Pandora's stock jumped more than 7% as sales growth exceeded forecasts

Danish jewelry company Pandora reported third-quarter sales results that beat analysts' expectations, sending its shares up more than 7% on Wednesday. Despite the strong quarterly figures, a significant portion of the company's operating profit growth was driven by a one-off gain from a partial refund of US tariffs. Meanwhile, sales growth slowed to 1% in October.

Like-for-like sales in the third quarter rose 4% year-on-year, beating both the analysts' consensus of 2% and the highest forecast of 3%. Organic growth came in at 6%, compared with the market's expectation of 4%. The company's revenue reached DKK 6.69 billion, above the forecast of DKK 6.58 billion.

Nearly half of the sales growth came from the Japanese market. However, Pandora expects the pace of growth in that country to moderate going forward.

The company's operating profit totaled DKK 1.06 billion, significantly exceeding analysts' expectations of DKK 860 million. This figure included a one-off gain of DKK 246 million from the refund of previously paid US tariffs.

The tariff refund boosted the operating margin by 3.7 percentage points and the gross profit margin by 3.4 percentage points. As a result, the operating margin rose to 15.9% from 14% a year earlier, although Pandora noted that excluding the one-off effect, the underlying figure would have remained nearly unchanged.

The gross profit margin stood at 83.7%, above the analysts' forecast of 80.3%. However, excluding the revenue from the tariff refund, the figure would have been exactly 80.3%.

Earnings per share (EPS) rose to DKK 6.9, up from DKK 6.3 in the same period last year, and above the forecast of DKK 5.8. However, the company noted that excluding the tariff refund and the related financing costs and taxes, EPS would have been DKK 5 — down 20% year-on-year.

In October, like-for-like sales growth slowed to 1%. Pandora said this was mainly due to reduced promotional and discounting activity. Excluding one-off factors, underlying growth was around 3%. The company noted that the fourth quarter is historically a stronger period in terms of sales and profit.

Alongside its results, Pandora updated its 2026 guidance. It raised its organic growth outlook from 0-3% to 2-3%, while narrowing its operating margin forecast from 22-23% to 22.5-23%. The improved margin outlook is mainly attributed to a higher-than-expected benefit from the tariff refund: the company now expects a positive impact of 1.3 percentage points from this factor, up from the previous estimate of 1 percentage point.

In addition, Pandora revised its full-year like-for-like sales guidance, setting a new range of 0-1%, compared with the previous forecast of -2% to +1%.

The company raised its 2026 net financial expense guidance from DKK 1.10-1.15 billion to DKK 1.20-1.25 billion, citing losses from currency fluctuations and hedging operations.

For 2027, Pandora also updated its operating margin target. The new target is 14-15%, or 15.5-16.5% excluding one-off factors. These exceed the previous targets of above 12% and above 14%, respectively. Analysts' average forecast for the 2027 operating margin stands at 16.1%.

The company stated that it has already hedged 90-100% of its required silver volume for 2027, at an average price of around $62 per ounce. This is significantly lower than the $82 price that Pandora had used in its previous forecasts.

Despite the strong profit recorded in the quarter, free cash flow, including lease payments, was negative at DKK -557 million. In the same period last year, the figure stood at a positive DKK 218 million.

In addition, inventory levels rose to 22% of revenue, up from 16.4% a year earlier. Pandora attributed the increase to rising metal prices, the shift to platinum coating, and growth in the number of units sold.