Pandora shares rise after jeweler confirms FY guidance despite recession fears

By Scott Kanowsky 

Investing.com -- Copenhagen-listed shares in Pandora A/S (CSE:PNDORA) jumped by more than 8% on Tuesday after the Danish jeweler backed its full-year guidance despite flagging both macroeconomic and geopolitical uncertainties.

The group confirmed its 2022 outlook of 4% - 6% organic growth, along with earnings before interest and tax margin of between 25% - 25.5%.

Trading in the fourth quarter is also on track to reach the "upper end of the implied guidance range" thanks to a decision to raise prices by an average of 4% and rein in spending on advertising. Analysts at Jefferies noted that the final three-month period of Pandora's fiscal year now look "increasingly de-risked."

"With strong financials and our position in affordable gifting, we are well equipped to weather a potential recession and seize relevant investment opportunities, for example to expand our store network," said president and chief executive officer Alexander Lacik in a statement.

He added that Pandora is also taking "precautionary measures" to ensure the company's profitability if these circumstances change.

The Jefferies analysts said third-quarter results were also buoyed by a "surprisingly resilient sales environment," with revenue at Pandora's key U.S. market growing organically by 56% compared to pre-pandemic levels.

On a year-on-year basis, quarterly sales in the U.S. dropped by 3%. Pandora said this decline stemmed from a tough comparison to the same timeframe in 2021, when Americans were given a financial boost from COVID-era stimulus checks.

Outside of the U.S., Pandora's units in Australia and the U.K. posted double-digit organic growth, while Germany remained "healthy." However, France was hit by lower promotional activity and Italy saw some signs of weakening consumer sentiment.

Analysts at RBC called these regional returns "uneven."

Meanwhile, Pandora said it will distribute DKK 5.3 billion (DKK 1 = $0.1345) to its shareholders in 2022, which is equal to about 13% of its market capitalization.