Why Pandora forecasts lower growth and profit margins in 2025?

Pandora, the renowned jewelry company celebrated for its customizable charm bracelets, recently released its financial results for the crucial holiday shopping quarter. 

The Danish jewellery maker, announced on Wednesday that it anticipates lower growth and profit margins this year compared to last.

The company attributes this projection to sluggish demand in Europe and a slowdown in the previously booming German market, according to a Reuters report. 

In the fourth quarter, Pandora experienced a significant increase in operating profit, reaching 4.15 billion Danish crowns ($578.49 million).

This result surpassed the company’s performance in the same period the previous year, when it reported an operating profit of 3.67 billion crowns.

Furthermore, Pandora’s fourth-quarter operating profit exceeded the average expectation of analysts, who had predicted a profit of 4.10 billion crowns based on a poll conducted by Pandora, Reuters reported. 

This positive outcome can be attributed, in part, to Pandora’s operating profit margin of 34.7%, which slightly surpassed the average forecast of analysts, according to the report.

Pandora’s shares recently reached a record high, and the company also initiated a new share buy-back program for up to 4 billion Danish crowns.  

The company anticipates its operating profit margin to decrease to approximately 24.5% in 2025 from 25.2% last year.

Black Friday discounts weigh on profitability

The company announced that its operating profit aligned with market expectations. However, Pandora also revealed that the widespread Black Friday discounts had a notable impact on its sales and profitability.

While the deep discounts offered during Black Friday boosted overall sales volume, they also shifted a larger proportion of sales towards the discounted items. 

This shift towards lower-margin sales had a slight negative effect on the company’s overall profitability for the quarter. 

Despite this impact, Pandora’s overall operating profit remained in line with what analysts and investors had anticipated.

The company forecasts 7-8% organic growth in 2025. The world’s biggest jewellery company by volume exceeded its organic growth guidance of 11-12% in 2024, achieving 13% growth, according to the report.

Pandora’s sales increases

Pandora’s overall comparable sales grew 6%, driven by a 9% increase in the US.  

Comparable sales in Germany grew 28%, a slower pace than the 42% growth experienced in the third quarter. France and Italy both saw revenue declines.

“We had a very strong fourth quarter in the US and Canada,” Alexander Lacik, CEO of Pandora told Reuters.

It’s a stronger consumer demand and sentiment in the US than we see in Europe, and one would probably think that that’s going to continue into this year.

Pandora disclosed that their financial performance in Italy and France was adversely affected by a combination of factors. 

These included prevailing economic challenges in both countries, such as slow economic growth, high unemployment rates, or decreased consumer spending. 

Additionally, Pandora faced an “intense promotional environment,” characterised by fierce competition among retailers to offer lower prices and discounts on products.

This competitive pressure also likely squeezed Pandora’s profit margins and made it more challenging to maintain sales volumes at previous levels.

I

The post Why Pandora forecasts lower growth and profit margins in 2025? appeared first on Invezz