Pandora backs guidance as revamp starts to pay off
Danish jeweler Pandora AS (PNDORA.KO) backed its full-year guidance Tuesday and said that although costs from its turnaround program continue to hit the bottom line, early positive signs are visible.
Net profit in the quarter fell 50% to 526 million Danish kroner ($78.2 million) from DKK1.16 billion in the same period a year earlier. Analysts polled by FactSet had expected net profit of DKK538 million.
Revenue dropped 2.6% to DKK4.69 billion against expectations for DKK4.66 billion.
The company, which sells charm bracelets, rings and earrings at around 7,700 stores world-wide, said early positive signs from its "Now" turnaround program are visible in the underlying gross margin, cost levels and cash generation as it continues a commercial reset of the business. It has been busy cutting promotions and buying back inventory, improving products, stores and marketing, as well as cutting costs and shaking up its organizational structure.
Pandora said it has decided to conduct additional restructuring initiatives to improve the structural health of the business. These initiatives will entail additional restructuring costs of around DKK500 million, pushing full-year restructuring costs up to DKK2 billion from previous guidance of up to DKK1.5 billion.
Capital expenditure for 2019 is now expected at DKK1.0 billion to DKK1.2 billion, from DKK1.2 billion to DKK1.5 billion, while net concept store openings in 2019 are now expected to be around 50 compared with previous expectations of around 75.
Brand relaunch initiatives and a larger portion of additional marketing spend are planned for September with limited return on these investments in 3Q 2019. This will hit the earnings-before-interest-and-taxes margin in 3Q 2019, it said.
Pandora backed its guidance for a drop in organic sales in 2019 of 3% to 7%, with a pre-items EBIT margin of 26% to 28%. Revenue in local currency is expected to drop between 1% and 5%.
Write to Dominic Chopping at [email protected]; @domchopping @WSJNordics
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