Pandora, the world's largest jeweler, best known for its silver charm bracelets, announced that it will stop selling mined diamonds and switch to affordable lab-grown gemstones as part of a broader focus on sustainability.
"Diamonds are not just forever, they are for everyone," said Alexander Lacik, Pandora's chief executive, in a statement on Tuesday announcing the launch of Pandora Brilliance – the company's first collection of laboratory-made stones.
Shares in Pandora
rose 5.78% in early European trading on Tuesday. According to FactSet, the share is up more than 10.25% over the year to date.
Copenhagen-based Pandora used mined diamonds in around 50,000 pieces out of a total of around 85 million pieces of jewelry last year. The company said the new collection aims to "transform the diamond jewelry market with affordable, sustainably manufactured products".
Read: Are Natural Diamonds For Engagement Rings On The Way Out?
It will initially be launched in the UK and will be launched in other key markets over the next year. Pieces will start from £ 250 ($ 347) and each stone will range from 0.15 to one carat, the company said.
The diamonds produced in the laboratory were grown with an average of more than 60% renewable energy. That number is expected to increase to 100% when the collection launches worldwide.
The demand for artificial diamonds has grown steadily, especially among younger customers who want to identify gemstones that are guaranteed to be conflict-free and take the strain off their wallets.
The market for laboratory-grown diamonds is currently growing in double digits, according to the latest report from the Antwerp World Diamond Center and the consulting firm Bain & Company. Prices have also fallen, and man-made gemstones are now up to ten times cheaper than mined diamonds, making them more accessible to a wider range of budget-conscious consumers, the report said.
Pandora's new collection came when the company reported better-than-expected results for the first quarter and improved its guidance for the full year. Underlying sales are now expected to increase by more than 8% by more than 12% and operating profit margin to increase by more than 21% by more than 22%.
Read: Pandora closed 30% of its stores in January
The company plans to expand its core markets, with a particular focus on China and the US, where brand penetration is still low. The two markets account for more than 50% of the global jewelry market.
Analysts at RBC Capital said Pandora had shown "impressive resilience" to a challenging economic environment from COVID-19 with a healthy channel shift into e-commerce.
“From here, we view the path to positive sales growth as more challenging and remain cautious on the path to positive LFLs for retail (as well as for likes). Consensus estimates are higher than FY 21E (estimate for fiscal year 2021) and the assessment is less supportive, ”they wrote in a research note on Tuesday.