Danish jeweler Pandora results fall short of forecasts, maintains outlook

Danish jewelry maker Pandora posted second-quarter results below expectations on Tuesday but maintained its full-year guidance as it limited a decline in sales in the U.S. market.

Shares in Pandora, best known as a retailer of charm bracelets, fell 9 percent at the market open. The stock lost more than a third of its value in the first six months of the year, but had risen more than 20 percent in the last six weeks.

Pandora said it expects revenue of between 23 billion Danish crowns ($3.7 billion) and 24 billion in 2017 as a whole and a margin of around 38 percent on an underlying or EBITDA basis, unchanged from its last guidance.

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The company is hoping to revive growth in the United States, its biggest market, where sales have disappointed in recent quarters as it suffers from a drop in shopping mall activity.

Pandora said U.S. sales, which were helped by a one-off item of around 200 million crowns due to a reversal of previous sales return provisions, fell 2 percent in local currency terms in the quarter, compared with a 10 percent decline in the first three months of the year.

"The retail environment in the United States remains challenging. However, our strategy has delivered a solid improvement in the performance of the concept store network," Chief Executive Anders Colding Friis said in a statement.

"Additionally, we are rolling out a number of initiatives to strengthen our U.S. business even further," the CEO said, adding the company had identified close to 100 new store locations.

Like-for-like sales in the United States grew 8 percent, driven by more effective promotions, the company said. Analysts had expected around flat U.S. like-for-like sales.

"Eight percent like-for-like in the United States is a really strong signal to send and quite unheard of in a tough U.S. market," said Michael Friis Jorgensen, analyst at Denmark's Alm. Brand Markets. "I see it as an implicit (guidance) upgrade, when they maintain guidance despite of currency headwinds."

The company posted second-quarter sales of 4.83 billion crowns, below the 4.90 billion average estimate of analysts polled by Reuters.

EBITDA reached 1.61 billion crowns, compared with an expected 1.74 billion. Net profit was 1.10 billion crowns, against 1.25 billion expected.

Despite signs of falling consumer spending in Britain, another major market for Pandora, sales increased by 12 percent in local currency, helped by strong online sales.

The company has built its success on charm bracelets, but has in recent years expanded into rings, earrings and necklaces.

($1 = 6.2973 Danish crowns)