Pandora Names New CEO

Silver jewelry company Pandora has appointed retail veteran Björn Gulden as its new CEO, effective March 1.

Gulden , 46, is currently managing director of the Deichmann Group and president and CEO of its wholly owned retail chains Rack Room Shoes and Off Broadway Shoes in the U.S. Prior to those positions, Gulden was senior VP of apparel and accessories at Adidas and was part of the management group that took Adidas public in 1995. The Swiss native and Norwegian citizen also played professional soccer in Norway and Germany before a serious injury ended his career.

Gulden replaces Mikkel Vendelin Olesen, who resigned suddenly in early August due to lower-than-expected growth, which the company blamed on commodity price increases and “inadequate” execution.

The Danish company with manufacturing facilities in Thailand is known for its widely popular charm jewelry. The company is also known in the jewelry and financial industries for its extraordinary sales growth and its $2.1 billion IPO, launched in October 2010.

However, in early August, the company released its second quarter financial report two weeks early with less than expected growth as well as declines in major markets. It also drastically downgraded its sales and profits targets for 2011 and reported a drastic decline in July revenues. The result was that its stock fell about 70 percent in a single day.

Marcello Bottoli, who was named interim CEO during the August turmoil, will continue in that position until Gulden arrives and will report Pandora´s 2011 annual results on Feb. 21, 2012.

Pandora also announced that as of March 2012, Marcello will become deputy chairman of its board of directors in order to take advantage of what has has learned as interim CEO. Current deputy chairman, Torben Ballegaard Sørensen, will continue as member of the board.

“Björn is an outstanding executive who has impressed me with his knowledge and hands-on experience from many years in the retail and wholesale business around the world,” said Allan Leighton, Pandora chairman.

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High Flying Pandora Returns to Earth with No Growth in 2011 Revenue

A tumultuous year for Pandora came to an end after a 10-percent drop in revenue for the fourth quarter, leaving the jewelry manufacturer and designer with a 0.1 percent decrease in group revenue to 6.65 billion Danish kroner ($1.18 billion) in 2011.

This is a far cry from the spectacular results the company, known for its silver charm jewelry, reported from 2009 until the mid-year of 2011. The bottom dropped out for the fast-growing brand—a darling of investors, retailers and consumers—with a second-quarter report released in August where the company changed its outlook from expecting a revenue growth of no less than 30 percent for 2011 and an EBITDA margin of minimum 40 percent with flat revenue and EBITDA margins in the low thirties for the year. This report resulted in the immediate resignation of its CEO, Mikkel Vendelin Olesen, and a one-day 65 percent drop in the value of its stock.

The company also announced Tuesday that it has begun a campaign to buy back unsold stock from retailers for the first two quarters of the fiscal year that will negatively affect 2012 results. The company estimates that the campaign will cost 500 million to 800 million Danish kroner.

“The campaign will encourage Pandora retailers to exchange discontinued, merchandise for appropriately priced best-sellers, on a one-for-one basis,” the company said. “(It) will likely generate a corresponding negative impact, due to cannibalization of forward sales, on reported numbers across the whole of 2012.”

Among Pandora’s results for 2011:

* Sales in Americas increased 7.9 percent (12.4 percent in local currency);

* Sales in Europe fell 8.3 percent (down 7.7 percent in local currency);

* Sales in Asia Pacific decreased by 0.2 percent (down 4.3 percent in local currency);

* Gross margin increased to 73 percent in 2011 compared to 70.9 percent in 2010;

* EBITDA margin was 34.3 percent in 2011 compared to 40.3 percent in 2010;

*EBITDA decreased by 15 percent to 2.28 billion Danish kroner ($406,503 million);

* EBIT margin was 30.9 percent in 2011 compared to 36.2 percent in 2010;

 EBIT decreased by 14.8 percent to DKK 2.05 billion Danish kroner ($366,323 million);

* Reported net profit increased by 8.9 percent to DKK 2.03 billion ($362,684 million) in 2011. Adjusted for a revaluation of the CWE earn-out provision based on a revised outlook for PANDORA CWE, 2011 net profit decreased 18.4 percent to 1.52 billion Danish kroner ($247,228 million).

In its outlook, Pandora it expects 2012 revenue growth to be in mid-single digits; gross margin in the low 60s, driven by the impact of commodities prices and a reduction in our selling prices; and EBITDA margin in the mid 20s.

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Pandora Produces Charming Q3 Sales and Profit Gains

Danish jewelry company Pandora said Tuesday that third quarter revenue increased 14.3 percent, year-over-year, to DKK 1.79 billion ($308 million) with double-digit gains across all geographical markets. Net profit for the period increased by 11.4 percent to DKK 380 million ($65.2 million).

