Pandora’s share price plunges on new forecast
Jewelry maker reins in expectations following rapid global expansion
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 U.S. and China.
The shares fell more than 20 per cent, and were down 19.7 per cent at 345.4 kroner ($70.11) as of 9:59 a.m. 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 late Monday that it expects sales to grow 4 to 7 per cent in local currencies this year, down from a previous forecast of 7-10 per cent. It warned its profit margin on earnings before interest, tax, deprecation and amortization will be lower than anticipated at about 32 per cent, down from a prediction of 35 per cent.
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 U.S. 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 comes so soon after the new targets, Zuzanna Pusz, an analyst at Berenberg, said in a note. The new guidance is about 8 per cent below market expectations, but “given the uncertainty this creates around the midterm financial targets announced earlier this year we could see an even more negative share price reaction,” she said.