Pandora Trims 2025 Profitability Outlook Amid U.S. Tariff Headwinds

Pandora, the Danish jewelry giant, has revised its 2025 profitability targets downward, citing escalating U.S. tariffs and foreign exchange pressures. The company now expects an EBIT margin of “around 24%”, a 50-basis-point reduction from its previous guidance of “around 24.5%”, as it navigates a challenging macroeconomic landscape. The move underscores the growing impact of trade tensions and currency fluctuations on global consumer businesses.

The Tariff Challenge: Costs and Mitigation Strategies

The U.S. tariffs on imports from Thailand—where Pandora manufactures 80% of its products—have become a central concern. The company now estimates an annualized tariff cost of DKK 700 million (€94 million) for 2025. To offset this, Pandora plans to reroute shipments through Canada and Latin America starting early 2026, avoiding its current U.S. warehouse in Baltimore. This strategy aims to mitigate DKK 250 million of the burden, with the remaining DKK 450 million addressed through price hikes, supply chain optimizations, and operational efficiencies.

The tariffs have already led to price increases: a 4% hike in April 2025 followed a 5% increase in late 2024, primarily to counter rising silver prices (silver accounts for 40% of material costs). CEO Alexander Lacik emphasized the company’s resolve: “We do not control the external factors, but we do control how we execute on an already proven strategy.”

Q1 Results: Growth Amid Headwinds

Pandora’s first-quarter performance provided a glimpse of resilience. Revenue rose 7% organically to DKK 7.35 billion, slightly exceeding analyst expectations. EBIT margins held steady at 22.3% (up 30 bps year-on-year), driven by pricing power and supply chain efficiencies. Gross margin improved to 80.4%, benefiting from reduced forward integration costs and strategic pricing.

The U.S. market—accounting for one-third of revenue—delivered 11% like-for-like (LFL) sales growth, while Europe posted 4% LFL growth, with emerging markets like Spain and Portugal surging by double digits. Online sales jumped 15% in key markets due to a new e-commerce platform launched as part of its Phoenix strategy, which also includes the “Be Love” marketing campaign.

Risks and Resilience

Despite the positive momentum, Pandora faces significant risks. A reinstatement of the U.S. 37% “reciprocal” tariff on Thai imports—a threat lingering in U.S.-Thailand trade negotiations—could raise annual costs to DKK 900 million by 2026. Additionally, the weakening U.S. dollar has created a 70-basis-point forex headwind since early 2025, as revenue denominated in USD loses value when converted to Danish crowns.

The company’s financial discipline remains a bright spot. With low leverage (NIBD/EBITDA of 1.4x) and a DKK 4.0 billion share buyback program, Pandora is well-positioned to weather near-term storms. Management also reaffirmed its 2026 EBIT margin target of “around 25%”, contingent on full implementation of its mitigation measures.

Conclusion: Pandora’s Path to 2026

Pandora’s revised guidance reflects a cautious but pragmatic approach to an uncertain environment. While tariffs and forex pressures have dented short-term margins, the company’s execution of its Phoenix strategy—bolstered by strong U.S. sales and digital innovation—remains on track. The rerouting of shipments and price adjustments should begin to offset costs by early 2026, aligning with its 25% EBIT margin target.

Investors should monitor two key metrics: the resolution of U.S.-Thailand trade disputes and the efficacy of Pandora’s supply chain reconfigurations. With 7-8% organic growth guidance intact, a 4% EPS rise in Q1, and a 19% boost in earnings from buybacks, Pandora’s fundamentals remain robust.

In a sector where consumer sentiment and geopolitical risks loom large, Pandora’s ability to balance growth with cost discipline positions it as a resilient player. However, the road to 2026’s 25% margin target hinges on navigating these external challenges—a tightrope walk requiring both luck and strategy.

Data as of Q1 2025. Earnings figures in Danish kroner (DKK).