Pandora A/S
CSE:PNDORA
Pandora A/S
Pandora A/S, a hallmark in the realm of affordable luxury jewelry, began its journey in 1982, when Danish goldsmith Per Enevoldsen and his wife Winnie laid its foundational ethos of crafting unique jewelry pieces. From humble beginnings as a local shop in Copenhagen, Pandora has evolved into a global entity, renowned for its customizable charm bracelets. The underlying magic of Pandora's success lies in its innovative blend of high-quality craftsmanship with emotionally resonant designs. By tapping into the universal desire for personal expression, the company has fostered a sense of individuality that resonates with its customers, while maintaining a price point that brings luxury within reach for a broader market.
Pandora's business model thrives on a mixture of direct retail and a robust network of third-party distributors, ensuring its wares grace over a hundred countries worldwide. With manufacturing operations centralized in Thailand, the company harmonizes cost efficiency with sustainable practices, a combination that bolsters margin stability. Revenue generation is primarily driven by the sale of these personalized pieces, with customers mixing and matching from a vast array of charms, rings, necklaces, and earrings to craft their distinct personal stories. This fusion of operational efficiency, strategic distribution, and a product line that captures the zeitgeist of modern sentiments has enabled Pandora A/S to secure its position as a leader in the jewelry industry, continuously expanding and adapting to global trends and tastes.
Earnings Calls
In Q1 2025, Pandora achieved a 6% like-for-like growth and 7% organic growth, driven by its Phoenix strategy. Despite economic challenges, gross margins increased by over 100 basis points, contributing to a nearly 20% year-over-year EPS growth. Looking ahead, Pandora maintains its revenue guidance of 7-8% organic growth and 4-5% like-for-like growth for 2025. However, EBIT margins are expected to adjust to around 24% from a previous estimate of 24.5% due to external cost pressures, particularly from FX volatility and tariffs. The company remains committed to investing in brand development while navigating these challenges.
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Good morning, everyone, and welcome to the conference call for Pandora's First Quarter Results for 2025. I'm Bilal Aziz from the Investor Relations team, and I'm joined here by our CEO, Alexander Lacik; CFO, Anders Boyer; and the rest of the IR team.
As some of you may understand, we have a bit more to cover than usual today, but there will be a Q&A at the end. If you could kindly limit yourself to two questions at a time, that would be wonderful. Please pay notice to the disclaimer on Slide 2 and turn to Slide 3. I will now hand over to Alexander.
Thank you, Bilal, and welcome, everyone. It's actually not been that long since we spoke to you after the '24 results, but I'm sure for some, it felt like a long time given the ever-changing world we live in. For Pandora, you'll be pleased to know, it's been more of the same in Q1 of '25. We basically delivered another solid quarter despite the noises around us. We generally like to keep things simple in this company, and that means always coming back to what works for us, the Phoenix strategy and our overall mission to build a full jewelry brand. And that's what helped drive the Q1 performance.
We delivered 6% like-for-like growth, which helped drive organic of 7%. Once again, you'll see within the numbers that we kept our Core nice and stable, but then complemented this with strong growth in fuel with more, exactly in line with our mission. On profitability, I'm happy to also report that we started very strongly. Most of you know that the cost environment we and most of the sector faces. But our Q1 performance hopefully emphasizes that this will not change the fact that Pandora is and will be very profitable as a company.
Our gross margins are up over 100 basis points again in the quarter. And EBIT margins also slightly up speaks to that fact. Finally, our return on capital continues to remain very high and the fact, as I mentioned previously, helped drive nearly 20% EPS growth in the quarter. All in all, very pleased with the quarter. And in the context of the background, you probably agree it's increasing -- that is increasingly volatile.
Now let's look ahead and move to Slide 4, please. You can probably understand that given the world we live in guiding for the future becomes increasingly tricky. Nonetheless, we've highlighted our thoughts here, so let me summarize. I know some of you will ask on the impact we are seeing from the prevailing uncertainty related to trade tariffs.
From a top line perspective, it's too early to have an assessment. For now, we delivered a good Q1 and I have not yet seen any effects on our business for more cautious consumer behavior that some are fearing. However, it's very early days, so it would be premature for us to guess how this is going to play out in the end. Therefore, right now, we simply reiterate our guidance for what we said in February. This is for organic growth guidance of 7% to 8% with a like-for-like growth of 4% to 5%. This range does not account for material change in economic growth or consumer behavior. So we'll be staying very vigilant and update you if required.
That brings me naturally on to current trading. We've traded through the month of April so far in Q2. As a reminder, between short time period, there's always phasing of promotion, changes in the trading calendar, which can impact things. But so far in Q2, our underlying trends are at the mid-single-digit levels for like-for-like growth. That's consistent with the current guidance range. We have also a 4% to 5% like-for-like growth. Our EBIT margin guidance, eventually, I'll let Anders comment on that in detail.
But in summary, there's two headlines here. We've adjusted our target slightly to be around 24% versus around 24.5% previously. This is mainly on recent FX movements, which have been very volatile. And secondly, our underlying progress on our profitability remains exactly on plan. We're investing in our business while still delivering very high profitability. So there's no change there. Of course, the tariff-related situation has potential to impact our margins too, and I will let Anders detail out the scenarios there. But even there, we're already preparing for various outcomes and have already acted to mitigate potential headwinds that could come our way.
So in short, we are controlling the factors we can do and preparing accordingly. Now let's move to Slide 6, please. I mentioned earlier how in times of uncertainty, it becomes even more important, we remain clear on what we're trying to achieve. This slide hopefully illustrates better. It's our usual Phoenix wheel with our 4 pillars that are intertwined. Through the quarter, we executed across all of these 4 pillars, and some of those, I will detail out shortly. I'm convinced that as long as we stay true to these 4 pillars and invest sufficiently behind them, we will continuously drive more consumers into our brand, and that's the single most important thing I care about.
That brings me nicely on to the next slide. Given the external environment, I thought it could be helpful to remind everyone on some key characteristics of Pandora. Whilst the environment may be volatile, we'll continue to invest behind our brand, people and growth. We are a global player in a fragmented market that has a true scale advantage. And we will flex that if we can drive our competitive advantage further. We also have a brand that is becoming increasingly strong and has a strong gifting proposition. We believe that adds an element of resiliency to our business as consumers were always gravitate towards well-known and trusted brands, particularly in uncertain times.
Finally, our starting point on the gross margin is very high. As an executive management team, that gives us options that others may not have. It means that even in harsh scenarios, the business will remain highly profitable and generate significant free cash flow, to date will continue to return to shareholders. So in summary, we don't control what happens around us and nor do we pretend to be able to predict the future. Instead, we choose to focus on what we have and are building on. These are very solid foundations backed by the strong strategy that I just mentioned. And in recent history, this has served us very well.
Next slide, please. Let's start diving into some details of what happened behind this Phoenix strategy in the quarter. As usual, I'll start with the brand, and here we show some examples of our marketing efforts, which are consistently driving brand heat. In Q1, some of you may have noticed that we launched the next phase of our BE LOVE campaign. This campaign featured a new visual identity and also introduced a new cast of brand faces. This included actress Winona Ryder and supermodel Iman to mention a few. The campaign underscores our ability to connect with our consumers through telling stories for our beautiful products. We will continue to invest behind our campaigns at full throttle going forward.
