Pandora lifts recovery hopes with first quarter beat

COPENHAGEN - Danish jewelry maker Pandora posted a smaller-than-expected fall in first-quarter earnings, raising hopes its plan to allow retail outlets to swap less popular items with better selling products is bearing fruit.


Pandora charm bracelet / Photo: Pandora


Shares in the charms and charm bracelet specialist, which have lost around three-quarters of their value in the last year, jumped as much as 13 percent in early Tuesday trading.

After a sparkling debut on the Copenhagen bourse in 2010, Pandora shares were hammered last year as the firm suffered from a downturn in European consumer spending, rising raw material costs and admitted it had priced itself beyond core customers.

In February, the group launched a campaign aimed at kick-starting sales by offering retail outlets the chance to swap items shoppers are not buying for jewelry that sells better. It forecast the campaign would cost up to 800 million Danish crowns ($140 million).

First-quarter earnings before interest, tax, depreciation and amortization (EBITDA) dropped 44 percent to 401 million crowns, far exceeding analysts' average forecast of 300 million in a Reuters poll.

"It is evident that we do have a number of short-term challenges but I am encouraged to see that we have initiated actions to deal with all of them," said Chief Executive Bjorn Gulden, who took up the job on March 1.

"The Spring/Summer 2012 collection launched in mid-March is doing very well both in terms of sales-in and sales-out, and I'm confident that this improvement will continue with our product offering for Fall/Winter 2012," he added.

Revenues fell by 18 percent to 1.42 billion crowns, roughly in line with an average 1.43 billion forecast in the poll.

European sales dropped 36 percent while sales in the Asia- Pacific region fell 16 percent, the company said.

"Overall, the result is better than expected, particularly its profitability and gross margin" said Sydbank analyst Nicolaj Jeppesen.

"The negative is that the result is declining compared with the last quarter," he added.

Pandora kept its forecast for 2012 revenues to top 6 billion crowns and said its EBITDA margin for the full year was likely to be a "low 20s" percentage.

Excluding the negative impact of the one-off stock balancing campaign, the group expects 2012 EBITDA margin in the "mid 20s", it said in the statement.

At 0825 GMT, Pandora shares were up 11 percent at 71.7 crowns, compared with a 0.2 percent rise in the Copenhagen stock exchange's benchmark index .OMXC20.

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