Charm-bracelet maker Pandora warns again on sales

By Stine Jacobsen

COPENHAGEN (Reuters) - Danish charm-bracelet maker Pandora cut its 2018 sales outlook for a second consecutive quarter and ditched its long-term revenue ambition as the leaderless company struggles to regain its edge.

Shares in the world's top jewellery maker by production capacity tumbled as much as 12 percent to a two-month low on Tuesday as new jewellery lines failed to entice shoppers, while numbers of visitors to malls in key markets fell.

The firm is without a chief executive since ousting Anders Colding Friis after its first profit warning in August. Former Body Shop CEO Jeremy Schwartz and newly appointed chief financial officer Anders Boyer are running the business for now.

The new management team said it would launch a cost-cutting programme aimed at reversing falling like-for-like sales, and cancelled its long-term revenue growth goal of 7 to 10 percent.

"We are not satisfied with the development and we react to that with full power," Boyer told Reuters.

Pandora, which sells customisable jewellery such as charms, bracelets, rings and pendants at a lower price than competitors like Swarovski, also said it would review its long-term core profit (EBITDA) margin target of around 35 percent.

"The management cuts the apron string to the former management's long-term guidance and that leaves the investors in a major void until the full-year report in February," said Michael Friis Jorgensen, analyst at Alm Brand Bank.

TOO SLOW

Pandora has repeatedly admitted it has been too slow to change, and like-for-like sales of new products were flat in the third quarter, underlining that its drive to innovate faster had not progressed as fast as expected.

The firm did not say by how much it would cut costs, but further savings will come in addition to nearly 400 job cuts announced in August.

Boyer said Pandora would significantly cut the number of franchised stores it planned to buy as weaker-than-expected sales made that model of operation less attractive. It will also open fewer new stores than the previously planned 1,000 by 2022.

Pandora had enjoyed dramatic sales growth over the past decade as its customisable bracelets and charms became hugely popular. Last year it sold 200,000 charms a day, but in the third quarter sales of its key product fell 9 percent.

Pandora shares rose almost 20-fold in the four years to 2016, topping 1000 Danish crowns in May that year. On Tuesday, the shares - already down more than 40 percent this year - traded as low as 342 crowns.

Like-for-like sales fell 3 percent in the third quarter while the EBITDA margin came in at 29 percent, a far cry from the 37.8 percent achieved in the same period last year.

Pandora now expects 2018 sales in local currencies to increase by between 2 and 4 percent, down from previous guidance of 4 to 7 percent, while it kept its EBITDA margin target at around 32 percent this year.

Third-quarter EBITDA (earnings before interest, tax, depreciation and amortisation) fell 25 percent compared to last year to 1.45 billion Danish crowns ($222 million), below the 1.60 billion expected by analysts in a Reuters poll.

($1 = 6.5374 Danish crowns)

(Reporting by Stine Jacobsen; Editing by Sunil Nair, Kirsten Donovan and Georgina Prodhan)