As I mentioned, in terms of our certainty, the value proposition of our brand, we believe, is unmatched. Reminding consumers of this and driving brand heat through cultural relevance is going to be very important. On the slide, you can also see how we leverage extensive earned media coverage through the quarter to make sure we stay top of mind.
Next slide, please. You've often heard me talk about how our brand and designs go hand-in-hand. Tied to that, I'm quite excited on our product pipeline this year, which is going to be focused on our Core charms and carrier offering. We'll be bringing new and relevant aesthetics in our offering at the Pandora brand promise of being accessible to the many. In the second half of this year, you will see launches of our new mini charm selection and medallions. Both hold good potential in the jewelry market, where we know good consumer appetite is. Furthermore, in the case of medallions, we also know some of the new designs will also be compatible for necklaces, which ties nicely into our full jewelry brand promise. So overall, the past two slides should give you comfort that our plans for our brands and exciting designs are moving ahead at full speed, and we have many initiatives that we are excited about.
Next slide, please. Yes. In the past quarter, I mentioned the launch of our new e-commerce platform. As a reminder, our old existing e-commerce platform has been incredibly successful. But as part of our mission to dial-up brand desirability, we have been investing in a newer platform for complete new look and revamp. This new platform brings the brand to life for a much more immersive experience. This is critically important, given this is our largest brand window. We tested a new platform through Q4 last year in Italy and Canada with encouraging results and took this further in Q1. And I must say the results have been quite encouraging. We're seeing greater engagement across our brand from the new platform, which was the primary aim.
Meanwhile, most of our commercial metrics are at least in line or better than the old platform. So this is going quite well for us. And by the end of the quarter, quarter 2, that is, we will be live across all our markets. For some of you already will have lived on the new platform, I highly advise you to experience the new platform yourself. I'm sure you will see the tangible difference.
Next slide, please. Now let's look at our two segments, Core and Fuel with more. As you know, our strategic aim is to be seen as a full jewelry brand, which essentially entails driving steady growth in the Core whilst adding higher growth in Fuel with more. As a global brand, there will always be shifts between collections depending on consumer preferences, timing of new products and specific marketing campaigns. That means that the in-year focus between collections will naturally vary. I already mentioned earlier how this year, our innovation will be more skewed to our charms and carriers. The big picture message we look at is strong Core and fueling this with more. The specific collection that drive our growth in a given year is more of a function of that..
You can see from this slide that our strategy is working. Within our Core, we've seen a very steady 2% like-for-like in quarter which was supported by good performance in our collaborations. Next slide, please. Our Fuel with more segment continues to grow quicker, having achieved double-digit like-for-like growth over the past many quarters. This continued into Q1 with a like-for-like growth of 12%. It's great to see that we indeed continue to drive more consumers across all of our beautiful collections. In Q1, in particular, our growth here helped by strong growth still in Timeless and the ESSENCE range. Meanwhile, Pandora Lab-Grown Diamond is performing quite well after the introduction of our new microfine offering. So I think the like-for-like was 140-something. And in unit terms is 180-something, so very strong growth.
Now let's discuss the performance within the markets. As usual, I'll start with a big market to the U.S., which delivered a very strong 11% and like-for-like growth. Another great quarter and a small acceleration actually. I know some of you would have seen last week's GDP figures from the U.S., so this makes the performance stand out even more. There's still no magic formula here. We believe this is driven by still strong brand momentum with our major KPIs moving in the right direction. We remain very excited about the future long-term potential of this market but clearly watching the broader macroeconomic environment very carefully.
I'm also sure most of you will also keep that in mind as you think about the near term. This quarter, our gap between our organic growth and like-for-like was not as high as it's been in the past. But that was just due to temporary phasing of selling, something we had already flagged previously. This impact will gradually ease as we move through the rest of the year.
Next slide, please. In Europe, our total like-for-like growth across all markets came in at 4%, helped by strong growth in markets disclosed in rest of Pandora such as Spain. The performance in the key European markets did slow to minus 2% in the quarter, there are a few components to this. Our growth in Germany did moderate to 1%. As you remember that our comparative was particularly challenging, and we're coming off many years of very strong growth. So this normalization was somewhat expected at some point.
In the U.K., we saw a small improvement to plus 2% like-for-like, helped by strong execution of the Mother's Day, which happens a little bit earlier in the U.K. than rest of Europe. In Italy, we continue to face some challenges and a like-for-like declined by 9%. We have now finished our internal diagnosis of this market and the clear action plan is being developed. In France, our growth improved slightly to minus 6% as we realigned our media model. However, a bit like Italy, we got a specific plan for this market to ensure it drives consistent like-for-like growth. And in both markets, there's a clear need for us to develop the local cultural relevance and investing a bit more behind our media efforts.
Next slide, please. In rest of Pandora, we delivered another strong quarter of plus 8% like-for-like growth. This performance is still off a tough comp base, so remains strong in that context. As I mentioned in the previous slide, a big chunk of other European exposure actually sits, which helps the growth here. So namely, in this quarter, Spain and Portugal continued to drive double-digit like-for-like growth, which also then complemented by other countries such as Canada.
Next slide, please. Finally, in China, we had 11% like-for-like growth and performance remains challenging overall. We are still considering next steps in this market and making progress in our efforts to optimize the P&L and optimize the store networks with closures of at least 50 stores this year. In Australia, we saw small improvements to 2% like-for-like growth, and this was helped by some improved consumer sentiment within the region, but also I'm happy to report that Pandora's new online platform has seen good commercial metrics as well.
Next slide, please. Here, you can see again the immense value we create from our network expansion. There's been no change to our plans here since February, and maybe that's kind of the point. Network expansion is something we control and drive. Even in uncertain environments, we remain confident that this will remain a good driver of our growth as there is still ample white space opportunity for us. You can see on the top of the slide how attractive the economics of a new store opening is for us. Whether it's a concept store or shop-in-shop, the revenue ramp-up is incredibly quick in year 1 and the full EBIT margin is typically between 35% and 40%. So we will continue to expand on this journey ahead in '25, where we target 75 to 100 total openings and an organic growth contribution of 3%. We've started the year well with a 4% organic growth contribution in Q1, which comes from the openings over the past 12 months. There's more to look forward to here in that regard.
Next Slide, please. Finally, before I hand over to Anders, I just wanted to highlight that the rollout of our new store concept is going quite well. We now have a total of 477 new concept store in our new format. And in this quarter, we opened up in some high-profile locations such as Oxford Street in London.
For those who're in London, please do go and visit and don't forget to buy something. The store has had a very encouraging start, and it's another good demonstration of what we're trying to do. Elevate the in-store brand experience for our consumers and present Pandora as a full jewelry brand without necessarily explicitly saying so. I've always said that our store concept would be one major driver of our overall mission.
So far, in our new format, we continue to see encouraging commercial metrics. And as I mentioned in the previous quarter, it's good to see that our store staff are also starting to improve execution in the store. The new layout of the store has good productivity benefits and over peak trading occasions such as Christmas and Valentine's Day, we're getting better and delivering better results. And on that note, I'll hand it over to Anders for a closer look at the financials.
