Cheap Bling Works Like a Charm

Published: Tuesday 08 November, 2016
If you thought the Pandora party was over, think again.The Danish maker of charms, rings and earrings that can sell for less than 100 pounds ($144), reported better-than-expected first-quarter profit, and raised its sales and earnings forecast for the full year. The shares rose 10 percent, the steepest increase for more than a year.

It’s all very different from three months ago, when the market took fright at the prospect of fewer store openings and slower growth.In the current environment, luxury goods groups need affordable products, a great digital experience or a buzz about their brands to win sales from more discerning shoppers. Pandora certainly has the first of those: luxurious treats or gifts that won't break the bank. Think of it as competing with the lower end of Tiffany's trinkets.

And it's working on keeping the brand fresh too, expanding categories such as earrings.They've certainly hit a sweet spot in China, where shoppers are shying away from more overt displays of wealth amid slower economic growth and anti-graft measures.The trend's taken off elsewhere too. While sales growth in the Americas was held back by comparisons with a very strong period a year ago, revenue in Europe, the Middle East and Africa rose 47 per cent, while Asia Pacific was up 58 percent.Overall, group revenue was 34 percent higher in the first quarter. That's slower than the 40 percent across the whole of 2015.

But it's pretty impressive when compared to sluggish growth in the luxury market. Margins are also stronger, with an Ebitda margin of more than 38 percent expected this year, better than the previous forecast.