This is a strong turnaround when compared with second quarter results in which the company—best known for the manufacture, distribution and marketing of silver charm jewelry—said its sales fell by 9.5 percent to 1.26 billion DKK ($210.2 million) with profit during the same period down 89.9 percent to 63 million DKK ($10.5 million).

Pandora also said Tuesday that its stock balancing plan (replacing discontinued stock) is continuing as planned. In the third quarter, the company received returns of discontinued products with a wholesale value of DKK 86 million ($14.7 million), and replaced it with merchandising costing DKK 127 million ($21.8 million). In 2012 Pandora received returns of discontinued products valued at DKK 609 million ($104.6 million), and replaced DKK 599 million ($102.8 million).

Revenue by geographic region is as follows:

• Americas increased by 21.9 percent (9.5 percent in local currency), with U.S. sales up 15.8 percent (2.6 percent in local currency).
• Europe increased by 13.1 percent (11 percent in local currency).
• Asia Pacific decreased by 10.7 percent (17.3 percent in local currency).

Branded revenue as percentage of total revenue increased to 81.3 percent, compared with 73.6 percent in third quarter of 2011. Gross margin was 64.1 percent, compared with 73.6 percent in the third quarter of 2011.

EBITDA margin was 28 percent, compared with 34.2 percent in Q3 2011, a decrease of 6.2 percent to DKK 503 million ($86.3 million). EBIT margin was 25.8 percent compared with 32.2 percent in Q3 2011, an 8.5 percent drop to DKK 463 million ($79.5 million).

The company, which sells its jewelry through retail jewelers and its own branded retail stores, updated its outlook, saying it expects revenue for 2012 to be above DKK 6.3 billion ($1.08 billion), from its previous guidance above DKK 6 billion.

“I am happy to report that we continue to perform in line with our ‘18 months turn-around plan,’” said Björn Gulden, Pandora CEO. “Third quarter developed even a little better than we expected and we have, based on the tailwind from the currency development, decided to slightly upgrade our revenue guidance. One of our major initiatives ‘The stock balancing campaign’ was continued, mainly impacting the U.S. and third-party distribution, during Q3 2012. We have now largely concluded the campaign and it will, as communicated earlier, be finished by end of 2012.”

Gulden added its spring merchandise sold well and its fall merchandise had a strong start for the third quarter.

“The year is not yet finished,” he said. “We have our most important quarter to come, but we feel confident that our improved product, our lower prices and our other operational improvements will put us in the position of achieving our updated financial goals for the full year.”

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Pandora Names Allan Leighton as CEO

Allan Leighton

Pandora said Thursday that Allan Leighton, current chairman of the jewelry company, will succeed Bjørn Gulden as CEO on July 1.

Gulden is stepping down to join sports brand, Puma, as its new CEO. Pandora’s board of directors will recommend that Gulden remain part of the company as a board member.

Marcello Bottoli, who is currently deputy chairman, will succeed Leighton as board chairman.

Bjørn Gulden

“Pandora is a great business which is performing well, but the sports industry has always been a major part of my life, and my role at PUMA will also allow my family to remain in Germany,” Gulden, a former professional soccer player said in a statement.

Leighton added: “Bjørn, Marcello, the management team and I have worked very closely on delivering on the company strategy and the board believes that continuity in that execution and understanding of the business is key to our continued success.”

The Danish manufacturer, marketer, distributor and retailer of fine jewelry is still recovering from a very difficult 2011, which saw a sudden 70 percent drop in its stock price following a less than glowing second quarter report that year. Prior to that drop the company, which designs its popular charm bracelets and silver jewelry in Copenhagen and manufacturers them in Thailand, was the darling of jewelry retailers and the investment community as it experienced spectacular growth. The company’s IPO in 2010 raised $2.1 billion.

Gulden began at Pandora in March of 2012 and by November 2012 the company, working off a stock rebalancing program, returned to profitability in the third quarter reporting a revenue increase of 14.3 percent, year-over-year, and net profit increase of 11.4 percent. However, it wasn’t enough to save the year as revenue for 2012 was essentially flat while net profit fell 41 percent.

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Pandora Jewelry Returns to Strong Profit And Growth

Pandora—whose short history as a publicly traded company was marked by spectacular growth followed by an even more spectacular fall—is back on track dramatically increasing its sales and profit for the first quarter of 2013.

