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Pandora, the world’s biggest jeweler, which is best known for its silver charm bracelets, said that it will stop selling mined diamonds and switch to affordable, laboratory-grown gems as part of a broader focus on sustainability.
“Diamonds are not only forever, but for everyone,” said Pandora Chief Executive Alexander Lacik in a statement on Tuesday to announce the launch of Pandora Brilliance — the company’s first collection using lab-made stones.
Shares in Pandora
PANDY,
PNDORA,
rose 5.78% in early European trading on Tuesday. The stock has risen more than 10.25% in the year to date, according to FactSet.
Copenhagen-based Pandora used mined diamonds in about 50,000 pieces last year out of a total of around 85 million pieces of jewelry. The company said the new collection aimed to “transform the market for diamond jewelry with affordable, sustainably created products.”
Read: For Engagement Rings, Are Natural Diamonds on the Way Out?
It will initially be introduced in the U.K. with plans to launch in other key markets next year. The pieces will start from £250 ($347) and each stone ranges from 0.15 to one carat, the company said.
The lab-created diamonds have been grown with more than 60% renewable energy on average, a figure that is expected to rise to 100% when the collection launches globally.
Demand for man-made diamonds has been steadily growing, particularly among younger customers, who are eager to identify gems that are guaranteed to be conflict-free and easier on their wallets.
The market for lab-grown diamonds currently enjoys double-digit growth, according to the latest report from the Antwerp World Diamond Centre and the consulting firm Bain & Company. Prices have also been falling, and man-made gems are now up to 10 times cheaper than mined diamonds, making them more accessible to a wider range of price-sensitive consumers, the report noted.
The launch of Pandora’s new collection came as the company reported better than expected first-quarter results and upgraded its full-year forecast. It now expects underlying revenues to increase by more than 12%, up from more than 8% previously, and its operating profit margin to be more than 22%, up from more than 21%.
Read: Pandora closed 30% of stores in January
The company said it plans to grow its core markets, with a particular focus on China and the U.S., where its brand penetration is still low. The two markets represent more than 50% of the global jewelry market.
Analysts at RBC Capital said that Pandora had demonstrated “impressive resilience” against a challenging COVID-19 economic backdrop with a healthy channel shift into e-commerce.
“From here, we view its path to positive revenue growth as more challenging, and we remain cautious on its path towards positive retail LFLs [like for likes]. Consensus estimates are elevated from FY21E [financial year 2021 estimate] and valuation is less supportive,” they wrote in a research note on Tuesday.
