Key Morningstar Metrics for Pandora
- Fair Value Estimate: DKK 990
- Morningstar Rating: ★★★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: High
Pandora PNDORA now expects 6% organic sales growth in 2025 versus prior guidance of 7%-8%. In the fourth quarter, like-for-like sales were flat, with North America up 2% like for like, versus 9% in the US for the first nine months.
Why it matters: A broad-based deceleration in sales (Europe, the Middle East, and Africa was down 1% like for like, Asia-Pacific grew 2%, and Latin America fell 7%) suggests that customers are not taking well to the company’s price increases to offset raw material inflation and tariffs. Silver price headwinds will persist following a stunning 160% increase over the past year and, given Pandora’s strong hedging for 2025 and 2026, are not yet fully showing in the bottom line.
- Silver purchases accounted for only 30% of cost of goods sold or 6% of the company’s sales in 2024. For 2025, Pandora expects a 130-basis-point headwind due to materials. However, the impact will be larger in 2026; a 4.7% headwind from raw materials was expected at the end of the third quarter of 2025.
- Weakening in the US market stands in contrast to accelerating sales of luxury firms in this market in the third quarter. Pandora is exposed to less-affluent consumers, who are more economically sensitive and not benefiting from the strength of asset markets to the same extent.
The bottom line: We are reducing our fair value estimate to DKK 990 per share from DKK 1,150 to factor in more moderate near-term revenue growth and gross margin pressure from silver price increases. Given Pandora’s affordable positioning, limiting its pricing power (we still believe it has pricing power, thanks to gifting demand), and sluggish consumer sentiment, the company may need to engage in material innovation (already planned) and absorb a larger amount of raw material price increases weighing on the margin. Also, Pandora is the largest jeweler and very profitable, and is very likely to weather this downturn better than peers. We view the shares as attractive at current levels.
