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Pandora fires CEO as new jewellery fails to charm
[COPENHAGEN] Danish jeweller Pandora ousted its chief executive on Thursday to try to regain investor confidence after the company said this week it would cut jobs and warned on profits.
Shares in Pandora, known for its silver charm bracelets, rose as much as 9 per cent on the news and as it appointed former The Body Shop CEO Jeremy Schwartz to jointly run the company with newly named chief financial officer Anders Boyer in the interim.
The shares had plunged by 24 per cent on Monday when the company cut its 2018 sales growth outlook to 4-7 per cent, and its EBITDA margin outlook for the year to around 32 per cent, the latest in a slew of bad news.
The profit warning came just seven months after CEO Anders Colding Friis, who has been criticised by investors for poor communication during his three-year leadership, set out the goals as part of Pandora's strategy towards 2022.
"We are very aware that investors are questioning this process. At some point you have to make a decision and that was what we did this morning," Pandora Chairman Peder Tuborgh told Reuters.
Mr Friis is the second top executive to quit the company after CFO Peter Vekslund resigned earlier this year after the firm missed its own 2017 sales forecasts and said margins would be thinner.
The company is also struggling to gain market traction for new charms for its bracelets, it said.
Mr Friis, who will leave the company at the end of August, told Reuters: "We have been too optimistic in our expectation for how fast our strategy could be implemented."
Pandora sells customisable jewellery such as charms, bracelets, rings and pendants, at a lower price than competitors like Swarovski.
Prices for its newest collection, Shine, range from US$20 for a charm to US$200 for the most expensive bracelet, prices from its US online store showed.
Pandora acknowledged that the new strategy it launched in January, aimed at rectifying a lack of innovation and weak growth in key markets, was not progressing as fast as expected.
It has especially been challenged by consumers buying fewer charms per bracelet, Mr Boyer told Reuters.
"We had expected we could reverse that trend with all of our new products, but that hasn't happened yet," he said.
Sales of charms, the backbone of Pandora's jewellery assortment, declined 7 per cent in the second quarter. Sales of other jewellery in its new 'Shine' collection, launched in March, had been well received, it said.
Pandora confirmed preliminary second-quarter sales of 4.8 billion crowns and an EBITDA margin of 31.1 per cent released on Monday in connection with the profit warning.
Like-for-like sales growth in the second quarter was down 1 per cent compared to a 5 per cent decrease in the previous quarter.
Mr Boyer stuck to the company's mid-term target for the period until 2022 for an EBITDA margin of 35 per cent and sales to increase by 7-10 per cent per year in the period, which was announced in January.
"Our strategy is the right one, but the transformation takes longer than we had expected," added Mr Boyer, who took up the position last week.