Thank you, Alexander, and good morning, everyone. Please turn to Slide 20. In many ways, the Pandora business is actually quite simple. The Phoenix strategy is all about building on the existing assets of the business in a way, just doing more of the same. And when that is converted to a P&L. It translates into a P&L that's quite easy to follow because there's no sort of big structural changes. It's just more of the same. And the first quarter of 2025 was exactly that. Nice solid top line growth with revenue going in the existing stores and then we open up a few new stores on top of that.
The gross margin remains at a high level, even expanding a bit. And then that feeds into a bit of EBIT margin expansion as well and all adding up to driving nearly 20% EPS growth and a very high return on capital as we are leveraging on the existing assets of the business. Of course, it's not easy to deliver, especially in the current environment. But it is a testament to our simple business model and equity story, which we've proven now through a volatile world for the past few years.
Now so back to the gross margin. You can see here on this slide that it was up just above 100 basis points in the quarter. And in a second, you will see in the margin bridge that, that increase came despite an 80 basis points drag from commodities. For this drag, we have been offset or more than offset through pricing efficiencies and channel mix. The drag from commodities and foreign exchange will increase by quarter as we go through the year. But the message that we passed on back at the full year announcement still stands. And that is that you should expect the gross margin to be only slightly down in 2025 despite 250 basis points of headwind from silver, gold and foreign exchanges.
And I'm sure you will agree with me and the rest of the team here that any company that can maintain a gross margin of almost 80% despite 250 basis points of headwind is doing something right. So next slide, please. On this slide, we are breaking down the revenue growth in the quarter. As you show and Alexander has covered the key elements already. So I'll just highlight the light pink are saying minus 3% tied to phasing of sell-in and other. And this effect was in line with what we said back in February at the full year announcement. And it is simply phasing of selling to the partners, combined with continued quite weak performance in some of our multi-brand partner stores and some calendar effects. And for your modeling, you should expect this to gradually reverse out through the remaining 3 quarters of the year.
Next slide, please. On the EBIT margin, the performance played out also in line with our expectations with a 30 basis points expansion versus last year. And the bridge that you can see on the slide here within the dotted box in the middle explains the underlying story quite well. Because as you can see, we had a headwind from commodities and foreign exchange of around 80 basis points, but then that was more than offset through leverage from both network expansion and like-for-like growth and that's the two sort of darker pink boxes in the middle. And so despite these external headwinds, our profitability remains high and in line with last year. And also just a quick comment on the OpEx. The OpEx ratio was up 80 basis points versus last year, and that's mainly linked to our continued investments in the brand with marketing expenses being up 12% in the year or 60 basis points as a percent of revenue.
Then, now let's move on to the guidance on Slide 24. There's a few points about our revenue guidance that we would like to pass on. In February, when we issued our guidance, we targeted another year of solid organic growth of 7% to 8%, of which like-for-like is 4% to 5%. And as of today, as Alexander said, there's no change to that guidance. Our initial thinking behind the guidance back in February already included a continued tepid consumer backdrop and a continued competitive trading environment. Clearly, since we issued that guidance, the macroeconomic picture is now more clouded and uncertainty has increased. But as of today, our guidance still stands. So overall, the message on the revenue guidance is that we started out well in Q1. We have left the top line guidance unchanged, but of course, the macroeconomic uncertainty has increased.
Next slide, please. On the EBIT margin guidance, the big picture message I want you to take away is that, that there's no change to the underlying drivers compared to the guidance that we provided back in February. All the building blocks that you see on this slide are unchanged from back in February, except foreign exchange, commodities and tariffs. And as I'm sure most of you are aware, there has been quite some significant foreign exchange volatility in the past month or so. And that has an impact on our margin, mainly coming from the depreciation of the U.S. dollar and a few other of our main trading currencies, and then that's only partly offset by a weaker tieback.
On top of that, we also have included a small impact from tariffs over this 90-day pause period of 30 basis points. And I'll speak about that topic later on. But in our guidance, we assume that the costs associated with tariffs remain for the 90 days. And then after that, things revert back to normal. So we've updated our EBIT margin guidance for the additional 40 basis points of FX headwind and 30 basis points from tariffs and therefore, we now see a full year EBIT margin of around 24% versus 24.5% previously. And again, the big picture message that we would like you to take away is that we are facing just under 300 basis points of headwind from external factors, I guess, we can call it. And that's the two large pink boxes in the bridge.
But despite that, we still deliver a margin of around 24%. And we do think that, that's quite a good outcome when you consider the magnitude of the headwind. And it should be repeated, as Alexander also said that within this margin, we continue to invest properly in the business.
And that brings me nicely on to the next slide, Slide 26, about the 2026 margin. We also wanted to update you on our latest thoughts about the EBIT margin target for 2026. Back in February, we communicated that we would be towards the low end of the 26% to 27% range based on the commodity and foreign exchange rates back then. And as you can see on this slide, we have updated the bridge and currently expect to be landing at around 25% next year. And just let me just talk you through a few points here on what changed. First of all, and most importantly, nothing in the underlying business has changed. And the change of the margin that we show here remain a story about headwind from silver, gold and foreign exchange. Secondly, our mitigating actions to deal with these issues are progressing quite well and according to our plans.
On pricing, you can see on the slide here that we now confirm around 180 basis points of benefit from actions that we've already taken. That's the extra pricing that we took back in October last year as well as the extra pricing that we've just taken back in April. And I'm also happy to report that our cost efficiency program is running according to plan, and that we now expect an incremental margin uplift of 50 to 100 basis points, next year in 2026. And the uplift from this cost program, we have included in the purple block called net operating leverage and efficiencies. And that block also includes the operating leverage from the underlying business. And then between those two drivers combined, we expect a margin uplift of around 100 basis points, as you can see here.
So, Therefore, the only change since February is simply the fact that we now face a total headwind of 350 basis points from commodities and FX and that's an increase of around 70 basis points since we last spoke back in February. I also want to flag that we took advantage of some volatility in the civil markets in early April. And then where we took the opportunity to hedge further out in 2026. And that we have now locked in around 70% of our entire P&L in 2026 at a spot price of $31. And to a last extent, that then removes one element of uncertainty for the 2026 EBIT margin. But of course, we still carry the sensitivity to gold and FX movements. Another way to read this bridge on this slide here is that despite 350 basis points of headwind, then Pandora can keep the margin unchanged at about 25% since 2023. That should give you some sense of our resilience in the business model.
So we do live in a world where sudden cost pressures have been part and parcel of operating a global business for some time but our ability to leverage our business model, drive pricing and cost efficiencies to offset are constant as well. So in a way, it becomes a question of when and less of if we can catch up with large-scale external cost pressures. And in that connection, we would like to stress that while reaching the 26% EBIT margin already next year in 2026 looks challenging, it is something that we still hope the longer-term ambition to deliver, and we will revert with more concrete plans on that in due course.
