Pandora said it is in a “strong financial position” to sustain a prolonged Covid-19 crisis, as it recorded “positive organic growth” in the first quarter of 2020.
Despite a recorded 14% drop in organic growth, its EBIT margin was 15.3% in the three months ended 31 March 2020.
The group said that this margin “indicates how Pandora can maintain positive profitability even in periods with very weak demand”.
Nonetheless, Pandora said the pandemic has had a “material negative impact” on the financial performance in the quarter.
In the last week of March, sell-out growth was down by 70%. It has since improved to a fall of 55% based on “strong online performance” and a gradual re-opening of physical stores across the globe.
Before the pandemic, financial performance in the first two months of the year was “strong”, with organic growth increasing 1% due to key markets in the US, the UK, Italy, France and Germany.
Pandora said: “The development indicated an effective turnaround before the COVID-19 escalation. The brand momentum that was built during 2019 continued to improve in early 2020, driven by media investments and a stronger and more consistent marketing message.”
The jewellery group said that immediate cost and cash initiatives had also been initiated to protect its financial position during the pandemic, whilst the execution of ‘Programme NOW’ will help to “leverage” the brand’s momentum when demand returns.
Pandora also revealed it has liquidity to sustain a stress-test scenario where all physical stores are temporarily closed throughout the year.
An additional committed loan facility of 3bn krones (£350m) with its main relationship banks has also been established, whilst Pandora intends to sell 8 million treasury shares in an accelerated book-building/
Alexander Lacik, president and CEO of Pandora, said: “We are focused on managing the current crisis, and we do our utmost to protect our employees and create a safe environment for them and our customers.
“Among our 28,000 employees, we have only had a few reported cases of COVID-19.”
He added: “The group is now preparing for the recovery after the pandemic, and our strong performance in January and February makes us confident in the underlying brand momentum.
“We have implemented cost and cash initiatives to ensure that we have the necessary financial strength for a strong commercial comeback when demand starts normalising.”