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Pandora Drops as Charm Maker Cuts Forecast, Chief Departs

Pandora A/S
Pandora A/S "Moments" bracelets. Pandora, which on average sells one piece of jewelry every second, said today it will have no sales growth this year. Source: Pandora via Bloomberg

Aug. 2 (Bloomberg) -- Pandora A/S, the Danish maker of charm bracelets, lost about two-thirds of its market value in Copenhagen trading after cutting its full-year forecast and saying Chief Executive Officer Mikkel Vendelin Olesen had left.

Pandora dropped 65 percent, the biggest decline since the Glostrup, Denmark-based jeweler’s initial public offering in October.

The company has lost about 41.2 billion kroner ($7.87 billion) in market value since the stock peaked in January. Pandora was Denmark’s largest public stock sale in 16 years. The company, which sells silver bracelets for $65 and charms to add to them for $30 each, plans to abandon the price increases Olesen implemented to combat rising commodity costs.

“Credibility and visibility is now completely shot,” William Birch, an analyst at Jefferies International Ltd. in London, said in a note, adding he’s reviewing his “buy” recommendation on the stock. “Investors may regret ever opening this box of disappointments.”

Second-quarter earnings before interest and taxes fell to 440 million kroner, the company said. That missed the average estimate of 611 million kroner in a Bloomberg survey of four analysts. Sales in July plummeted about 30 percent.

‘Self-Inflicted’

Pandora declined 96.20 kroner to close at 51 kroner, giving the company a market value of 6.64 billion kroner. The owners priced the shares at 210 kroner before the IPO and the stock jumped 25 percent to 263 kroner on Oct. 5, the first day of trading.

JPMorgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley and Stockholm-based Nordea Bank AB arranged Pandora’s stock sale.

The results, published two weeks earlier than scheduled, are “totally unacceptable” and “self-inflicted,” Chairman Allan Leighton said at a conference call with analysts. Pandora was wrong to have increased prices, he added.

“We have been doing that at a time when consumers have become more value conscious,” he said. “We will move back to where we really should be, which is within affordable luxury.”

Pandora today said 2011 revenue won’t rise. The company previously forecast at least 30 percent growth. The company will suspend planned price increases this year and in 2012, start a strategic review using external consultants and present the conclusions to investors at the end of the year, Leighton said.

CEO Olesen has resigned with “immediate effect” and board member Marcello Bottoli will take over until the company finds a new permanent chief, according to the statement.

“The CEO of the company is in the end accountable for the performance, that is why he resigned,” Leighton said.

Revenue rose 3.6 percent to 1.39 billion kroner, missing the average estimate of 1.73 billion kroner.

To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net

To contact the editor responsible for this story: Tim Quinson at tquinson@bloomberg.net.

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