And then please move to Slide 27. So finally, from me, we thought it would be helpful to provide a bit more context on the tariffs. So we have three key sources of tariff impact. First of all, it's about not surprisingly, our jewelry. And that's mainly a question of the tariffs on Thailand when you import that into the U.S. Secondly, we are sourcing point-of-sales material and visual merchandising in China. And thirdly, we are shipping currently jewelry to Canada and LatAm through the U.S. Fortunately, we can confirm today that we can essentially mitigate the last two of those sources of tariffs because we can change most of the sourcing of point-of-sales material and visual merchandising into the U.S. to other countries during the next 6 months. And from early '26, we will be able to ship directly to Canada and Latin America. We were fortunately working on these mitigating actions anyways before April 2. And in a way, we're now just accelerating implementation.
So, in 6 months' time, that means that this essentially leaves an exposure on the tariff level imposed on jewelry imported from Thailand to the U.S. And we clearly do not know how this is going to play out. And in a such situation, we think it's natural to look at scenarios instead. So we have provided two potential scenarios on the slide here and the related cost impact. And I'm not going to talk them through in detail, but you can see the numbers on this slide, and we are happy to take any questions or maybe better on a follow-up call afterwards. So the numbers here that we show on this slide include two of the three mitigating measures that you can see on the right of the slide.
On top of these two, we will, of course, look at additional price increases. But to what extent we are increasing prices as a response, how much and how fast all depends on what tariffs are ultimately implemented. But the point is that the final EBIT impact could be smaller than what is shown here because the numbers just to repeat, only include the pure cost mitigating actions. So if Scenario 1 plays out as an example, then you could even say that perhaps the final impact could be quite negligible after we have made our pricing adjustments. And I also want to highlight that even in the more extreme Scenario 2, the business, even though there will be an impact, then the business will remain very profitable and generate a significant amount of cash.
And with that, I'll now hand it back to Alexander.
So thanks before jumping to the Q&A, just a couple of highlights from my side. So it's clear that our strategy is working very well, and it continues to be the guiding light for everything we do. And on a high level, it doesn't change. We remain agile as ever in this changing world like we have demonstrated in the last couple of years. Secondly we continue to deliver best-in-class profitability despite commodity and FX headwinds, which Anders just took you through. And it allows us, simply put, to keep investing in growing our brand. Third point is, of course, we do not pretend that we can predict the future. But as Anders said, our job is to ensure we're prepared to deal with the cards that are being dealt. And I think we are working really well in that respect.
And finally, we will continue with our strategic plans this year with exciting brand campaigns and designs for consumers and more rollout of our Evoke store concept. So we keep investing in the consumer proposition here.
And I think with that, we can turn to the Q&A.
[Operator Instructions]
The first question we have is from the line of Anne-Laure Bismuth from HSBC.
My first question is about the U.S. market. So do you explain what are the elements explaining such a strong performance in the U.S.? Is there any category or collection doing better than others? Are you recruiting a lot of new consumer? And what can you implement from the success of the U.S. to other markets such as in Europe? And my second question is about price increase. So you have increased prices last October. And again, in April, can you come back on the magnitude of the price increase in April? Was it across the board, across all product category? And how did the customer react to that price increase? And are we done with the price increases for this year?
I can knock off the first one. I mean the simple matter is we have one global go-to-market model. So if you think about the way the company is operating is there is a global template when it comes to advertising, products, pricing strategies and whatnot. So it's kind of -- and then there's -- let's call that, that's the 80% of the go-to-market execution finally. And then there's a little bit of localization at the back end could be things like local influencers, et cetera, et cetera.
But lastly speaking, it's one program that we roll out globally. So there is no such thing as U.S. is doing something completely different and how we can bring that back the other way. This question is some which we've had for a long time regarding Germany. And it's kind of the same story. So -- but I think what we've done in the U.S. really well, the execution has kept on improving year-on-year. We've been taking back more and more of the network. And we know that we performed quite well when we take over the network. Our e-commerce platform has been really strong in the quarter in the U.S. But there's nothing like uniquely different going on in the U.S. So we invest for growth, with a super strong team in place and they're executing very well.
Maybe, if you take the other one, Anders?
Yes. On the pricing and the -- our approach in April is the same as we've done in prior years, that is a bit of a it's not across one size-fits-all approach. It's quite tailored across markets and across price points and categories. If I look at the geographical angle, we did increase prices in April in most markets. But the average was just around -- just below 4% price increase. But there were a couple of markets where we did not increase prices for example, Italy, I think in the Turkey as well. And then there's quite a few in the 3% to 4% range and a few markets where we went beyond 4% range. Canada as an example, where we increased prices actually by 12% in April. So it's a very tailored approach based on the price testing that we're doing that you've heard talk about at the call before.
So for now, that's the 5% that we did in October, the 4% last year, the 4% that we just did in April, that's kind of it for now as we're not assuming more price increases this year. But of course, it's something that we -- it's a daily exercise where we're watching whether we see opportunities to do more. And then, of course, we have the tariff joker, so to speak, on top of the business as usual pricing exercise that we're running in the company.
The next question we have is of Grace Smalley from Morgan Stanley.
The first one would be on Germany, please. I know you mentioned that the normalization was somewhat expect I guess the magnitude of normalization was stronger than what we were thinking. So could you just comment on how that compared to your internal expectations? And as you look ahead, would you expect Germany to continue to normalize from here? Or would you expect that Q1 like-for-like performance to be kind of the trough and then for it to sequentially improve?
And then my second question, Anders, when you were discussing in terms of the mitigation, you outlined doesn't include any potential future price increases. As you are thinking about future price increases to offset potential ongoing tariffs, are you thinking about these being just in the U.S. only and you're looking at mitigating price increases just at the U.S. P&L? Or would you look at doing these increases to offset the headwinds from tariffs if they were to continue?
Okay. Germany. So just so -- in last year, in Q1, I think we grew something like 67% or something. When you grow 67% in the market that essentially isn't growing and maybe ex Pandora is probably declining. At one point, you enjoy the happy days, but you're also realistic about that this will slow down at one point. And I think we've been kind of saying that for many quarters, indeed that this very high double-digit growth will at one point starts slowing down.
Now you're right. When you look at going from 67% to 1% growth, it goes like, oh, is there something wrong here? There's nothing wrong. German business is as strong as it's ever been. I just went through all the brand metrics, are continuously improving. What we were up again. When you're up against the 67% base, I mean it is not so easy to expect that you're going to grow another 20%, 30% on top of that. That is not what we had expected. And of course, part of the 67% last year was propelled by this TikTok, viral trends that we've been talking about for a while. And we've been kind of always saying that it's very difficult to exactly pinpoint how much they're worth. But clearly, we had a lot of benefit from that sitting in the base.
So the underlying 1% is probably something different if you would clean for that. But we don't have a very good methodology to do that. So we don't waste our energy on that. I think that the main point is Germany continues to be very strong, we still see growth potential, but it's probably going to be in the -- maybe it's going to be in the high single digits this year rather than the double digits or thereabouts. So yes, I think that's Germany for us.
