Shares in Pandora, the Danish jeweler, surged to the top of the Stoxx 600 Europe index following the company's well-received strategic plan and new financial targets. In response to the challenges posed by the Covid-19 pandemic, Pandora initiated a turnaround program in 2021 aimed at achieving sustainable and profitable revenue growth. The plan involved investing in strengthening the brand's desirability, enhancing digital capabilities, expanding the store network, and transitioning to using exclusively laboratory-made diamonds.
The success of this strategy is evident in the doubling of Pandora's shares over the past year. This growth can be attributed to the introduction of new collections and the expansion of their market presence through a wider network.
Having completed the initial phase of the plan, Pandora now intends to increase investments significantly to further accelerate revenue growth, expand operating margins, and generate robust cash returns. The company aims to solidify its position in the affordable luxury sector by strengthening its store network and increasing marketing efforts.
As part of their announcement, Pandora outlined their targets for future growth. They aim for organic growth between 7% and 9% from 2023 to 2026. Additionally, they project an earnings before interest and tax margin of 26% to 27% by 2026, with revenues ranging from 34 billion to 36 billion Danish kroner ($4.79 billion-$5.07 billion) in 2026.
Frederick Wild, an analyst at Jefferies, commented on Pandora's announcement, stating that it surpassed expectations and cleared a high hurdle.
Pandora expects its EBIT to reach between DKK8.8 billion and DKK9.7 billion by 2026. Furthermore, the company plans to return between DKK14 billion and DKK17 billion in cash to shareholders during the period of 2024 to 2026.
Based on preliminary calculations, Wild predicts a potential 15% increase in consensus earnings expectations for 2025.
As of 0924 GMT, Pandora shares were trading at DKK773.40, marking a 9.4% increase.
