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Pandora A/S - Q3 2025 Earnings Review
The Market Turns Overly Pessimistic on External Headwinds Not Only Affecting Pandora
The Octopus Value Investing
November 18, 2025
Better late than never, they say. Today, I am sharing with you the earnings review of Pandora's Q3 2025 earnings.
DISCLAIMER: This article is not a recommendation to buy or sell any financial instrument; the content is educational and my personal opinion. Each person has to make their own analysis. Any action or decision you take as a result of viewing this article is your sole responsibility.
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Executive Summary
Revenue Growth: Revenue grew by +6.0% vs Q3 2024, reaching DKK 6,269 million, with -4% of FX headwinds.
Gross Margin: 79.3% in Q3 2025 (-80bps YoY).
Operating margin: 14.0%, a decline of -210 bps vs Q3 2024. However, the operating margin would have expanded at a constant exchange rate.
Net income reached DKK 489 million, down -17.8% YoY, compared to DKK 595 million reported in Q3 2024.
Announcement of many changes: CEO retirement, new geographical sales reporting split, and new countermeasures to counter margin headwinds from 2027.
Narrowed 2025 Outlook and EBIT margin 2026 target lowered when accounting for raw materials impact, especially silver.
Income Statement
Revenue
Pandora grew organically +6% in Q3 2025, reaching DKK 6,269 million in sales. LFL sales growth was +2% reaching its minimum since Q2 2023. Note that this has also been the quarter when FX headwinds have had the largest negative impact on sales since I have followed the company, reaching -4%. Additionally, -1% headwind due to the phasing of sell-in and others was reported. See the overview in the figure below.
Figure 1: Pandora quarterly sales split by contributor. Source: Own elaboration.
Geographical Revenue Distribution
Starting with Pandora’s largest market, sales in the USA increased by +6% with an outstanding +9% LFL. At a constant exchange rate, sales in the US grew at a double-digit pace, +12% vs Q3 2025. The company keeps outpacing the American jewellery market for another quarter.
The performance of the four separately disclosed European markets was awful for one more quarter. Except for Germany, which is seeing sales normalize after a hyper-growth phase in 2024, the high single-digit LFL sales decline in the UK (-8% LFL), Italy (-4%), and France (-7% LFL) highlight just how sticky challenges are in those markets. The only positive news among these geographies is the sequential improvement in Italy after the troubleshooting investigation and initiatives, from -8% LFL in Q2 2025 to -4% LFL in Q3 2025.
Australia maintained its positive momentum, achieving its third consecutive quarter of positive Like-for-Like (LFL) growth at +4%. This performance underpinned an outstanding double-digit organic sales growth of +18%. This positive trajectory marks a significant turnaround, as sales in this region had been stagnant in previous years. Hopefully, the troubleshooting initiatives in key European markets will yield similarly positive results.
The Rest of Pandora segment reported another LFL growth of +6%. Main highlights are:
Spain & Portugal continue reporting double-digit LFL sales growth, after many years showing similar performance.
Japan's revenue has doubled YTD in 2025, driven by elevated marketing and network expansion investments, with the country serving as a test lab for launching the brand on a larger scale across the continent.
Note: I had the chance to visit Japan this fall and noticed many Pandora shops on key commercial streets of the major cities like Tokyo, Kyoto, and Osaka, with a setup very similar to the one Pandora has across Europe.
Overall, 70% of the geographical revenue base is growing at LFL of 6% or more.
Figure 2: Sales distribution by geography. Source: Pandora Q3 2025 earnings report, page 14.
Finally, it was announced that Pandora will simplify its geographical revenue reporting starting in Q4 2025. The geographical revenue disclosure format will be consolidated into four regions: EMEA (Europe, Middle East & Africa), North America, Latin America, and APAC. Updated KPIs for the last three years will be provided, and reporting will continue with the previous split until Q3 2026.
I like this reporting change as I think reporting the key European geographies wasn’t adding much value. It was no longer representative, given that other European countries have caught up due to excellent performance (e.g., Spain, Poland, and Portugal), and Rest of Pandora includes a large heterogeneous group of countries.
Product Revenue Distribution
Sales growth trends across product lines remain unchanged, with LFL growth of 2% in the “Fuel for More” segment linked to tougher Timeless collection comparatives and further slowdown of Pandora Signature in connection with its down prioritization.
Figure 3: Q3 2025 quarterly sales by product. Source: Q3 2025 report, page 8.
Network Development & Performance
Figure 4: Pandora’s points of sale development. Source: Q3 2025 report, page 15.
Pandora net openings slowed down to 11 concept stores and 8 shop-in-shops in Q3 2025, dragged by the accelerated closure of shops in China.
Network expansion added 5% to organic growth in Q3, and on top of that, forward integration has added 1% to revenue growth. Moreover, online sales growth has accelerated sequentially, from +7% in Q2 to Q3 2025, which might signal underlying solid execution on the online platform rebuild, which is currently being released across more markets.
