates 0%. That is, the hands have remained steady: growth was zero in key European markets, the United States dropped to -7% (as in the fourth quarter of 2022), but all this was offset by the remaining markets, where Pandora grew by 12%. The result is also mitigated by the expansion of the network, which has favored a growth of 3%, with strong margins.

Speaking of margins: the gross result tends to rise and reaches 77.5%, a slight improvement. But the Ebit margin (gross profit) is at 21.5%, down by 1.5 percentage points compared to the corresponding quarter of 2022 due, says the company, to the accounting scan between revenues and costs. In the end, the 2023 Ebit will be substantially in line with that of 2022, thanks to a policy of price adjustments, which will be increased further. The company remains financially healthy and, like many other listed companies, is planning a buy-back to support the stock.

What are Pandora’s plans? The company says it has further solidified the Moment collection’s position as a global leader in the jewelry product category with the launch of a new geometric link bracelet. The new bracelet has seen strong demand in most geographic areas. Investments in other platforms (jewelry lines) have recorded results that are defined as encouraging. Timeless had a strong quarter and growth of 11%, while Pandora Me was up 21%. Diamonds by Pandora is proceeding as planned. That is, not much is known yet. The company is also preparing for a relaunch in China, in the wake of the post-covid crisis.

We started 2023 well with resilient growth and solid margins. Our investments in uplifting the brand are paying off, with good performance in our flagship Moments business and strong results from our new platforms, Timeless and Pandora ME. It is clear that we are increasingly the preferred jewelery brand, especially on gift occasions. The macroeconomic outlook remains uncertain, but we are confident in our ability to adapt and thrive, as we have demonstrated in recent quarters.
Alexander Lacik, president and chief executive officer of Pandora