And then on price increase, Maybe this is not a super helpful answer. But in a way, it all depends whether it's U.S. only or whether we will do a broader price increase, it is a bit of a unprecedented situation that we are in, where I think we'll have to be agile and look at how consumers, not just in the U.S. but around the world, acting to this situation, what's happening to the sea level, in general, as we sometimes call it, if these tariff levels remain in place, I think the general sea level on consumer brand pricing in the U.S. is going to go up, as what -- so the economists would tell us, but that could also happen in other parts of the world. And that we would like to see how that plays out before we make any final decisions on pricing. We have a couple of scenarios on a slide that we have developed over the last month, but we would like to see a little bit more on what other brands are doing, what I can do, what's happening to the consumer in general, then combined with our own internal user testing before we do it. But of course, everything is in play including global pricing.
Next up, we have Thomas Chauvet from Citi.
My first question on Moments. It's been growing at about 2%, 3% LFL for most of 2024, and it was flat in the quarter. How do you think about cannibalization from potentially other lines? I see collapse was up nearly 20% in the first quarter, but down 9% last year. So is there some kind of correlation between collapse sales and Moments? And what are the initiatives you have for the rest of the year to drive back growth at the Moment's platform?
And then second question, maybe for you, Anders, on sourcing and tariffs, just points of clarification. When you say you switch source of supply to the U.S. on the right side of your slide, do you mean you're talking just about POS and visual merchandising materials? Or are you trying to find the Moments suppliers outside of Asia to manufacture and ship products to the U.S. And then have you posed the Vietnam facility expansion or creation due to open in early 2026 due to the very high tariffs that Vietnam is supposed to have. And finally, what are your contingency plan if the economies of Thailand enter severe recession, I mean your key employer in the country, anything we should be aware of?
Thomas. So on the Moments platform, I mean, really, the way if you think about how we are somehow talking about this. We talk about the Core and then we talk about Fuel with more. And it's not just done because it's convenient to talk about two things rather than seven things. But there is a thought behind that in the sentence of most of the things that we lumped in under Core actually work together. Because it's -- and now I'm going to use a sloppy term here, so please don't put it in your notes, it's a bit your do-it-yourself jewelry. And what sits under Fuel with more is finished jewelry in a way.
And on the do-it-yourself, there's -- you can now take pretty much all the charms and medallions, whatnot which we have on Pandora ME and put it on a Moments bracelet as an example, most of the work that we've done, I mean, ever since '15 or '16 when the company started doing these collabs, has actually been charms that kind of somehow sit on the Moments platform. So is there an interplay between -- yes, of course, there is. So that's why you need to look at this as one grouping rather than anything else.
Then you can kind of have a discussion on, is there a cannibalization between the Fuel with more or the Core. And I think there is not -- we don't know exactly how these flows go because that requires a different type of research than what we have. But it's -- we're kind of servicing a different occasion. So at least from a conceptual standpoint, if you're there to buy charms for existing bracelet is less likely than it was. I changed my mind, and I'm jumping in and buying something from a ring or whatever. So I think the way we look at it and the way we think about it is, on one hand, we look at the kind of the Core business, the same make sure that, that grows low single digit as a group.
And then you look at a Fuel with more and say that there's also higher, let's say, interchangeability within all of the collections that sit under that, maybe you can exclude diamonds from that statement. But the rest one could argue. We have rings across pretty much all the different collections so that there might be some play between.
So I think that's the way to judge it. And just one final note.
On collabs, it's much more hit and miss, as you would have noted last year. We didn't have a good collab.I think prior year was also so-so because it came at the back of Marvel, which -- and the Disney100, which was super strong. So we didn't manage to cycle that this year, the princess rings from Disney are doing a phenomenal job. It's very, very popular. So the collabs, they will kind of ebb and flow in a way depending on kind of consumer acceptance, but the Core business somehow, it's still the same consumer trying to serve the same occasion, let's say. So that would be kind of my thoughts.
And yes, then if we look at what's coming in the back half of this year, I think we are -- it's probably the first time since I've been here that we're putting some let's say, differentiated other than Pandora ME, I should say, differentiated innovation targeted for the Core business. So we're bringing out these medallions, which is going to come, there's going to be a big push behind it. And also, there is, let's say, a consumer need around having charms that are a little bit more not as large and clunky, let's say. So we call them mini very creative name. But it kind of tells the story. So it's still a charm proposition, but it's a little bit finer in a sense. And we know just looking around us that there are a few other brands that have the this kind of expression and designs and we've heard that from our customers as well that this is something they are looking for. So these are two quite important things that we are injecting into the Core platform in the back half of this year. And again, it's not going to be -- we launched it in two weeks and then move on to something else. We firmly believe that this can actually become quite significant part of collections inside the Core platform.
Thomas, thanks for the questions. On the sourcing in China, yes, I can see -- I understand why you asked the question, but it's about point-of-sale material and visual merchandising only. What we're referring to here. Obviously, in a situation like this, we also look at what could it be a case for Pandora producing jewelry in the U.S. depending on where our tariffs end up. And even in the high tariff cases, it's actually very hard to make that math work producing jewelry in the U.S. But of course, it's something that we have been looking at it, but don't plan for that. That's something that Pandora will communicate at a point in time.
Vietnam continues full speed. When Alexander and I had on the last update last week with the team, they had -- there was 1,800, 1,800 construction colleagues or workers at the site in Vietnam. So that means full speed because despite potential tariffs also on Vietnam. Vietnam, we need the capacity, not the least. It's good diversification in general for Pandora. So we are continuing with that full speed. And if the -- I think the third question was about what if there's a recession in Thailand or Vietnam.
Thailand and Vietnam for us, it's sort of more from a -- this is the finance guy speaking, sort of cost-only country, if you like, we don't have only very small distributor businesses in Thailand and Vietnam. So from a net perspective, so it's -- if a recession should hit, of course, I think we -- I don't think it will have an impact on how we operate in those two markets, we just continue as we do, being an important part of the Thai business community and country. And of course, that recession might have an impact on the Vietnamese dong and the thai Baht. But if anything, that could offset that the -- some of that strength that we've seen in the Thai Baht during the last year where I think the Thai Baht has strengthened 11% year-over-year versus the U.S. dollar. And of course that's some of the FX headwind that we're seeing is exactly that. So maybe that could offset some of that, just speculating.
Sorry, just to add on the Vietnam piece. Remember that the reason for building out Vietnam was not only capacity, but it was also from a business continuity standpoint. So in case something happens in one of the other two sites that we have in Thailand that we need to have enough capacity in our own network because don't forget, Pandora's volume is so vast that there is no OEM network that could cope with us turning up and say, "Hey, can you do 50 million pieces for us?" And that's just not -- and that's the reason why we made the investment in Vietnam. So I think that we will need that either way.
Next up, we have Lars Topholm from Carnegie.
Two questions from me also. One is a first question on the 2026 margin. So now you locked in silver which means, I guess, the major outstanding sensitivity is gold. Could you give a gold sensitivity? So for example, $100 on the gold price, how would that affect your gross margin and everything else equal?
And then I have a question on Italy, if you can put some more color on how you intend to turn that market around? I mean, I hear about the new product launches medallions and the mini charms, the concern would, of course, be this is one of your best penetrated markets, and you don't really have shown momentum there for a while. So are there sort of other actions you're going to take there?
You want to go first?
