Tariff Resilience in the U.S. Jewelry Market: A Contrarian Opportunity in Luxury Retail

The global luxury jewelry market is facing a paradox: while Europe and Asia grapple with economic fragility, the U.S. remains a fortress of demand for affordable luxury. Pandora, the Danish jewelry giant, has emerged as a standout example of this trend, defying global headwinds with 8% U.S. sales growth in Q2 2025 (on a like-for-like basis), even as its China and European markets contracted. This divergence highlights a contrarian opportunity for investors—U.S. consumers, despite inflation and tariffs, continue to prioritize jewelry as a symbol of celebration and self-expression.

The U.S. as a Pricing Power Laboratory

Pandora's resilience is not accidental. The company has navigated a 19–30% tariff regime on imports from Thailand, Vietnam, and China by implementing strategic price hikes, reengineering its supply chain, and diversifying into higher-margin segments like lab-grown diamonds. Its “Fuel with More” collection, featuring ethically sourced stones, drove 12% growth in 2025, appealing to Gen Z and millennials who value sustainability. This product innovation has allowed Pandora to maintain a gross margin of 80.4% in Q1 2025, outperforming peers like Tiffany and Bulgari, which face steeper cost pressures from tariffs on natural gemstones.

The U.S. market's unique dynamics—strong discretionary spending, a culture of gifting, and a demographic shift toward younger, sustainability-conscious consumers—have created a pricing power buffer. Unlike global peers, Pandora's U.S. operations account for one-third of its revenue, insulating it from regional downturns. Competitors like Cartier (owned by Richemont) and Tiffany (LVMH) also report robust U.S. sales, but Pandora's focus on accessible luxury—charm bracelets, silver pieces, and mid-tier collections—positions it to capture a broader segment of the market.

Contrarian Edge: U.S. Resilience vs. Global Fragility

While Pandora's U.S. success is notable, its global struggles underscore the risks of overreliance on volatile markets. China, its second-largest market, saw a 15% sales decline in 2025, and Europe's high single-digit drops reflect broader economic malaise. Yet, the U.S. market's strength—evidenced by a 5% year-on-year growth in jewelry sales (per Tenoris data)—suggests a structural shift. U.S. consumers are increasingly allocating discretionary spending to jewelry over other luxury goods, such as handbags or watches, which face steeper price sensitivity.

This trend is amplified by Pandora's Phoenix strategy, which emphasizes circular production, 100% recycled metals, and digital engagement. The brand's upcoming “Talisman” and “Minis” collections further diversify its offerings, reducing reliance on any single product line. Meanwhile, competitors like Bulgari are shifting production to the U.S. and Canada to avoid tariffs, but their high-end positioning limits their ability to compete with Pandora's price-to-value ratio.

Long-Term Viability: Tariffs as a Catalyst for Innovation

The U.S. tariff environment, while a short-term drag on margins, has forced Pandora to accelerate innovation. Its share buyback program (DKK 4.0 billion) and disciplined capital allocation signal confidence in long-term resilience. The company's ability to absorb DKK 250 million in 2025 tariff costs without sacrificing growth demonstrates financial flexibility. However, risks remain: a reinstated 37% tariff on Thai imports could add DKK 500 million in annual costs, testing its pricing power.

Investors should also consider the broader luxury sector's response to tariffs. Tiffany, for instance, is pivoting to lab-grown diamonds and U.S.-sourced materials, but its reliance on high-margin natural gemstones makes it more vulnerable to price shocks. Pandora's diversified approach—blending ethical sourcing, digital tools, and localized marketing—offers a more sustainable model in a high-tariff world.

Investment Thesis: A Contrarian Play on U.S. Demand

Pandora's U.S. performance validates the long-term appeal of affordable luxury in a fragmented global economy. While tariffs and raw material volatility pose risks, the company's strategic agility and product innovation create a moat. For investors seeking contrarian opportunities, Pandora represents a compelling case: a brand that has turned global challenges into a U.S. growth engine.

However, caution is warranted. The U.S. market is not immune to macroeconomic shocks, and rising silver prices could pressure margins. Yet, Pandora's full-year guidance of 7–8% organic sales growth and 24% EBIT margin targets suggest a disciplined path forward.

In a world where global luxury brands are struggling to adapt, Pandora's U.S. resilience offers a blueprint for success. For those willing to bet on the enduring allure of affordable luxury, the Danish jeweler's story is far from over.