Jewellery large Pandora may add some sparkle to your portfolio

Women in a hundred countries will be unwrapping a sparkly something from Pandora this Christmas. The Danish firm, valued at 100 billion kroner, or £11.5 billion, on Copenhagen’s stock exchange, is the world’s largest jeweller.

Its chief executive, Alexander Lacik, says its dominance of the bauble sector is based on tapping in to customers’ life stories. The lab-grown diamonds and the charms that dangle from its bracelets have, he argues, just as much emotional significance as costly gems in celebrating milestone moments.

In 2023, sales in Pandora’s 7,800 outlets, including 2,800 of its own shops, hit £3.1 billion. Turnover in the UK, its second market after the US, was £448 million.

Ads for the jewellery are all over British TV but its shares are a hidden gem. They have soared 339 per cent in the last five years – so would you be better off asking for Pandora shares in your stocking, rather than a trinket?

Pandora is one of the world-beating Scandi super-trooper stocks with fellow Danish company Novo Nordisk, maker of the weight loss drugs Ozempic and Wegovy.

Accessibility is its secret: you don’t have to be rich to buy a £25 charm for your bracelet, which is why 50 million are sold every year.

The firm sold 107 million pieces of jewellery in 2023, ranging from those £25 charms to the diamonds sported by Pamela Anderson at New York’s Met Gala. The 57-year-old actress, an ambassador for the brand, wore 200 carats of pink and white lab grown diamonds – thought to be worth about £1,800.

About 40 per cent of Pandora’s sales are racked up at Christmas, so when Lacik flew into London for 48 hours this month, he was on a mission to put more Pandora goodies under British Christmas trees.

Lacik, 59, was born in Czechoslovakia. After the Russian invasion in 1968, his parents fled to Sweden, and he was brought up there from the age of three.

After spells at consumer goods firms Procter & Gamble and Reckitt, he took over at Pandora in 2019. His predecessor stepped down after a profit warning in 2018.

‘There was a narrative that Pandora was going to disappear,’ he cheerfully recalls. Previous management, he says, had lost focus – introducing too many new products that weren’t quite right, followed by streams of discounts.

Under Lacik, Pandora has got its shine back, despite having had to contend with the pandemic. Shares are up 36 per cent this year in spite of pressure on profit margins from higher gold and silver prices and a tough background for the wider jewellery sector as customers tighten their belts.

Pandora has been well placed to benefit from people seeking affordable adornments. Lacik says his jewellery is ‘all about sentiment’ rather than spending big sums.

‘We serve a profound human need to tell stories,’ he adds, referring to the role of jewellery as a memento, token of love or badge of pride, marking some of the major moments in women’s lives. We have found a way to do it through jewellery. If we were a tech firm, we would have invented TikTok or Meta.’ It sounds like an overblown way to describe costume jewellery. But the philosophy helped Pandora evolve to today’s heights from a single Copenhagen store opened in 1982 by goldsmith Per Enevoldsen and wife Winnie.

The firm is still based in Copenhagen, though its charms have been produced in Thailand since 1986.

The chain has 240 stores in the British Isles with three more set to open in the next year. There will be more in the US, where there are already 479 stores.

In the group’s most recent third quarter, profits rose 7 per cent to £110 million while sales were up 9.5 per cent to £682 million.

Sceptics may feel the company, and its share price, are vulnerable to the vagaries of fashion. Its best known item is the charm bracelet, but Lacik wants to ‘unlock a significantly larger market’, by moving into the engagement ring business with lab-made diamonds.

The annual market in these gems – seen as more ethical than mined diamonds – may be £20 billion, according to Statista. They are as much as 90 per cent cheaper than mined stones, which boosts their attraction to Pandora’s young and cost-conscious clientele.

Lacik insists they are as ‘real’ as any other diamond, yet somehow they are seen as less meaningful.

So would he give Pandora jewellery to his wife? Yes, he says. He recently gave her a £90 North Star charm and there might just be another piece wrapped under the Christmas tree this year.

But for investors looking for Santa to bring other Scandi-grown goodies from his Nordic haunts there is plenty to chose from.

MORE NORDIC SPARKLERS

Scandinavia may be small but some of its shares are mighty – and you can invest directly through leading platforms in the UK such as Hargreaves Lansdown and Interactive Investor.

There are also managed funds, such as Fidelity Nordic, where an expert will pick shares for you.

Or consider a fund that tracks the performance of a relevant index, such as the Amundi Nordic Exchange-Traded Fund (ETF).

‘Charges are higher as you’ve got currency conversion to take into account, but it’s as easy as buying UK listed shares in my view,’ says Ben Yearsley, director of Fairview Investing.

Novo Nordisk: 589 Danish kroner

Despite losing £82 billion in value late last week, the Danish maker of weight loss drug Ozempic has had a roaring two years. It has been Europe’s most valuable listed company since knocking French luxury goods giant LVMH off the top spot in September 2023.

Sceptics point to increasing competition in the sector. But Derren Nathan, head of equity research at Hargreaves Lansdown, says if operational issues, including huge demand, are overcome ‘investors could be further rewarded’.

Recommendation: BUY

Carlsberg: 830 Danish kroner

The Danish brewer has had a tough 2024 after a cold, wet summer in Europe hit sales, and the poor reception for its £3.3billion takeover of tonic water maker Britvic, which has just got a green light by competition watchdogs.

‘It is still set to have a reasonable year,’ says Jeremy Fialko, a research expert at HSBC. He adds it could see a sales revival in China and calls the 19 per cent share price fall over a year ‘unjustified’.

Recommendation: BUY

AstraZeneca: £102.56

Most UK investors think of AstraZeneca as British, but it is Anglo-Swedish. The drugs powerhouse overtook Shell as Britain’s most valuable company in April.

It has done well over the past decade, though lately shares have been hit by corruption allegations against senior staff in China.

Nathan says: ‘The reaction looks somewhat overdone and could represent an opportunity to gain exposure to a quality name in the sector. However, until more clarity emerges from China, further volatility can be expected.’

Recommendation: BUY

Zealand: 728 Danish kroner

A minnow compared with the other pharma firms, Danish group Zealand has enjoyed a 105 per cent rise in its share price this year. It is trialling a new weight loss drug that could see it come up against Novo Nordisk and Eli Lilly.

Susannah Streeter of Hargreaves Lansdown points to ‘hurdles’ bringing the drug to market, but says: ‘It’s clear there is huge appetite for any developments in this field, given how weight loss drugs have such mass appeal in development markets.’

Recommendation: BUY