Gross margin
Gross margin worsened by 80 basis points in Q3 2025 vs Q3 2024, 79.3% vs 80.1%. However, the combined impact from commodities, FX & tariffs is quantified to be -280 bps. Hence, Pandora could have expanded its gross margin if it weren´t for the tariffs’ impact, which represents a -110 bps drag.
Price increases mitigated gross margin deterioration by +230 bps (vs +60bps in the previous quarter), being the last one until now, the low single-digit further price increase implemented in August 2025.
Operating Income
In Q3 2025, Pandora's EBIT margin decreased year over year by 210 basis points to 14.0%. However, measured at constant foreign exchange rates, EBIT grew by 5% in the quarter, resulting in an EBIT margin of 15.7%.
Operating expenses rose by +8% at a constant exchange rate compared to the same quarter in the previous year, mainly due to the continued expansion of the store network. Sales and distribution expenses increased by +8% at CER, reflecting the addition of 239 new stores. Marketing and administrative expenses increased by +9% at CER. No reacceleration on marketing expenses is observed despite the launch of talisman and minis collections, meaning that all marketing efforts may be awaiting the Christmas campaign.
Figure 5: EBIT margin development vs Q3 2024. Source: Pandora’s Q3 2025 report, page 16.
Net Income
Net income for the period reached DKK 489 million in Q3 2025, down -17.8% YoY, compared to DKK 595 million reported in Q3 2024.
The EPS declined by -13.7%, from 7.3 DKK per share in Q3 2024 to 6.3 DKK per share. Operating income decline is the sole factor impacting net income decline. Adjusting for FX impacts, EPS growth would have been +5% YoY.
Balance Sheet
Figure 6: Pandora’s balance sheet. Source: Q3 2025 report, page 30.
Cash Flow Statement
Capital allocation
CapEx & acquisitions
Pandora's capital expenditures included DKK 394 million for the purchase of property, plant, and equipment (PPE), an increase of 7.1% year-over-year. This represents a sequential slowdown in PPE expenditures, which might indicate that investments in the new Vietnam facility have already peaked.
Working capital
Net working capital was 7.3% of revenue in Q3 2025 compared to 5.9% in Q3 2024. The increase reflects a significant impact from commodity hedging and higher commodity prices negatively impacting inventories. After adjusting for hedging effects in both years, the underlying net working capital was slightly down versus the prior year.
Shares repurchase
DKK 1,565 million was used to repurchase stock in Q3 2025 vs DKK 1,150 million in Q3 2024. This shows a remarkable increase in the pace of execution of the DKK 4.0 billion share repurchase programme.
As highlighted last quarter, my view was that the share buyback program was not being executed with sufficient aggression relative to the stock price at the time. I am very pleased to see the improvement in execution in this regard.
FCF Generation
In Q2 2025, Pandora reported Operating Cash Flow (OCF) of DKK 960 million, down -18.7% from DKK 1181 million in Q3 2024. This negative performance was primarily driven by lower profitability and worsening working capital.
Reported Free Cash Flow (FCF) standing was DKK 218 million, down -28.1% YoY. Lower profitability plus higher investments negatively impacted cash generation during the period.
Risks Update
Commodities headwinds and US tariffs remain the main risks the company faces. Little, but cushioning them with some countermeasures. However, this quarter, a new risk arose, the CEO role succession, as Alexander Lacik announced he will step down in 2026 after 8 years at the helm.
Raw materials prices
Silver and gold prices kept their upward trend for another quarter. The company estimates that at the current silver price (24 October 2025) of around USD 48, the overall average silver price in 2026 would be around USD 35.5, including the 25-30% unhedged exposure.
USA tariffs
Background: Pandora manufactures the majority of its jewelry in Thailand, while also building a second facility in Vietnam, and sources raw materials from China. Recent US trade policy announcements after agreements signed established the tariff level on imports from Thailand at 19% while China’s tariff levels were set at 54%.
The USA and China reached an agreement that will lead to a 10% reduction in cumulative tariffs on Chinese goods, effective on November 10th . It will positively impact Pandora’s gross margin in Q4 2025 by lowering jewellery tariffs to a 30.5%-32.5% range vs the initial 54%.
Management succession
On September 30, 2025, Pandora announced that President and CEO Alexander Lacik will retire on 11th March 2026. During his tenure, he completed the brand transformation and drove up Pandora’s revenue by +45%.
He will be succeeded by Berta de Pablos-Barbier, currently Chief Marketing Officer, who will assume the role of President and CEO. Berta brings over 30 years of exceptional executive experience across globally recognized brands, including LVMH, Mars Wrigley, Lacoste, and Boucheron.
APAC expansion, commodity headwinds, and the need to revive core geographies are among the challenges faced by the new CEO.
Management Call & Guidance
Management Call
During the call, an analyst openly asked for updates on the expansion plans announced more than 2 years ago into Asian countries. The analyst specifically asked about Japan. Pandora’s CEO provided an extensive and comprehensive update.
Japan is the region where the business is really flying.
The Japan story has, you know, there's a few things to add. Many years ago we were there with the distributor. The distributor planted a few flags which are, were mainly in, let's say, the tourist districts. We actually, we had a small business, not very profitable, kind of even keel, let's say. We were not really speaking to the local customer.
