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Pandora warns of uncertainty in 2022 after record quarter

Published May 04, 2022 01:40AM ET Updated May 04, 2022 04:06AM ET
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© Reuters. Pandora products are seen at their store at the Woodbury Common Premium Outlets in Central Valley, New York, U.S., February 15, 2022. REUTERS/Andrew Kelly/Files
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By Nikolaj Skydsgaard

COPENHAGEN (Reuters) - Jewellery maker Pandora (OTC:PANDY) warned on Wednesday that higher inflation and the Ukraine war posed increased uncertainty for its full-year earnings, despite reporting record first-quarter revenue and raising its sales outlook slightly.

"We are very pleased with the strong start to the year delivering record revenue for a first quarter," Chief Executive Alexander Lacik said in a statement.

Shares in Pandora were down slightly at 0727 GMT after rising 3.3% when the stock market opened in Copenhagen.

"It's broad-based growth, meaning all our core markets with the exception of China are in good growth and all product platforms are contributing to the growth," Lacik told Reuters.

The Danish company now expects full-year organic sales growth to come in between 4% to 6%, compared with a previous forecast of 3% to 6%, but said the forecast for 2022 was subject to "elevated uncertainty".

Lacik said Russia's invasion of Ukraine, COVID-19 and inflationary pressure, which could affect how people spend their money, had created more uncertainty since the start of the year.

Pandora, however, kept its forecast for growth in earnings before interest and tax margin (EBIT) unchanged at 25% to 25.5% despite seeing inflationary pressure and increased costs for energy, transport and raw materials such as silver and gold.

"We are absorbing these costs within the guidance," Lacik said, adding that getting out of Russia and inflation-related costs would lead to unanticipated expenses of 200 million Danish crowns ($28 million) this year.

The firm hedges prices for its main raw materials, silver and gold, a year ahead, meaning short-term spikes would not affect Pandora, he said.

The company said sales in the first quarter rose 21% to 5.7 billion crowns, a record and above an average of 5.2 billion expected by analysts in a poll compiled by the firm in April.

"It's a testament to the strong trend from January, which continued into February and March with no noteworthy negative effect from COVID-19," Jyske Bank analyst Janne Kjaer said in a note.

Pandora said almost none of its stores had closed in the first quarter, a considerable shift from last year, when about 30% of its stores faced temporary closures due to the pandemic.

($1 = 7.0673 Danish crowns)

Pandora warns of uncertainty in 2022 after record quarter

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