Pandora Slashes Forecast With Jewelry Maker's Misery Deepening
Pandora Slashes Forecast With Jewelry Maker's Misery Deepening
(Bloomberg) -- Pandora A/S plunged after the world’s biggest jewelry maker cut its profit and sales forecasts amid struggles in key markets such as the U.S. and China.
The shares fell more than 20 percent, the most in seven years, and were down 19.7 percent at 345.4 kroner as of 9:59 a.m. in the Danish capital. Investors were battered by a similar slump just three months ago when the company’s first-quarter report disappointed.
Pandora said late Monday that it expects sales to grow 4 to 7 percent in local currencies this year, down from a previous forecast of 7-10 percent. It warned its profit margin on earnings before interest, tax, deprecation and amortization will be lower than anticipated at about 32 percent, down from a prediction of 35 percent.
Pandora didn’t give a reason for the poorer outlook, saying it will provide details in its second-quarter earnings report due to be released later this week. After a rapid global expansion, the company has been struggling with slowing growth in the U.S. and China and misfired on some new product launches. It has lost almost half of its market value since the beginning of 2018.
The continued hits to shareholders come after Chief Executive Officer Anders Colding Friis earlier this year tried to reset market expectations with new long-term financial goals and a forecast for a slowdown in 2018. The goals, he said, were more “realistic” because the company had matured and couldn’t count on the same fast growth as in past years. The company also dismissed Chief Financial Officer Peter Vekslund after its performance last year fell below its guidance.
Monday’s profit warning will “put the continuity of the management team and the board in question” since it’s so soon after the new targets, Zuzanna Pusz, an analyst at Berenberg, said in a note. The new guidance is about 8 percent below market expectations but “given the uncertainty this creates around the mid-term financial targets announced earlier this year we could see an even more negative share price reaction,” she said.
Pusz and other analysts had recently said Pandora was at risk of falling short of its 2018 guidance after retail reports suggested the company’s new Shine collection didn’t hit home with consumers.
Pandora, whose main products are silver charms and bracelets, acknowledged earlier this year that it has failed to provide enough new collections to keep consumers interested. The Shine launch in March, Pandora’s first large gold collection, was an attempt to ratify that.
Hedge funds have continued to bet against the stock with about 8 percent of the share capital shorted, according to data provided by IHS Markit. That’s down from a November peak of about 13 percent.
In a second statement released on Tuesday, Pandora said it will cut 397 jobs of its 27,000 work force as part of a cost reduction plan to save about 150 million kroner ($23 million) a year from 2019. Pandora said it will also shift some resources to digital and e-commerce activities and will centralize operations and the supply chain structure.
Pandora also on Monday said it will move forward its second-quarter earnings report to Aug. 9 from Aug. 14 and provided some preliminary numbers:
- Second-quarter revenue fell 0.1 percent to 4.82 billion kroner ($747 million)
- The Ebitda margin was 31.1 percent, down from 33.4 percent a year earlier
- Pandora expects 2018 currency headwinds against the Danish krone to be at about 2 percentage points down from about 4 percentage points
- The company will open a net 250 concept stores during 2018, compared with a previous plan of about 200. About half of those are expected to be opened in EMEA, 25 percent in the Americas and 25 percent in Asia-Pacific
--With assistance from Heather Burke.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net
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