PANDY - Pandora: Transformation Into Full Jewelry Brand

2024-05-28 17:13:16 ET

Summary

• Pandora has transformed from a one-product company to a versatile jewelry brand with a new strategy that focuses on brand desirability and product personalization.
• The company's strategy has been successful, with increased revenues and operating margins, and positive investor response to its first-quarter earnings.
• Pandora has a capital allocation plan for shareholders, with buybacks and dividends, and its estimated annual return aligns with its historical returns.

Investment Thesis

Pandora ( PANDY ) is a Danish jewelry brand offering a wide range of affordable products such as rings, bracelets, necklaces and earrings. The company has vertically integrated supply chain and covers the production, marketing and distribution of its products. At the beginning of May, the company reported its first quarter results and confirmed its transformation into a full jewelry brand. Even though the annual return on Pandora, with dividends included, would exceed 18.5% p.a. over the past three years, I believe Pandora’s share price does not fully reflect the company’s ability to expand into new products and grow in new markets under its new corporate strategy. In the following, I will describe the company’s business model, its new strategy under the excellent CEO Alexander Lacik, and conclude the article with Pandora’s valuation. Pandora is definitely not a company that makes investors rich quickly. However, I think Pandora is a long term compounder, rewarding patient investors with above-average return over an extended period of time....

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