Pandora Q3 profit triples, eyes Russia and China

COPENHAGEN, Nov 11 (Reuters) - Jewellery maker Pandora (PNDORA.CO), a newcomer to the bourse, said on Thursday growth across all regions and product categories helped it triple profit in the third quarter.

Pandora
Pandora Jewellery

Shares in the fast-growing firm, which debuted on the Copenhagen bourse on Oct. 5, soared as analysts said earnings and sales exceeded expectations and pointed out the firm has become slightly less dependent on its trademark product.

Pandora makes mass-market jewellery sold mainly in Europe and the United States and is eyeing emerging markets for growth. Its hit product line, charm bracelets and charms, brought 79 percent of sales in the quarter, against 90 percent a year ago.

The stock market listing of Pandora, which was established as a Copenhagen shop in 1982 and has grown briskly over the past decade, was one of Europe's largest this year.

Helped by early Christmas orders, operating profit soared to 743 million crowns ($137 million) from 251 million a year earlier. Sales more than doubled to 1.79 billion, half of which came in Europe, from 825 million.

"Some of the sales that we normally have in the fourth quarter have already taken place in the third quarter," Chief Executive Mikkel Vendelin Olesen told Reuters.

FIVE A DAY Pandora opened 464 points of sale in the quarter -- on average five a day -- taking the total number to 10,386, including more than 320 Pandora-branded concept stores, it said.

"Since our July entry into Italy, Europe's biggest market for genuine jewellery, we have managed to establish nearly 150 new outlets. That bodes well for our future entry into big markets such as Russia and China," Olesen said in an email.

Pandora aims to open its first shops in China and Russia by year-end. Olesen told a news conference the firm aims to open 500 points of sale in 2011, a slower pace than this year.

The firm guided for full-year sales of around 6.2 billion crowns, up from 3.5 billion in 2009, and earnings before interest, tax, depreciation and amortisation around 2.5 billion crowns, against 1.6 billion last year.

"These are strong expectations that exceed mine, especially on sales. I expect the demand to continue in 2011," Sydbank analyst Soren Hansen said.

BEST IN CLASS

Pandora shares closed up 8.8 percent at 298 crowns -- 42 percent above its IPO price of 210 crowns -- while Copenhagen's blue-chip index .OMXC20 was nearly unchanged.

"There are not many listed jewellers. Foreign investors in particular are attracted to it," Hansen said, explaining the stock's popularity.

"Pandora has a very interesting business model compared with some peers in that they have their own production, design and distribution channels, and are mainly wholesale-based," he said. "Their margins are best-in-class in their business."

Its jewellery, priced between $50 and $1,500, is made for relatively low cost in Thailand.

Analysts have said raw material costs could be a worry for Pandora -- safe-haven commodity gold hit another record this week as investors aim to protect their inflation exposure.

Olesen told Reuters that Pandora would pass on higher costs to customers, and had raised prices in Britain and the U.S.

Pandora said it hedged 100 percent of its gold and silver consumption in the third quarter. "For the following four quarters we have hedged 100 percent, 80 percent, 60 percent and 40 percent of expected gold and silver consumption," it said.

($1=5.406 Danish Crown)

(Additional reporting by Teis Jensen, Editing by Hans Peters and David Hulmes)

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