• Like-for-Like Growth: 7% for the full year, 6% in Q4.
• Gross Margin: Approximately 80% for the year.
• EBIT Margin: Just over 25%, in line with guidance.
• EPS Growth: 17% for the year.
• Revenue Growth from Network Expansion: 5% contribution in Q4.
• Core Segment Growth: 2% like-for-like growth in 2023 and 2024.
• Fuel with More Segment Growth: 22% like-for-like growth in 2024.
• US Market Growth: 9% like-for-like growth in Q4.
• European Market Performance: 0% like-for-like growth in key markets, 4% in broader Europe.
• China Market Performance: -10% like-for-like growth.
• Store Network Expansion: 75 to 100 total openings targeted for 2025.
• Free Cash Flow Generation: Significant, with a new 4 billion Krona share buyback program.

• Warning! GuruFocus has detected 5 Warning Signs with BOM:540403.

Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Pandora AS (PNDZF) achieved a 7% like-for-like growth for the full year and 6% in Q4, demonstrating the robustness of their Phoenix strategy.
• The company maintained a strong gross margin of around 80%, indicating a solid business model.
• Pandora AS (PNDZF) reported a 17% EPS growth for the year, showcasing strong earnings performance.
• The company achieved significant milestones in sustainability, crafting all jewelry with 100% recycled silver and gold, and operating entirely on renewable electricity.
• Pandora AS (PNDZF) plans to continue investing in brand development and expects organic growth of 7-8% in 2025 despite challenging market conditions.

Negative Points

• Pandora AS (PNDZF) faces significant external cost headwinds from commodity prices, impacting their EBIT margin guidance.
• The company observed intense promotional behavior from competitors, which could pressure their pricing strategy.
• Performance in key European markets like France and Italy was challenging, with like-for-like sales declining.
• The Chinese market remains difficult, with a 10% decline in like-for-like growth and plans to close underperforming stores.
• Pandora AS (PNDZF) anticipates a challenging macroeconomic environment in 2025, which could impact consumer spending and growth.

Q & A Highlights

Q: Could you elaborate on the promotional environment and your comfort with implementing price increases in such a competitive backdrop, especially in European markets like France, Italy, and the UK? A: We've observed a hotter promotional environment across all countries, with more days of promotion and deeper discounting. Despite this, our pricing actions remain unchanged. We introduced a 5% price increase in early October and feel confident about the elasticity being around minus one. In European markets, the context varies. In France, a different media model post-Mother's Day was a mistake, impacting Q4 momentum. In Italy, we've lost some momentum on the core, and in the UK, despite a minus three performance, we believe we're still gaining market share.

Q: Regarding the margin commentary beyond 2026, is there potential for further margin expansion from the 26 to 27% targets? Also, what are your expectations for the Essence category this year? A: We won't comment beyond 2026 as we have enough on our plate to reach those targets. However, the cost program rolling on should provide structural benefits. For the Essence category, while we don't have specific volumetric targets, we aim for it to reach a critical mass within 3 to 5 years, ideally around 5% of our business.

Q: If the US were to implement tariffs on European or Danish imports, how would that impact Pandora, given your production is in Thailand? Also, could you explain the margin bridge for 2026? A: A 10% tariff on imports to the US from Thailand would have an annual impact of around 350 to 400 million Danish Krone. This assumes the jewelry category is included. Regarding the margin bridge for 2026, we are mitigating a 270 basis point headwind from commodity prices and FX through pricing and cost savings. We aim to reach the low end of our 26 to 27% target.

Q: Can you provide insights into the regional building blocks for your 2025 guidance, particularly for the US market? Also, when will you provide more details on the cost-saving program? A: We expect the regional mix to be similar to Q4, with the US continuing as a growth driver, pending macroeconomic conditions. We will provide more details on the cost-saving program by the Q1 announcement, with further clarity expected in the following quarter.

Q: What are the key learnings from the rollout of the lab-grown Diamond Collection, and why is the rollout being slowed? Also, could you comment on current trading, particularly in the US? A: The rollout of the lab-grown Diamond Collection highlighted the need for base consumer awareness, which was lacking in markets like Brazil and Mexico. We are focusing on the US, Canada, Australia, and the UK for now. Current trading shows no significant discrepancies, with the US remaining strong and some challenges persisting in European markets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.