Yes. Lars, thanks for that question. over the last 1 or 2 years, the gold sensitive has actually increased relatively faster than silver because we've seen quite a nice right on our gold plated business. So just looking up the numbers here, sort of in the gold exposure, I'm talking about sort of the absolute krona that we are spending on gold per year is roughly 20% of the silver exposure. So if you convert our 30 basis points rule of thumb on silver, if silver prices are up $1 per ounce, then that's around 30 basis points. Then if gold is up $100, I'm just trying to do the math in my head here, that's also actually just around a 3% increase then that would be...
That should be 8 bps something like that.
5-ish, 5 basis points or so on $100. Just getting it confirmed by my colleague here.
Okay. On Italy, Lars, so we just concluded kind of this deep dive research some 10 days ago, whatever, and then we've been busy trying to get ready for this. But so we need to do a proper internal summary and action plan. But for me, if you look at it kind of where we are behind is traffic. This is kind of the key point. So it's none of the conversion ability to convert or the basket size or any of those things, it simply put traffic. And part of what we are -- I mean, as you say, is our most penetrated risk wear market globally, together with Australia.
And kind of what we're hearing is from consumers a little bit that they think that -- well, we've seen all your innovation before. It's not enough to excite me, let's say, which is kind of -- if you have such a mature position, the bar somehow is higher. We don't experience that anywhere else in, let's say, if you talk to the U.S. consumers or Germany or sort of less penetrated, let's say, markets. we don't get that feedback. So I think maybe we have somehow missed a little bit this signal.
Then I think there is also something around the depth of assortment that we have in opening price points. So when we benchmark versus other people that are somehow competing with us they have had a much higher emphasis on providing more depth in the price, let's call it, sub EUR 30. I'm talking specifically about charms now. That's something we're looking into. So innovation and that depth. And the minis could be one good response to this and the medallions, some of the pricing on the medallions could also be. But I think this is an area where we probably need to double down and do a little bit more work.
Then I think the third piece, which as we kind of double clicked on it is you know that we do quantitative testing of all our advertising. And then there's like a 5-point scale that comes back in the methodology. And then you kind of rate it from -- think of it as a bell curve really. And typically, our copies score super well in the U.S. followed by U.K., and then Italy has been a little bit more on the average. But whenever we looked at this, we've kind of said, "Yes, that's good enough to go globally.
The question then is if you pay too higher price over time,, where your copy scores on as good as they could be. So now the big debate is are we going to do Italian copy? No, we're not going to do Italian copy. So -- because we have something that's working for the Anglo-Saxon market somehow, particularly in the U.S. but probably complementing the comps that sits underneath, let's say, I'm simplifying. But so you have our TV ads, which are going to be there, and they're going to be global ads.
But a lot of the coms underneath, we probably need to do a much better job in driving local cultural relevance in those assets, much like what we are doing in Spain. I think there, it's probably a market where we're absolutely doing the best job. Because if you look at the metrics between Spain and Italy from a maturity standpoint is actually not so different. And even the kind of level of affluence in the customer base is kind of similar to Italy on average, of course. So -- but what they have done exceedingly well in Spain is to activate, let's say, the mid- and lower funnel communication be it being present in events and glossy magazines and the influencer community. So that's something which we will need to ramp up.
And we have some exciting progress in that space for the back half. So I think we're taking the right steps. So this would probably be in this short space of time, the key conclusions are drew from the kind of deep dive research that we've just done in Italy, but there's a little bit more work to align the groups here. But -- so yes, Italy is a very important market for us and definitely need to put more growth into this market. So that's the current view.
A very quick follow-up in that context because now you mentioned Spain and let's say [indiscernible] was transferred from Spain to France. So the success you have built in Spain and what you say, use of local influencers, local culture. You mentioned will we also see that rollout in France now, meaning we could expect further improvement there?
I mean -- so I think there are a few other things at play. I mean, she's done an amazing job in Iberia, I should say, both Spain and Portugal. But it's not only that part of it. I mean, I think also, if you look at the execution at the store level, I think we've had a better execution in Spain consistently over a number of years. I think we have still some work to do in France.
You know that we've essentially transformed this, let's say, network from being heavily reliant on franchisees. And I think the end of last year, we we are now kind of at the very end of kind of vertical integration or forward integration, I should say, into our own house. But now we need to kind of make sure that the people in the stores have the right training and all of those things. So I think that's part of it. So sales execution is -- Yes. Okay. For awareness, Denmark nationwide is running an alarm test. So there's going to be a little bit of noise. We'll keep going. If you can't hear me then just let me know.
So Alizay, she's there to obviously improve the sales execution. But equally, we can take a lot from the playbook in Spain, definitely, and learn, not just in France. I mean, if I could do what they've managed to do continuously in Spain across globe, then we would be in a really nice shape. So there's some interesting insights from there.
And next up, we have Kristian Godiksen from SEB.
So this is Andre from Danske Bank. I also have a few questions. And my first question is regarding the tariffs and specifically the Scenario 1. So can you maybe just elaborate, is this DKK 250 million in '25 and DKK 300 million in '26 , is that a net effect? And if it is, what's the gross effect before taking out this impact from Canada, Latin America and also the sourcing of materials from China? That's the first question.
The second question is in terms of price increase and increase in 2026. And I see you have not put that into your bridge for 2026 EBIT margin. So do you expect to increase prices more in 2026 that could offset more of this raw material pressure? That's it.
Andre, it's Anders here. Thanks for that question. The number, the DKK 250 million in Scenario 1 is a net number from -- in terms of the cost mitigation that we know as of now. So the gross impact would be meaningfully higher. I'm just trying to think how to frame that in the best way, maybe I take it one by one. Because on the imports from Thailand, that is what it is. We will continue to do that. So the gross and the net number is the same, at least for the part of the products that we're using, importing from Thailand and selling in the U.S.
But on the products that we're importing from Thailand and then into the U.S. and then passing on to Canada and Latin America. There, the gross exposure could potentially be much higher. I think when we look back at the April 3 announcement, we said that the annual impact would be DKK 250 million per year. But in 2025, specifically, there's no change because we don't expect the mitigation to work until Jan is our early '26 anyways. So the big difference between gross and net will be on China, where the exposure at least if you go back to last year, it was at least double up, but then we have been working already before April 2nd, on mitigating actions. So most of the reduction of a big chunk of the reduction in exposures are already exited already been done.
So net-net, maybe this sounds slightly confusing, but I think the way to think about it is that the job is still to be done let's call it, DKK 100 million is a potential impact on tariffs on China that we still need to get finally in place how we can move that sourcing to other countries. And then, of course, if we did not for whatever reason, succeeded in shipping directly to Canada and Latin America, then the gross exposure would be another DKK 250 million per year.
And then on pricing, should I take that as well? On '26, you're right, in that bridge Andre, we are assuming that negative only, if I can call it that, during the normal pricing, 1% to 2% that we've spoken about all the way at the CMD last year. We're not at this point in time, assuming that we will do extraordinary price increases. And in that connection, I think we should just repeat that over the course of the last 7 months, we've done a 9% sort of extraordinary price increase 5% in October 4% in April. Which is quite something. And as you know, we are super conscious of remaining an accessible brand. So we are not factoring in additional extraordinary price increases next year.
