Pandora Sees 2020 Sales Falling as Much as 20% Amid Pandemic
Pandora Sees 2020 Sales Falling as Much as 20% Amid Pandemic
(Bloomberg) -- Pandora A/S, which makes more pieces of jewelry than any other company in the world, said organic sales may contract as much as 20% this year as the virus suppresses demand in some of its key markets.
Pandora said that a recent improvement “stalled“ in the third quarter. The Copenhagen-based company provided guidance for the first time since suspending its previous forecast in March. It also released its second-quarter earnings report. The shares fell as much as 9.3% in the Danish capital.
Pandora’s Ebit margin will be in a range of 16% to 19% this year. That compares with almost 27% in 2019, a year that was at the time seen as a transition period for the company as it relaunched its brand under Chief Executive Officer Alexander Lacik. The executive had joined earlier that year following a string of departures from Pandora’s top management.
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“The 2020 guidance is on the weak side so estimates need to come down,” Janne Vincent Kjaer, an analyst at Jyske Bank, said in a note. “And with the strong performance in the period up to the earnings report, there is no room for large disappointments.”
Before today, the shares were up more than 50% year-to-date.
What Bloomberg Intelligence Says:
Pandora’s guidance of a 2020 organic sales decline of 14-20% (with consensus at 16% decline), which is in the top quartile for the luxury goods peer group, and a stalling of sellout recovery on localized store closures in August, shouldn’t detract from its brand revamp, in our view, with a Star Wars collaboration in October, plus other designs adding positives.
-- Deborah Aitken, BI luxury-goods analyst, more here
Pandora, which last month reported some preliminary second-quarter numbers, said on Monday that sales in the U.S., its biggest market, fell 35% on organic terms in the quarter. The drop was 48% in Italy, whereas Germany posted the best performance among the company’s top 7 markets with a 6% decline.
“The continued local spikes in incident rates and inherent commercial impact from social distancing are expected to continue to negatively impact revenue in the second half of the year,” Pandora said.
The company, which earlier this year sold shares to shore up its balance sheet, won’t pay out a dividend for the quarter, but will reintroduce shareholder returns as soon as possible, CEO Lacik said by phone.
Read more: Pandora Considers Selling Bonds in 2021 Amid Capital Review, CEO Says
”Uncertainties remain and as long as they are big, we will be careful with dividends and share buybacks,” he said.
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