Pandora (0NQC.L) reported its Q2 2025 results on Friday, maintaining its full-year guidance despite macroeconomic headwinds, while noting a slower start to Q3.
Organic growth landed at a solid 8% in the second quarter, driven by network expansion and strong performance in the US. However, July's like-for-like (LFL) growth slowed to approximately 2% due to a soft end-of-season sale.
Price Targets
Revenue for Q2 2025 reached DKK 7.075 billion, up from DKK 6.771 billion in Q2 2024. This translates to an 8% organic growth rate, fueled by a 3% increase in LFL sales and a 5% contribution from network expansion. The US market continues to be a strong performer, with LFL growth of 8%.
Pandora's gross margin remained robust at 79.3%, although it experienced a 170 basis point headwind from foreign exchange, commodities, and tariffs. The company offset some of these challenges through pricing strategies and cost efficiencies.
Operating profit (EBIT) for the quarter was DKK 1.287 billion, resulting in an EBIT margin of 18.2%. This represents a 160 basis point year-over-year decline, partly attributed to a 230 basis point impact from external economic factors.
The company reaffirmed its full-year 2025 guidance, projecting organic growth of 7-8% and an EBIT margin of around 24%. This guidance incorporates an estimated 60 basis point headwind from current tariff levels.
The company said current trading in July, however, indicates a slowdown in LFL growth to around 2%, attributed to a weaker-than-anticipated end-of-season sale and the timing of product launches.
Despite the challenges, Pandora's management remains optimistic about achieving its full-year targets. The company anticipates a boost from upcoming product launches, new marketing campaigns, and its ability to adapt to changing market conditions.
The launch of Talisman/Minis at the end of Q3 2025 is expected to stimulate sales in the coming months.
Driver Breakdown
- US Strength: Continued strong LFL growth in the US market is a key driver.
- Network Expansion: Adding new stores contributes significantly to overall growth.
- Cost Management: Pricing strategies and cost efficiencies help offset margin pressures.
Alexander Lacik, President and CEO of Pandora, stated, “In these turbulent times, we are satisfied with yet another quarter of high single-digit organic growth and strong profitability. The results show that our brand and unique storytelling proposition continue to attract more consumers and that our global footprint enables us to balance ups and downs across the markets.
“Despite the macroeconomic challenges to top and bottom line, we are confident that we will deliver on our targets for the year driven by an exciting product pipeline, new marketing campaigns and operational agility.”
Analyst Summary: Bull and Bear Cases
Bull Case:
- Continued strong LFL growth in the US market.
- Network expansion is a significant contributor to organic growth.
- Management remains confident in achieving full-year targets, anticipating a boost from new product launches and marketing.
- Proactive pricing and cost management are helping to offset margin pressures.
Bear Case:
- July's like-for-like growth slowed significantly to approximately 2% due to a weak end-of-season sale.
- EBIT margin declined by 160 basis points year-over-year, impacted by external economic factors.
- Gross margin faced a 170 basis point headwind from foreign exchange, commodities, and tariffs.
- Full-year guidance incorporates an estimated headwind from current tariff levels.
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