Pandora up as new CEO says market strategy shift working

Bloomberg

Pandora A/S, a Danish jewellery company that spent much of last year under attack by hedge funds as it tries to relaunch its brand, jumped in Copenhagen trading after it delivered a smaller decline in operating profit than the market had expected.
The stock soared as much as 9.9 percent during trading in the Danish capital, its biggest gain since February. The Stoxx Europe 600 index was little changed.
“With no negative surprises in these results and relative to weak share price performance and bearish investor positioning, the shares may see some short-term relief,” RBC Capital Markets said in a note.
Earnings before interest, tax and costs related to Pandora’s restructuring program fell
15 percent to 1.08 billion kroner ($160 million) in the second quarter, Pandora said.
That beat the average estimate of 996 million kroner in a Bloomberg survey of five
analysts.
The company said it needs to expand its inventory buyback programme as part of “additional important restructuring initiatives to improve the structural health of the business,” which will cost an extra 500 million kroner.
“As expected, the financial results continued to be weak and impacted by the commercial reset” resulting from its Program Now strategy, Pandora said in a statement. The company reiterated its guidance for the full year and said it sees “early positive signs of the impact” of the new strategy, which envisages cost cuts, fewer discounts and a marketing boost, and whose impact is already “visible in the underlying gross margin, cost levels and cash generation.”
The report was the first under CEO Alexander Lacik, who joined in April following a string of departures from Pandora’s top management. He’s under pressure to deliver on Program Now, which was formulated before he joined.
Pandora has been hurt by fading consumer interest in its charms and bracelets and the company has also taken a hit from a decline in retail sales at shopping malls. The stock has roughly 75 percent of its value since a 2016 peak and is heading for a third consecutive year of losses on the Copenhagen stock exchange.
“We have said it would get worse before it would get better. We’re just on the verge of getting better,’’ Lacik told Bloomberg.