Pandora slashes forecast with jewellery maker’s misery deepening

Jewellery sits in display cases at a Pandora AS shop in Copenhagen, Denmark. (Bloomberg pic)

COPENHAGEN: Pandora A/S cut its financial forecasts, adding to the woes of the world’s biggest jewellery maker, which has been under a siege from hedge funds betting against its stock.

The Copenhagen-based company now expects 2018 revenue to increase 4-7% in local currencies, down from a previous forecast of 7-10%, it said in a statement late on Monday. The Ebitda margin will be about 32%, down from a previous prediction of about 35%.

Pandora didn’t give a reason for the cut, saying it will provide details at its second-quarter earnings report due later this week. The company, which produces more pieces of jewellery than any other manufacturer, has been struggling with slowing growth in key markets the US and China and has lost more than half of its market value since the beginning of 2017.

In January, Chief Executive Anders Colding Friis tried to reset market expectations with new long-term financial goals and a forecast for 2018 which indicated a slowdown. He described them as “realistic” because past years’ growth rates had become unreachable after the company’s markets had matured. Back then, Pandora also dismissed Chief Financial Officer Peter Vekslund after the 2017 performance fell below its guidance.

Monday’s profit warning will “put the continuity of the management team and the board in question” because it comes so soon after the company presented the new targets, Zuzanna Pusz, an analyst at Berenberg, said in a note. The new guidance is about 8% 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” when the Copenhagen market opens Tuesday, the analyst 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. Hedge funds have continued to bet against the stock as about 8% of the share capital is shorted, according to data provided by IHS Markit. Still, that’s down from a November peak of about 13%.