Against a backdrop of moderating, if not slowing jewelry demand, Pandora, the world’s largest jewelry brand, just reported its fifth quarter in a row of double-digit organic growth.

By contrast, Tiffany-owner LVMH’s watches and jewelry division reported a 5% decline in the first nine months of the year and the largest U.S. jewelry retailer Signet Jewelers of Kay, Zales and Jared fame dropped 8.5% in its first two fiscal quarters this year.

Pandora third quarter 2024 revenues rose 11% to $880 million (DKK 6.1 billion), bringing the first nine months of the year up 15% to $2.9 billion (DKK 19.7 billion). Confident the brand can continue to power forward, Pandora just raised its guidance for the third time this year.

In the first quarter, Pandora expected to end fiscal 2024 up in the 8% to 10% range; now it is projecting organic growth in the 11% to 12% range. Coming off last year, when it posted 8% growth to $4.1 billion (DKK 28.2 billion), Pandora will show a remarkable turnaround from 2019 when it dropped 8% to $3.2 billion (DKK 21.9 billion).

Elevating The Brand

That was the year Alexander Lacik joined the company as CEO and began the company’s overhaul, only to be stalled by the global pandemic. But the quiet time wasn’t wasted as he and his team developed the Phoenix growth strategy designed to transform Pandora from a charm and bracelet company and elevate it to a full jewelry brand.

It now offers fine jewelry selections across a range of pieces with distinct design signatures and richer materials, including fully recycled silver and gold, Murano art glass, lab-grown diamonds and pearls, all at accessible luxury price points, yet with full luxury-level service.

Two years into its Phoenix strategy, Lacik can say Pandora is unburdened by its charm-bracelet past, borrowing a phrase popularized in the current election cycle, and ready to embrace its future as a fine jewelry brand immersed with personal meaning for any jewelry-wearing and purchase occasions.

Pandora has benefited from the challenging post-pandemic economic climate with its core accessible luxury price points. But once the economy turns, it will be ready to take its place on the world stage as a fine jewelry brand that reaches across all age and income demographics.

In effect, it was in the right place with the right product for the challenging times we’ve been through and will be in an even better place with higher-value products for what all hope are good times ahead.

“We are very pleased with our strong results this quarter, particularly in the context of the current macroeconomic backdrop,” Lacik said in a statement. “We are transforming the perception of Pandora as a full jewellery brand and unlocking the next chapter of our growth by attracting more consumers to our brand.”

Right Product

Pandora’s core range of charms and bracelets is and is likely to remain its cash cow. Core products generated three-fourth of revenues or for the first nine-months of the year and like-for-like (LFL) growth of 2%. LFL is the metric Pandora references for product and market reporting.

The core category is based on its iconic charms and bracelets, representing a buildable platform for company growth, just as each customer’s bracelet is a buildable expression of her personality, meaningful moments and memories.

In last year’s investor day presentation, Lacik said the company has an installed base of approximately 10 million bracelets which propels a predictable, recurring revenue stream of roughly 50 million charms sold each year.

The Pandora iconic charm bracelet holds special meaning to its customers and is widely recognized as key to brand identity. So to transform the company and elevate the brand beyond its charm icon into a full jewelry brand, the Phoenix strategy builds on the personal meaning of jewelry beyond fashion and style.

Beyond Charms

This is where its “Fuel with More” segment plays, including the Timeless and Signature collections. It has also expanded its Pandora Lab-Grown Diamond (LGD) offerings, which now includes microfine, as well as larger-sized set LGD stones, and the newly introduced Pandora Essence collection with sculptural designs drawn from nature with some pieces accented with pearls.

The Fuel with More segment has generated LFL growth of 28% in the last nine months and represents about a quarter of company sales. And Pandora sees significant growth potential in this segment both among existing Pandora customers and to reach new customers.

For example, about half of the Essence collection sales attracted new customers in the third quarter after its roll out in the second quarter.

Becoming An Iconic Brand

Recognizing few brands reach icon status in the jewelry market – Tiffany and Cartier come immediately to mind – the Phoenix strategy aims is to elevate Pandora, the brand not just its charm bracelet, to that brand icon status as the brand people desire for gifting and self-purchase.

However, unlike Tiffany and Cartier, it reaches a potentially larger target market thanks to its accessible luxury price point.

“We are transforming the perception of the Pandora brand, from a brand known and loved for our charm bracelets to the most desirable full jewelry brand,” Lacik shared with me after the earnings call.

“If the tide rises, we’re going to rise with that on top of the existing performance.”

Right Place

Building and enhancing Pandora places – all its consumer touchpoints – is also critical to the Phoenix strategy. Pandora generated about 20% of revenue in the third quarter online, benefiting from success of its multi-season “Be Love” campaign which presents the brand’s extended product range and ongoing social media viral trends.

For example, its engraving services generated buzz on social media, leading to a doubling of engraving services in the third quarter with 1,250 machines now in stores and another 200 to be added by year-end.

Currently, it boasts 6,658 points of sale and 2,734 Pandora concept stores where Pandora’s full breadth, depth and personalized services are on display.

In the U.S. – its largest market generating 30% of revenues through the first nine months, posting 7% LFL growth and 5% organic growth – it has 479 concept stores, adding 14 stores in the third quarter and 42 year-over-year.

This U.S. expansion is set against an overall declining jewelry retail market. Rapaport reports the number of U.S. jewelers dropped by 3% in 2023, continuing a 20-year downward trend.

As in the U.S., new stores generate significant returns with low risk, given its investment in consumer insights. Between 2024 and 2026, Pandora will expand its global network by 400 to 500 concept stores, making itself ready for when the economy opens up.

And the third quarter marked a milestone for Pandora’s brand elevation: opening its largest flagship store in Copenhagen spanning two floors and 500 square meters of space. Featuring native Danish materials and architectural design, it’s based upon Pandora’s elevated Evoke store concept, which is now seen in 295 concept stores and will be expanded to some 1,400 stores by 2026.

The company also announced the expanded flagship store concept will be selectively introduced in a few major cities worldwide.

Potential Headwinds

While Pandora sees significant opportunities for growth ahead as an accessible luxury full jewelry brand, it is faces headwinds from rising commodity prices.

For example, the price of silver has increased to $33 per ounce, up from the $23.6 per ounce price it based its 2026 financial target of 26% to 27% EBIT on. Currently, EBIT stands at 19.4% for the first nine months of the year.

To mitigate the effect of rising commodity prices, Pandora implemented a 5% price increase in October 2024 and sees the potential for further price increases coming.

Then, there are big questions around the potential for new U.S. tariffs coming next year with the Trump administration, one that I asked about after the earnings call. He was sanguine about the possibility.

“The commentators are getting a little bit out in front of themselves. If you judge Trump by what he’s done in the past, he uses these ‘nuclear’ kind of threats as a negotiating tactic to get people to move in certain directions,” he said.

“There are too many open ends to take any firm stance on it at this point, though we are working through various scenarios. What he seems to be doing is trying to bring back manufacturing jobs to the U.S. but that wouldn’t be practical for us. Let him be sworn in and then we’ll see what actually happens.”

Lacik believes tariffs will be applied on a selective basis and not necessarily across the board. And while he doesn’t see Pandora shifting manufacturing to the U.S., the company is still heavily invested in American workers, if that is Trump’s goal. Pandora employs some 8,000 workers in its American stores.