And now we will take Kristian Godiksen from SEB.
I'll also start off with the two questions then. First of all, just helpful question regarding the EBIT margin -- updated EBIT margin target for 2026. So your previous orientation with the full year results, you guided towards the lower end of the range of the 26% to 27% EBIT margin. And then you now say you have an incremental negative impact of 70 basis points. And hence, I would have assumed you would be guiding of an EBIT margin of around 25.5% and not 25.0%. So, just wondering what is the missing link here? Is it a buffer? Or is there other negative impacts or yes -- that will be the first question, what I'm missing here?
And then on the second question, on the cost program, whether you could maybe provide an update on that is what is to determine the -- where to end in the range of the 50 to 100 basis points in relief on the margin? Is it timing or some uncertainty on magnitude or something else?
Thanks, Kristian, for that question. Yes. So in a way, I guess the way you're right, when you're looking at something that technically, so strictly speaking, goes to 24 -- sorry 25.3% or 25.25%, you could round it up or down. We just felt that at this point in time. So whether it is not the in-year guidance is going out, then guiding on a -- with a decimal feels quite precise. But your math is right. And we are also saying that in the communication today that if we had guided with a decimal, you will say, well, the next year, the EBIT margin is 25.3%. So yes, I guess I'll leave it at that.
And then on the cost program, yes, you're right. It's speed. So how fast exactly can we implement the a number of different cost initiatives that we are looking at. And as they sort of go by and when we update you each quarter, we will be able to speak narrow that range. But we are -- I think as you stressed, we have pretty -- quite good momentum in the program. A lot of good ideas coming to the table and then it turns more into how fast can we do it. And there's also ideas coming to the table that stretches further out than '26 . So we also sort of keep building the pipeline for potential efficiencies in '27 and beyond.
So that's my quick follow-up question actually on the '27. So the -- Let's say, you end up in the 50 bps, then the additional 50 bps would go into 2027. But there -- I guess, there was also some of the timing that will not start the first of January 2026. So there will also be additional already also at the 100 basis points that will flow into the 2027 margin target.
Andre, you're absolutely right. I think we are trying to serve front load, so to speak, so we get as big as possible a run rate on as early as possible. But of course, nothing -- not all of it is going to happen on Jan 1 in the morning. So you're absolutely right.
Next question is from the line of Louise Singlehurst from Goldman Sachs.
Two for me then, please. Just on the guidance. I wonder if you can just help us think about the prior comments earlier on in the year and today. Obviously, looking at that 4% to 5% like-for-like, you're running at around 6% today. And obviously, that's a very good start to the year and does include some moderation. Can you just talk about -- obviously, we're hearing across the channel about more volatility in trading, broadly across consumer in the U.S. lower footfall, lower traffic. I just wonder what you can share with us. Obviously, that was a very conservative number, I presume back in -- earlier on in the year. And just some more color around the year ahead. That would be very helpful.
And then just secondly, a very quick follow-up on the Italian comments with regard to the plan. Is that going to impact the distribution as well? Are we looking at kind of cutting some of the distribution before we can start to think about injecting that new growth plan, specifically for Italy but also France in that comment, too.
Sorry, your line keeps breaking up. I didn't really catch your second question, if you don't mind repeating, it's just -- answering the right thing here.
Apologies, Alexander. Can you hear me now. It was just regarding the comments with regards to Italy and the plan to accelerate growth. Will you be looking to cut distribution at all before you start to inject the new growth plan?
Okay. I'm not going to start with that. I mean, the same answer is no. We actually keep, let's say, evolving the distribution in Italy, we still have a quite wide multi-brand network in Italy. And in the past few years, we've converted some of these multi-brands into Pandora owned and operated locations, not by converting the multi-brand per se, but maybe we then because the volume was so high in that multi-brand that we felt that, yes, maybe we could have owned store in that neighborhood, let's say. So no, this is not a it's not a distribution question. This is purely brand heat around getting people a bit more excited about the innovation on our Core business, more than anything else, honestly.
And thanks for the question, Louise, on guidance. I guess if you look at it from a pure mathematical sense, which you probably will do, the rest of the year implied is somewhere between 3% to 5% on a like-for-like basis after we've locked in Q1. The way we see it today, and given the uncertainty there,we're probably being quite a sensible balance overall. Clearly, when we set the guidance earlier in February, that was ahead of all of the new uncertainty that you're seeing today.
That uncertainty effectively started on the 2nd of April. So it's only really traded through 4 weeks, which is a very small month in April. So it's a bit early for us to give great clarity on which way that falls. But so far, there's nothing really to report from our side on that right now. So we'll be monitoring it very carefully. We think 3% to 5% for the rest of the year seems like a deep enough balance right now, and we'll keep you updated as we move.
The next question is from the line of Anthony Charchafji from BNP Paribas.
It's Antonio from BNP. I have two questions, please. The first one would be, I mean, more broad-based one on competitor. I mean arguably, most of your peers in the affordable jewelry, they are producing as well in APAC for the U.S. market? I mean they're getting hit by tariff and commodity as well, but I assume that their margins are nowhere near your 80% growth. So do you believe that your competitor are sacrificing profitability with maybe more promo to gain share? Or do you expect more consolidation in this highly fragmented market, so benefiting Pandora more in the midterm?
My second question would be on Thailand. So given that you are a top 3 employer in the country, I mean, we are seeing Mr. Arnaud from LVMH at the White House, sorry. So my question to you, Mr. Lacik, is whether you are in close relationship with the [indiscernible] government? And if you're I would say, your principal scenario out of the three of no tariff pause 90 days, both is the most likely.
So on competition, I mean, first of all, there's not that many listed companies in our space, which, I mean, you know better than I do. It's super fragmented. Most competition is local. There are a few regional ones. But if I think about the U.S., it's mostly local competition. And from what we know, it's probably also true that kind of the structure of our financials is an advantage, if I put it like that. So the ability to absorb shocks like, let's assume a 30%, 40% tariff is less than what we could possibly do. There is an alternative thought that I could also spread some of the, let's call it, tariff pain globally. So if I have a 10% price that I need to take and I know everybody else needs to take in the U.S., I could decide I'm only taking 3%, but I take 3% globally and actually increase my local competitiveness in the U.S. I'm not saying that that's what we're going to do. But we have some maneuverability simply because we are a global player.
So will that lead to more promotion? I mean, it's already been quite heated up, I would say, but it's very speculative. I I think everybody is like us, we're waiting to see what's going to happen with the tariff situation. And then everybody is going to have to make a call on okay, how do we now view this potentially very new scenario. So I guess your guess is as good as mine.
Consolidation, I don't think this is a big thing, to be honest with you, because there's not -- if you look at the -- at least from a branded standpoint, there are not that many that are very, very uniquely different from each other. So the barriers of entry in the category are not huge. The One of the important things here is to have a good distribution network. And in our case, we also write the fact that we have a strong brand, which we can keep investing in. So -- but from a product standpoint, you could argue, I mean, anybody can do what the other guy is doing more or less. There's not a lot of unique IPs here, if that's the case. So no, I don't see a lot of consolidation, at least not in the mid-market where we sit.
