EU CONSUMER CYCLICALS: Pandora: 3Q Results
(PNDORA: Baa2/BBB/NR)
Slow down in LFL on a Europe drag (namely Germany, UK, France & Italy) but otherwise 70% of revenue base is growing at over 6%. October group LFL growth is faster than 3Q. The gross/margin headwinds are as expected as is guidance for FY26 - both given its exposure to the fast rising Silver prices. Reminder CEO of 7yrs steps down early next year, CMO will take the reins. Equities not showing much faith in the co.
- 3Q sales DKK 6.3b (€840m), organic +6% (LFL +2%, network expansion +5%, other -1%). Net of FX +2.7%.
- LFL: US +6%, Europe -1%, Rest of World +6% - each makes up 1/3 for group
- Online (18% of sales) +9%, stores +1%
- YTD LFL +3%
- Gross margin 79.3% (-80bps)
- -100bp headwind from Silver/Gold, -170bp from FX
- EBIT margin 14.0% (-210bps)
- Above gross headwind + 110bp tariff headwind (faces 19% Thai tariff)
- Net levered 1.6x, was guiding to 1.3x by year-end on normal seasonality (target 1.0-1.5x)
Current trading: October LFL +4%
Guidance trimmed
- +7-8% organic growth unch, but LFL 1ppt lower at +3-4%, network expansion now at 4% (prev. 3%)
- EBIT margin guidance unch at "around 24%" (25.2% LY)
- 2026 EBIT margin target cut again to 23% on a now 470bp headwind from Silver
- Hedged 70-75% on Silver (& Gold) for 2026 at combined price around $31/oz (spot ~$48/oz)
- If spot of $48 is assumed for unhedged 25%, 2027 margin impact (impact always delayed) would be 370bps it says
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OPTIONS: Largely Upside Lean In Euribor, Plenty Of Condors
Monday's Europe rates/bond options flow included:
- DUX5 107.10/107.00ps, sold at 6.25 in 3k (ref 107.03)
- ERH6 98.00/06/12/25 broken call condor with, the ERH6 98.25/43 call spread paper paid 0.5 for both on 1.75K
- ERH6/ERM6 98.12 put calendar 5K given at 1.5, selling the M6 to buy the H6.
- ERM6 98.375/98.50/98.75/98.875 call condor, bought for 1 in 10k
- ERM6 98.50/98.625/98.75/98.875c condor, bought for half in 10k (ref 98.07)
- 2RZ5 97.75/98.00cs vs 3RZ5 97.62/97.87cs, bought the 2yr for 2.75 in 2.5k
- SFIZ5 96.05/95.90ps 1x2, bought for 0.25 in 2k
- SFIH6 96.55/96.65cs, bought for 1 in 7.78k
- SFIF6 96.20/96.10ps vs 0NF6 96.30/96.20ps, bought the front for half in 5k
BONDS: MNI Europe Pi: Increasing Shorts In Schatz
We've just published our latest Europe Pi bond futures positioning analysis - Download Full Document Here
- European bond futures have mostly moved off the shortest-leaning/least long structural positioning seen in August and early September over the past week or two, with longs set and shorts covered over the course of last week.
- However positioning is very mixed across contracts, and some (Schatz, Gilt) have been going against the grain.
FRANCE: Ex-PM Lecornu: Will Hold Final Talks On Stability And Inform Macron Weds
Outgoing PM Lecornu writes on X.com that "I have accepted, at the request of the President of the Republic, to hold final discussions with the political forces for the stability of the country. I will tell the head of state on Wednesday evening whether this is possible or not, so that he can draw all the necessary conclusions." (As translated by X.com's Grok).
- USDEUR and OAT futures little changed on the news, with the same main options still appearing to be available to President Macron: early elections, a new PM to attempt to form a stable government, or fresh elections.
- However this puts a slightly more concrete timeline (late Wednesday) on when we might hear about what options Macron will pursue.
