Brand strength and strong product offering combine to deliver robust growth. Q2 2023 organic growth accelerates to 5%, comprising of LFL (like-for-like) growth of +2% and network expansion of +4%. LFL growth in key markets in Europe broadly stable at 0%, US sees improvement to -4% LFL growth and Rest of Pandora sees ongoing strong growth at +12% LFL.
Gross margins continue upward trend witnessed over past years and reach 78.1%, +170bp vs. Q2 2022. As expected, EBIT margin at 20.2% was -190bp YoY reflecting A.O. cost phasing and planned investments into growth. Full-year EBIT margin to be broadly in line with last year.
Phoenix strategy continues to elevate Pandora as the go-to affordable global jewellery brand. Investments across the brand, products, store execution, online and not least the organisation are paying off. New unique product designs resonating with consumers; iconic studded bracelet sees good demand and underpins resilience in Moments with LFL at 0%.
Other platforms continue to see solid growth with Pandora ME delivering another double-digit LFL quarter at +17% and Timeless delivering +7% LFL. LFL in Pandora owned stores continued to be strong (+4% in Q2 2023) and +9pp above partner stores reflecting improvements in our store execution across A.O. merchandising, inventory availability, staffing.
Pandora continues its mission to democratise diamonds. In late August, Pandora launches three new lab-grown diamonds collections and expands offering to Australia. Mexico and Brazil to follow in October. Following three years of Covid-19 disruption in China, Pandora took the initial steps in the relaunch of the brand in mid-July. While still very early days on the journey, Pandora has seen some pick-up in traffic.
At 2023 outlook and current trading front, Pandora reflects the solid performance YTD, the organic growth guidance range is updated to +2% to +5% (previously -2% to +3%). The EBIT margin guidance remains unchanged at around 25%.
Current trading in Q3 so far is solid with LFL growth at mid-single digit levels. This has been driven by a broad-based pick up in traffic during the holiday season. Pandora expects traffic to ease off after the holiday season. Nonetheless, the underlying trading trends are encouraging. Pandora remains mindful of the macroeconomic climate.
Alexander Lacik, President and CEO of Pandora, says, “We are pleased with delivering yet another solid quarter against a backdrop of macroeconomic uncertainty. We have consistently demonstrated that the foundations built under the Phoenix strategy are yielding positive results.
We will continue to push ahead with our strategic initiatives for the second half of 2023 and beyond, including the expansion of our assortment in Diamonds and the ongoing roll-out of our new store concept, EVOKE 2.0. Given our solid performance so far, our updated guidance now sees another year of positive organic growth”.
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