Pandora, the world’s leading jewelry manufacturer, faced a significant setback on Monday as its stock price took a hit due to concerns over weak sales growth in its own stores during the third quarter. Although the Danish company raised its full-year outlook, highlighting strong sales in the United States, investors were disappointed to learn that sales at Pandora stores only grew by 5% in Q3, far below the anticipated 14% growth predicted by analysts. As a result, Pandora’s shares dropped by 4.8% in early trading.

This decline came as a surprise, especially considering Pandora’s stock had experienced a remarkable 40% surge this year, with the company reporting sales surpassing pre-pandemic levels following the reopening of shops after lockdowns. Analyst Per Fogh from Sydbank expressed his disappointment at the slow growth recorded in the third quarter.

Despite the underwhelming performance at its own stores, Pandora was quick to mention that it continues to witness strong sales in the United States, its largest market. This boost in sales can be attributed to the significant government stimulus measures and the rising number of COVID-19 vaccinations, effectively stimulating consumer spending on goods and services.

In light of these factors, Pandora has adjusted its full-year outlook, now anticipating organic sales growth of 18-20%, up from the previous forecast of 16-18%. Furthermore, it expects an earnings before interest and tax (EBIT) margin of 24-24.5%, surpassing the previously projected 23-24%. However, these figures still fall slightly below the average forecast of 24.6% from analysts compiled last month. Pandora also acknowledged that the unpredictability of COVID-19 and the unusually high growth in the United States have contributed to increased uncertainty around the guidance provided.

Despite concerns over in-store sales, Pandora’s overall performance in Q3 exceeded expectations. The company reported Q3 sales of 4.73 billion Danish crowns ($734.92 million), surpassing the anticipated 4.67 billion as per the poll conducted by the company. Additionally, Pandora’s quarterly EBIT reached 957 million crowns, exceeding the projected 917 million, resulting in an EBIT margin of 20.2%.

These positive results can be attributed to the strong performance in the United States and the gradual recovery observed in Europe as COVID-19 restrictions were eased. The company is set to release its full third-quarter earnings report on November 3.

Despite the disappointing display in sales growth at its own stores, Pandora remains optimistic about its future prospects. The strong performance in the United States, coupled with the positive outlook for organic sales growth and EBIT margin, indicate that the company is well-positioned for continued success. As the global economy recovers from the impact of the pandemic, Pandora stands to benefit from the increasing consumer demand for high-quality jewelry.

Useful links:
1. Pandora Official Website
2. Reuters: Financial News