So two years ago we decided to give it a shot and go after the local customer. Which also meant that we needed presence in other places than just the kind of, let's say, the tourist areas. We are now up to like 50 points of sale or 60 thereabouts, mainly focused in the Tokyo and Osaka area (…)
We've added a little bit of local earned media. Let's say we've used some K-pop influencers. We've applied a bit of a more media investment that we've done in the past. We've shored up our store operation a little bit, which was also not great. That's it. Then actually we took our prices up a little bit in order to pay for all these extra investments. Investments, not a huge amount, but some. That's pretty much what we've done. It looks like all the growth that we are gaining now in Japan is coming from the local customer. It's very encouraging steps because the other insight for us is obviously we don't have to completely localize, let's say, our global model.
Also, an extensive update on the discount detox process the company is undergoing in Mexico was provided. Mexico (and Latam in general) seems to have small TAMs as affordability in those countries with remarkably lower GDPs has a completely different meaning. Personally, I do not expect to see the country get back to double-digit growth anytime soon if maturity has already been reached in the silver assortment.
All of Latam essentially has a price index which is significantly higher than anywhere else with the view that we were serving the top end of the socioeconomic pyramid. Going after the A and B type of consumers because let's say that what we call middle of the market in other markets wouldn't necessarily be very affordable for them. You can think of our core customer as being the people that work in our stores. That's the core constituents of a Pandora customer. Therefore they went after a slightly different audience that worked really well up to a point. With that higher price point they also adopted a high low model, which we do not really use anywhere else in the world, where we would have a lower starting price.
Then we do shallow discounts, let's say we have tried, and at one point, of course, when you only target, let's say, 10% of the population, you will start reaching maturity in terms of penetration. At one point, I think one or two years, probably two years ago, we started reaching a quite mature part of that sliver of the population, and then the answer to get more penetration was to do more deep discounting promotions. That is the part which we have said for a while that we were trying to detox away from.
What we're finding of course is then we don't have enough penetration opportunities. So we're kind of rethinking a little bit the model but we were losing too much volume by coming off these promotions.
2025 Guidance
FY25 guidance has been confirmed once again, although its composition has changed. Network expansion in 2025 is adjusted upwards to 4% (previously 3%), reflecting a stronger ramp-up of revenue from the openings carried out over the past 12 months. Hence, LFL growth has been adjusted downwards by 1% to a 3%-4% range.
Moreover, CapEx has been revised upwards and is now estimated to represent 7% of sales in FY2025.
Figure 7: Pandora’s updated 2025 guidance. Source: Q3 2025 report, page 21.
Regarding 2026 targets, since they were announced at the 2023 Capital Markets Day (CMD), the company's forecast has been hit by a significant -620 basis points of external headwinds, including an additional 120 basis points of commodities and FX headwinds from Q2 2025.
Pandora lowered the 2024 EBIT target to “at least 23%”, reflecting already implemented countermeasures, while simultaneously pursuing creative innovation anchored in its DNA as an accessible precious metal jewelry brand. This innovation, supported by extensive consumer research, is strategically designed to mitigate the impact of higher commodity prices, though any resulting EBIT margin uplift is not anticipated until 2027. Management has commented further on it.
(…) When you talk about reducing the exposure to silver, I guess in particular it sounds to me like you're talking stainless steel. Maybe you do not want to comment on that, but can you comment on how that creative innovation affects the way you produce? Will it allow you, for example, to use more robotics? Would it allow you to do printing directly in metal? Can you talk about what that brings of other design opportunities? Will you do PVD coating, for example? Maybe some words on that.
I understand your question, but we will not answer that. This is way too sensitive to get into. The only thing I will point out is that we will not turn into a costume jewelry player. We will still remain with precious metals. We're just finding another way to execute that.
Closing Remarks
Overall, I think Pandora met the expectations.
The company is still navigating through a challenging macro environment, like any other competitor.
There are clearly some persisting challenges specific to certain geographies: Mexico, Italy, France, UK and China. I will closely follow the development in these geographies, especially in UK and Italy, where I expect the first indications of recovery. Recent turnarounds, like the case of Australia, make me feel optimistic about the development of these countries.
Additionally, after seeing the business contraction ongoing in China for many years, I am very happy to see that the business expansion is moving forward in Japan, particularly because in the mid to long-term APAC must become the growing engine of the company’s sales.
My main concern for the coming years will be knowing the CEO succession. I appreciated how Alexander Lacik has been executing so far, the long-term focus on brand perception, and the way he thought about the business that he shared on every earnings call.
Finally, it is great to see the company become more aggressive in executing its share buyback programme and take advantage of the stock price dip while possible.
Appendix
Figure 8: Pandora’s quarterly sales by product. Source: Own elaboration.
Figure 9: Pandora’s quarterly sales by region. Source: Own elaboration.
Figure 10: Pandora’s quarterly sales by network point of sale. Source: Own elaboration.
Figure 11: Pandora’s quarterly gross margin and segments’ gross margin. Source: Own elaboration.
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