EU CONSUMER CYCLICALS: Pandora; 4Q (to dec) results
(PNDORA; Baa2/BBB)
When it priced its 30s in May we said "tad surprised it did not tighten away a 15bp NIC (unch from guidance) & leaves final looking attractive. It gave +50bps over troubled Kering (Gucci Parent) for 2-notch lower defensive retail exposure." That spread is at 35bps now and might not be done just yet. Silver is spiking higher again {XAG Curncy} - a headwind to margin improvements but not a credit mover at those levels.
- 4Q organic growth of +11% (LFL +6%, network expansion +5%). FY +13%, FY LFL +7%.
- 4Q US LFL +9%, Core Europe flat (Germany +28%, UK -3%, Italy -10%, France -14%), Rest of Pandora +11%
- 4Q gross margin 80% (+50bps), EBIT margin 34.7% (+70bp) (FY 25.2%)
- FCF of DKK6.8b up from 5.5b last year. 5.5b sent to equity holders
- g/n levered 1.3x/1.1x, below guided to net 1.2x and within target 0.5-1.5x
- targeting 1.3x by end of 2025 (and notes will seasonally peak in Q3)
FY 25 guidance;
- +7-8% organic revenue growth consisting of +4-5% LFL
- Q1 trading is in the HSD LFL growth but expects that to moderate
- EBIT margin of "around 24.5%" (-70bps yoy).
- in-line with previous guidance and will reflect delayed impact of silver prices (30% of costs, 70%+ hedged over 1yr F)
- Based on Silver price of $30/ounce still sees target of 26-27% by 2026 achievable although likely to come in at lower end
- Capex at ~7% of revenues
- Equity pay-outs totalling DKK5.6b
Headlines from CEO speaking point to minimal impact;
- "Pandora Sees Negligible Impact from U.S Tariffs on China, CEO Says
- Pandora Could Suffer Some Impact From U.S. Tariffs on Thailand or Europe, CEO Say
- Pandora Expects Harder Competitive Context This Year, CEO Says" -bbg
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US TSYS/SUPPLY: Preview 3Y Note Auction
Tsy futures are trading near learly morning highs ahead of the $58B 3Y note auction (91282CMF5) at 1300ET, WI is currently at 4.321%, 20.4bp cheap to last month's auction.
- December auction recap: Treasury futures remained weaker, near lows after nearly in-line $58B 3Y note auction (91282CMB4) drew 4.117% high yield vs. 4.115% WI; 2.58x bid-to-cover vs. 2.60x prior.
- Peripheral stats saw indirect take-up recede to 64.18% vs. 70.62% prior; direct bidder take-up rebounds off prior low of 9.62% to 20.71%; primary dealer take-up recedes to 15.11% vs. 19.75% prior.
- Timing today's 3Y note sale: results will be available shortly after the competitive auctions closes at 1300ET.
EUROPEAN INFLATION: Bundesbank Estimates Firmer Sequential German Services CPI
The Bundesbank’s estimate of seasonally-adjusted German CPI suggests sequential core and services inflation accelerated in December. Respective mid-term momentum measures were mixed and did not see a major shift this month, however. The December data overall points towards some inflation stickiness at an elevated level.
- Overall core inflation accelerated to 0.26% M/M SA (0.17% in Nov, 3.1% annualized) on a seasonally adjusted basis per Buba, as services inflation accelerated to 0.26% M/M (0.09% in Nov, 3.2% annualized). Even so, the rate of sequential services CPI remained below its 2024 average of 0.34%.
- Manufactured goods ex-energy inflation meanwhile remained broadly unchanged, at 0.25% M/M (vs 0.26% in Nov, 3.1% annualized).
- 3M/3M measures were mixed: core 0.78% (0.75% prior), services 0.73% (0.79% prior), and manufactured goods ex-energy was 0.88% (0.71% prior).
LOOK AHEAD: Tuesday Data Calendar: JOLTS, ISM Services, Tsy 10Y Re-Open
- US Data/Speaker Calendar (prior, estimate)
- 7-Jan 0800 Richmond Fed Barkin economic outlook, (text, Q&A)
- 7-Jan 0830 Trade Balance (-$73.8B, -$78.3B)
- 7-Jan 1000 JOLTS Job Openings (7.744M, 7.750M)
- 7-Jan 1000 JOLTS Job Openings Rate (4.6%, --)
- 7-Jan 1000 JOLTS Quits Level (3.326M, --), Rate (2.1%, --)
- 7-Jan 1000 JOLTS Layoffs Level (1.633M, --), Rate (1.0%, --)
- 7-Jan 1000 ISM Services Index (52.1, 53.5)
- 7-Jan 1000 ISM Services Prices Paid (58.2, 57.5)
- 7-Jan 1000 ISM Services Employment (51.5, 51.1)
- 7-Jan 1000 ISM Services New Orders (53.7, 54.0)
- 7-Jan 1130 US Tsy $85B 42D CMB auction
- 7-Jan 1300 US Tsy $39B 10Y Note re-open (91282CLW9)
