Pandora shares sparkle after jeweller raises growth targets

By Helen Reid

LONDON (Reuters) -Jewellery retailer Pandora raised its growth targets on Thursday, saying investments in the brand and store network were paying off, while sounding a note of caution on China.

Pandora's shares jumped 10.7% after it gave an updated outlook ahead of a capital markets day in London and said it would enter India and expand in other Asian markets.

In its biggest market, the United States, Pandora has been gaining share even as the overall jewellery market has shrunk, CEO Alexander Lacik told Reuters in an interview.

"I'm not saying we are unaffected, but we are softening the blow by gaining market share," Lacik said.

Consumers everywhere have been curbing spending on non-essentials as surging inflation squeezes disposable incomes.

The U.S. accounted for 30% of Pandora's revenue in 2022, with Britian in second place with 14%.

The "affordable luxury" brand, which sells jewellery from silver charm bracelets to lab-grown diamonds, is now targeting a compound annual growth rate of 7-9% for the 2023-2026 period and an EBIT margin of 26-27% by 2026.

It aims for a like-for-like compound annual growth rate of 4-6%, up from 3-5%, and a higher contribution from the expansion of its store network of around 3%, up from 1-2%.

Pandora's shares are up 60% this year as investors bet on the success of its "Phoenix" strategy launched in 2021 which has seen it increase marketing spending and open more stores.

In China, which accounted for 3% of its revenue in 2022, Pandora said it still sees long-term growth potential but "building a sizeable business there will be a longer journey than originally anticipated".

In 2021 Pandora said it aimed to triple revenue in China from 2019 levels.

However, a property slump, weak consumer spending and high debt levels are weighing on China's economy, hurting many Western brands and retailers exposed to the country.

Pandora, which aims to open between 225 and 275 new concept stores in 2024-2026, said it would enter the Indian market and expand in Japan and South Korea where it has a small presence.

"As China has gotten a bit softer a lot of the luxury brands have turned their attention to India," said Lacik, adding that India is an "enormous" jewellery market but with a still relatively low jewellery brand presence.

Overall the company targets revenue of 34 billion-36 billion Danish krone ($4.79 billion-$5.08 billion) in 2026, up from around 27 billion krone expected for 2023.

($1 = 7.0908 Danish crowns)

(Reporting by Helen Reid; Editing by Jacqueline Wong, Susan Fenton and Alexander Smith)