Pandora shares prices loses its shine on the Copenhagen Stock Exchange august 2 2011

Pandora shares prices loses its shine on the Copenhagen Stock Exchange august 2 2011 ; Shares in Pandora lost about two-thirds of their value as the Danish jewellery manufacturer slashed its full-year earnings outlook and parted company with its chief executive.

The 65 per cent plunge in Pandora shares on the Copenhagen Stock Exchange came less than a year after it raised about DKr10bn (€1.3bn) from an initial public offering that was one of the biggest in Europe last year.

Pandora, best known for the charm bracelets that it sells in 55 countries, cut its 2011 revenue growth forecast from at least 30 per cent to zero, having only upgraded its forecast from 25 per cent on April 18 this year and reiterated this guidance on May 19.

It also cut the full-year forecast for its earnings before interest, tax, depreciation and amortisation margin from at least 40 per cent to the “low thirties”.

The company blamed a “sharp revenue deterioration” late in the second quarter for a slowdown in its year-on-year revenue growth to only 3.6 per cent in the second quarter, down from 41 per cent in the first quarter and 67 per cent in the preceding quarter.

Its ebitda fell by 6.2 per cent to DKr512m in the second quarter.

Pandora cited a myriad of contributing factors including hefty increases in gold and silver wholesale prices, increasingly price-sensitive customers, excessive production and gorged inventory lists.

“This performance and these results are totally unacceptable. There are no excuses for them, they are largely self-inflicted, they reflect poor execution,” said Allan Leighton, Pandora’s board chairman.

The situation “can be remedied – but over time,” added Mr Leighton, the former chairman of the Royal Mail in the UK.

Pandora, founded in 1982 by husband-and-wife team Per and Winnie Enevoldsen, has attempted in recent months to move its mid-market brand into a more exclusive category by increasing prices and vastly expanding its product range. But this strategy backfired as large segments of its traditional customer base shied away from Pandora’s pricier offerings.

“This business requires a reset back to its mass market, affordable luxury positioning and good old fashioned execution of the basics around price, range promotion, inventory upgrades and new accounts,” said Mr Leighton, who is also chairman of UK fashion chain Peacock and set-top box maker Pace.

Pandora said prices on key products have already been cut and no fresh retail price rises are likely either this year or next. It also plans a more aggressive marketing effort in emerging markets and said it would open 190 new concept stores in the second half of 2011.

Pandora’s travails are being seen in Copenhagen as a major blow to Axcel, the Danish private equity group that floated the jeweller in a highly successful IPO in October 2010. The float, priced at DKr210 a share, gave Pandora a market capitalisation of about DKr27bn.

The shares, which had briefly climbed above DKr370 earlier this year, fell to DKr51 on Tuesday afternoon, wiping DKr12.6bn off the company’s market value in one day.

Goldman Sachs, JPMorgan, Morgan Stanley and Nordea Bank were joint global co-ordinators and bookrunners for Pandora’s IPO.

Axle, which bought a 60 per cent stake in the company in 2008 from its founding family, still owns 32 per cent of the shares.

Mikkel Vendelin Olesen, Pandora’s chief executive, left the company on Tuesday “with immediate effect.” His position will be filled temporarily by Marcello Bottoli, a board member, until a new chief is appointed.