Jeweller Pandora cuts 2018 sales outlook, reviews long-term profit target

Jewellery maker Pandora slashed its 2018 sales outlook for the second consecutive quarter after posting disappointing profits on Tuesday, saying it will review its strategy as it struggles to regain investor confidence.

Shares in the world's top jewellery maker by production capacity are down more than 40 percent this year as new jewellery lines fail to charm and fewer shoppers visit shopping malls in key markets, hitting sales.

The firm said it would launch a cost-cutting programme aimed at reversing negative like-for-like sales and cancelled its long-term revenue growth ambition of 7 to 10 percent. It also said it would review its long-term EBITDA margin target of around 35 percent.

"We have reviewed our business and decided to launch a forceful programme with the aim to materially reduce costs across the company to free up resources to invest in sustainable like-for-like growth," Chief Financial Officer Andres Bowyer said in statement.

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.
In August, the firm known for its silver charm bracelets ousted its chief executive after issuing a profit warning. The business is currently being run jointly by former Body Shop CEO Jeremy Schwartz and chief financial officer Andres Bowyer.

Pandora said a health check of the business undertaken by the new management team showed there was a need to change how the company operates. A first step will be to significantly reduce acquisitions of franchised stores, as well as opening fewer stores generally.

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

"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 Frisian Jorgensen, chief share analyst at Alma Brand Bank.