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Pandora, the world’s largest jewellery maker by volume, said that young consumers were behind a boom in laboratory-grown diamonds that has led to a slump in sales of mined ones and helped the Danish group’s shares outperform luxury rivals.
Alexander Lacik, chief executive of the mass-market jeweller, told the Financial Times that lab-grown diamonds were opening up the sector to new consumers as they were typically one-third the price of the mined alternative.
“People are discovering that a diamond is a diamond. It’s a different value proposition, and people are voting with their wallets . . . Older customers are more wedded to mined diamonds. Younger ones are more open to lab-grown,” he added.
Pandora became the first big jeweller to abandon selling mined diamonds in 2021 when the FT revealed it would offer only lab-grown ones, which are identical in terms of optics and chemical characteristics.
The Danish group almost doubled its sales of lab-grown diamonds in the first quarter, increasing revenue by 87 per cent to DKr63mn ($9mn). It sold DKr265mn of lab-grown diamonds last year, and is targeting DKr1bn by 2026.
Pandora is using lab-grown diamonds, particularly in the US, to highlight its move from being known above all as a seller of charms — pendants hung on bracelets or necklaces — to a full-range jewellery chain.
As luxury groups such as LVMH and Kering face up to a slowdown in sales that has seen their shares stagnate or fall in the past year, Pandora upgraded its sales forecast for 2024 on Thursday and has seen its share price more than double in the past 12 months.
“It’s clear that our positioning to be an accessible jewellery company in a situation where discretionary [spending] is pressured means that we are in the sweet spot. Globally, the jewellery market continues to be sluggish and, of the few companies that report results, they’re all having a rougher ride than us,” said Lacik.
Diamonds historically represented a tiny part of Pandora’s business, just 50,000 products of the 85mn it sold in 2021. Even at a lower price than mined gems, Pandora’s lab-grown diamonds are priced higher than most of its products with a 0.15 carat ring starting at $290.
Leading diamond miner DeBeers said last month that its output dropped by 23 per cent in the first quarter while natural rough diamond prices have fallen by more than a quarter in the past two years.
“This is a trend that nobody can doubt. In the US, close to half of all stones are now lab-grown. We are in pole position to enjoy this migration that we see as inevitable. But us entering into diamonds is a long game,” said Lacik.
Pandora’s revenues increased by 18 per cent on an underlying basis in the first quarter to DKr6.8bn, it said on Thursday. It raised its forecast for underlying sales growth in 2024 from 6-9 per cent to 8-10 per cent.