The Danish company, known for its popular charm bracelets, said Tuesday that group revenue for the period increased 40 percent year-over-year to 2.002 billion Danish krones ($348.6 million). Profits increased 29.6 percent DKK 438 million ($76.3 million).

The international company—which manufactures, distributes, retails and markets its branded jewelry—reported extremely strong increases in all regions of the world where it operates. Its regional breakdown for the first quarter is as follows:

* Americas: Up 38 percent (38.6 percent in local currency);
* Europe: Up 50.4 percent (50.6 percent in local currency); and
* Asia Pacific: Up 26.1 percent (27.7 percent in local currency).

The company noted that as it expected, gross margin fell to 65.6 percent for the period, compared to a gross margin of 71.6 percent in the first quarter of 2012. The company did not give a reason for this expected drop. 

“Although it is still early in the year, we have had a strong start,” said Pandora CEO Bjørn Gulden, who will leave the company at the end of the month to join sports brand Puma. “Revenue and earnings increased across all regions, positively impacted by the delivery of the Valentine's Day collection in Q1 2013, instead of, as historically, in the fourth quarter. Even more importantly, our sales-out in ‘Concept’ stores (branded stores owned by the company) has also strengthened with double digit growth in our four major markets. Some of this increase is due to the fact that Easter was in Q1 this year compared to Q2 last year, but we believe most of it is due to better products, improved marketing and better execution in the stores.”

The company’s financial guidance was unchanged from the prior quarter. It expects revenue of to be above DKK 7.2 billion ($1.25 billion) and expects an EBITDA margin above 25 percent.

Other highlights of the first quarter 2013 report

* EBITDA increased by 60.3 percent to DKK 643 million ($112 million), corresponding to an EBITDA margin of 32.1 percent, compared to an EBITDA margin of 28.2 percent in the first quarter of 2012.
 
* Free cash flow was DKK 406 million ($70.6 million), compared to DKK 118 million ($20.5 million) in the first quarter of 2012.
 
* Pandora bought back 398,153 shares corresponding to DKK 61 million ($10.6 million) as part of the on-going DKK 700 million ($121.8 million) share buyback program.
 
* Pandora expects to open approximately 150 Concept stores in 2013.

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Pandora Jewelry Q2 Revenue Up 53%

Pandora charm bracelet

Danish jewelry company, Pandora, continues its comeback that began to show promise earlier this year with a year-over-year 53 percent increase in revenue to 1.9 billion kroner ($343 million) for the second quarter of 2013. Net income rose 22 percent for the period to 431 million kroner ($76.5 million).

The company did note that comparable figures for the second quarter of 2012 were impacted by the company’s stock balancing campaign conducted in 2012, where it replaced unwanted products after demand collapsed two years ago.

The international company known for its charm jewelry and silver jewelry posted robust double-digit sales growth in all regions where it operates:

• Americas increased by 52.1 percent (54.3% increase in local currency)
• US increased 53.9 percent (55.6% increase in local currency)
• Europe increased by 59.3 percent (59.8% increase in local currency)
• Asia Pacific increased by 43.5 percent (42.4% increase in local currency)

Gross profit for the quarter increased 49 percent to 1.27 billion Danish kroner ($225 million). This corresponds to a gross margin of 66 percent, compared to 67.9 percent in the second quarter of 2012 and 65.6 percent in the first quarter of 2013. The company said the decrease in gross margin was primarily due to the expiration of the suspension of import duties on goods from Thailand (where the company manufactures its jewelry) into the U.S. “The increase in the gross margin compared to Q1 2013, was due to a decrease in commodity prices,” the company said.

EBITDA for the second quarter increased by 140.9 percent to 530 million Danish kroner ($94.1 million) resulting in an EBITDA margin of 27.4 percent, compared to 17.5 percent in the same period of the prior year. 

Pandora—which designs, manufacturers, markets and sells its jewelry wholesale and retail—said its volumes increased by 40 percent year-over-year and the average sales price increased nearly 9 percent.

On 30 July 2013, Pandora is sticking to an upgrade in its financial guidance, first announced July 30, to 8 billion kroner ($1.42 billion), compared with its previous guidance of 7.2 billion kroner and expects an EBITDA margin of approximately 27 percent, up two points from its previous guidance.

The company also plans to increase the number of its popular “concept stores” that it plans to open for the year, from 150 to 175.

“The solid performance reported for Q1 2013 has continued across all major markets in the second quarter, with strong sales from newly launched products, high replenishment rates and healthy sell-out from the concept stores,” said Allan Leighton, Pandora CEO. “Our strategy of delivering affordable luxury is becoming increasingly relevant, and although there are still many areas in which we can improve we are pleased with our progress.”

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