Pandora Raises 2021 Outlook, Focuses on China

RAPAPORT... Pandora has increased its forecast for the full year amid strong US and online demand at the start of 2021.The Danish jeweler now expects revenue for the year to increase more than 12% compared to 2020, adjusted from its initial prediction of more than 8%, it said Tuesday. The upgrade is "driven by the US stimulus packages, as well as stronger underlying performance," the company noted.Revenue rose 8% year on year to DKK 4.5 billion ($725.7 million) in the first quarter, as sales in the US jumped 64% in local currency terms to DKK 1.39 billion ($224.3 million). Profit came to DKK 628 million ($101.3 million), compared to a loss of DKK 24 million ($3.9 million) the previous year. Online sales increased 136% compared with the same period of 2020 and more than 200% versus 2019.However, Covid-19 is still creating uncertainty, Pandora cautioned. The new guidance assumes that 20% to 25% of stores will be closed during the first half of 2021 and 5% to 10% in the second half, the company added.Meanwhile, the retailer intends to reposition its business in China after an "unsatisfactory" performance in the first quarter, it explained. Although revenue in the country rose 35% year on year to DKK 281 million ($45.3 million), it accounted for only 6% of global sales during the period."The core issue in China is that Pandora is perceived as a mainstream jewelry brand," management noted. "Consumer perception must be changed to focus on Pandora's key brand strengths."Lab-grown moveThe news comes alongside the group's high-profile launch of Pandora Brilliance, its first line of lab-grown diamond jewelry, which uses synthetics sourced from Europe and North America. Pandora will also cease using mined diamonds - part of a new business strategy called Phoenix that focuses on "untapped opportunities" in its core business, the jeweler said.The company will introduce the line in the UK from May 6 because the country is its second-biggest market and the Pandora brand is strong there, a company spokesperson told Rapaport News Tuesday. The collection will debut in key global centers in 2022 once the jeweler has evaluated its performance in British stores, it explained.This is the first time diamonds of the natural or man-made variety will feature prominently in Pandora jewelry. The company used mined diamonds in about 50,000 of the 85 million pieces it created in 2020, the spokesperson explained. It expects to integrate synthetics more regularly in the future. "[Lab-grown diamonds] fit the Pandora brand: to create desirable, affordable jewelry," the spokesperson added. "Our business has stabilized after two years of turnaround. One of our objectives is now to take Pandora's core idea of self-expression and collectability, and try to apply it in new product concepts. Pandora Brilliance isn't a diversion from who we are, but instead an extension."Image: A Pandora store in Shanghai, China. (Shutterstock)