Pandora shares sparkle as company hails turnaround plan

By Christian Wienberg

Shares in Pandora, the jewellery maker and retailer that spent much of last year under attack by hedge funds as it tries to relaunch its brand, jumped after it delivered a smaller decline in operating profit than the market had expected.

The stock of the Danish-owned firm soared over 10% in Copenhagen, its biggest gain since February. “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 programme fell 15% 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.

It said it needs to expand its shares 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 Programme Now strategy, Pandora said.

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 chief executive Alexander Lacik, who joined in April following a string of departures from Pandora’s top management. He’s under pressure to deliver on Programme 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 centres.

The shares have lost roughly 75% of their value since a 2016 peak and are 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,’’ Mr Lacik said.

Bloomberg