Pandora slashes forecast with misery deepening

COPENHAGEN: Pandora A/S cut its sales and profit targets, adding to the woes for the world’s biggest jewellery maker which is under 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.

Its margin on earnings before interest, tax, deprecation and amortisation will be about 32%, down from an earlier prediction of around 35%.

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 key markets the United States and China and has lost more than half of its market value since the beginning of 2017.

At the start of this year, chief executive officer Anders Colding Friis 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 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, 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 with about 8% of the share capital shorted, according to data provided by IHS Markit. That’s down from a November peak of about 13%. — Bloomberg