Pandora slashes forecast with its 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 US and China.
The shares fell more than 20 percent, the most in seven years, and were down 19.7 percent at 345.4 kroner 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 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 amortisation 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 US 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.