And your second question was on -- Yes, of course, we are in very close contact with the Board of Investment in Thailand, which is kind of the link up to the government. As you know, we have some very senior type people working for us in Thailand. So it's run by them. So yes, so of course, we try to support them as much as possible. But in all fairness, I don't think that the jewelry category is top of the Trump administration's agenda necessarily. So I think they're trying to kind of go after a few other things before we get there. So yes, so we try as much as we can, of course. I'm not like Mr. Arnault unfortunately of fortunately, I don't know. But I don't have -- we don't have that weight. So in Thailand, we have weight locally. And then we try to kind of use that. So that's probably the answer.
And now we have a follow-up from Lars Topholm from Carnegie.
Thing is in executing these 50 to 100 bps in cost savings you put into your 2026 bridge. Is there any one-off cost element that you charge, for example, in 2025?
Yes. Yes, Lars, there will be bits and pieces that we are charging into it. And we think between that sort of one-off cost and the savings that, that leads to in this year that's going to pretty much balance out. But there will be some -- so that's part of the sort of uplift that we will see next year. But if you look at year-over-year margin rather than back versus 2023, then year-over-year, there will be an uplift also from one-off costs that sort of falls away or disappears.
And can you indicate how big the one-off element is this year?
No, it's not too big of -- I think it's the double-digit million kroner amount, I think, in that tune. It doesn't get into the 3 digits.
And we also have a follow-up from Kristian Godiksen from SEB.
So first follow-up would be just wondering what sparked the franchise stores to perform in line your stores in the U.S. as this was not a global phenomenon where there is still an underperformance for the other franchise stores? And then secondly, also on the U.S., obviously we spoke there is on the call speaking quite a lot of a negative view on the Italy. But if you look at the positive side, just wondering whether you've pinpointed why the brand momentum continues to be so strong in the U.S. and see accelerating like-for-like, clearly outshining the other markets just whether there are some specific levers there?
On the franchise piece, I would probably have to look into that. But I mean, the fact of the matter is also we have the dependence on franchise in the U.S. is a lot lower. And I think maybe it has to do with the ones that are still left operating versus the one that we have acquired that I would think that, that's kind of the -- but I would have to look into it, I haven't specifically looked into that, to be honest with you.
Versus if I take in Australia, for instance, where, of course, they are more in the beginning of this forward integration journey and some of these franchisees are less happy campus than the others, and then we go through the motions like we've done in France and in the U.S. in the beginning. So I think that's kind of just somehow the natural process.
And I think your question is similar to one of the first ones I got. There is nothing specific about the U.S. other than maybe from a penetration standpoint, the brand is less penetrated than what we see in Europe, for instance, which is kind of why we keep investing for growth, and it seems to be biting very hard. So that's the best explanation I could give you really. But again, as I -- and I want to reiterate, we don't do bespoke template. We do one global rollout of our go-to-market plans. And then it's up to the local markets to do, let's say, fixes on the fringes, but the core of what hits the market globally is the same, that's the model of Pandora.
Okay. Perfect. Just one final follow-up. Just wondering whether you could give some kind of flavor on the pickup in like-for-like from the upgrade of the eStore just as you did on the Capital Markets Day with the upgrade of physical stores to the book?
Have you had a chance to zoom in on the site?
Yes. I have.
Then would have -- yes, so what you would have noted is that it was a much flatter experience in the original site. And it was much more focused on trading and here's the latest thing and blah, blah, blah and a lot less, let's say, emotional and a lot less branded. So what the idea here was to kind of move the pendulum back from just using it as a trading site and make it a bit more to sell the brand as well. And whenever you do this, you will have the traders up in arms to say, now we're going to lose conversion. We're going -- to people are going to spend less time. They're going to be confused and you're going to have much higher balance rates and you're going to get NPS scores, which are through the floor. We are experiencing the opposite, okay?
So essentially, I see a much higher acceptance of the experience on the current site than the previous, which eventually leads to higher economic value per visitor. And every single pretty much every single metric that we look at, and there are quite a few is in a positive territory, including the -- so we measure the NPS, Net Promoter Score, which is up a lot. So it's moved from mid-50s to mid-60s. And just for perspective, getting above 70 is -- I mean, is really, really not easy. There are not many brands to get above 70. So we made a massive jump. So essentially, what the consumer is saying is like, I really like the experience I see that Pandora his much more to offer, which I didn't know about before. The brand feels more modern, more contemporary. So those are older batons that we pick up. We do a lot of research on it as we run. So all around, a very good consumer acceptance, I think, is the underlying driver of this.
The last question we have time for in this conference call is from the line of Grace Smalley from Morgan Stanley.
Sorry to add to the follow-up questions, but just two quick clarifications, please. Firstly, on the current trading, I believe you said the plus mid-singles is an underlying figure adjusted for timing shifts and so on. Could you just help us with what that would want to adjust for the different calendar and what the actual reported current trading number is if you are able to share that with us, please?
And then my second question is, I believe you have guided to the margin contraction this year being more severe in Q2 and Q3 and then slightly lower in Q4? Anders, could you just help us with the magnitude of EBIT margin contraction we should expect in Q2 and Q3, please?
I'll take the first one, Grace. So we weren't get into too exact details given it is a very, very short time period. But just be mindful that Easter this year clearly fell in April. Which would naturally be a small drag given we have store closures. And then we've got some promotional phasing, which we knew about ourselves. They're not a huge effect. So the underlying mid-single-digit like-for-like number we gave is the right sort of thought process basically. They're not massive effect, put it that way.
Yes. And then on the other question Grace. In Q1, we had 70 basis points of FX and commodity headwinds of net-net. That's gone already from this quarter Q2 be much higher. So in -- so that 70 basis points of headwind in Q1 translates into around 280 basis points of headwind in both Q2 and Q3 and then getting even a little bit higher in Q4 at 320 basis points. So that the big swing. Of course, there's many other moving parts as we go through the year. But the way to think about it is that the EBIT margin decline year-over-year is going to be the biggest in Q2 and Q3. That will still be a year-over-year decline in Q4, but actually quite meaningfully smaller than what we're going to see in the second and the third quarter.
And that's partly linked to the fact that some of the efficiencies that we are running with are going to grow as we get through the year on the cost program. but also some timing on when we're doing the forward integration, we have this one-off impact where if you move forward integration on the cost of goods sold. So that's the way to think about it. So we had summing up a little bit of tailwind year-over-year growth in the EBIT margin up in Q1. Quite a decline, let's call it, 200 basis points year-over-year in the second quarter and the third quarter and then still a decline in Q4, but much more.
Right. We've come to the end, at least of this exercise. Thank you for listening in. Just to summarize what we said, we think our Phoenix strategy is working super well, have an agile organization. I think we've shared a lot of detail on scenarios. So this continues to be a lot of uncertainty. Hopefully, in the next 80 or 90 days whatever it is, we might get some more clarity. And then, of course, when we come back in August to talk to all of you, maybe we have a clearer view going forward. But I'll end on that note and hope you have a good day. Thank you.
This concludes today's conference call, and you may now all disconnect your lines. Have a wonderful day.