Pandora’s Royal Baby Charm Helps Earnings Exceed Estimates

Pandora A/S, the Danish jeweller known for charm bracelets, reported second-quarter profit that exceeded estimates as new products such as a royal baby charm helped boost revenue in all its major markets.

Net income rose to 431 million kroner ($77 million) from 63 million kroner a year earlier, Glostrup, Denmark-based Pandora said in a statement today, compared with the 374 million-kroner average estimate in a Bloomberg survey of analysts.

Pandora last month raised its full-year forecast after adding new items including the royal baby charm, brought out to mark last month’s birth of an heir to the British throne. The jewelry maker reiterated today that it anticipates sales of about 8 billion kroner for 2013. Still, the shares slipped as analysts said management sought to temper enthusiasm over second-half prospects on a conference call.

“The CEO tried to lower expectations for the second half,” said Soeren Loentoft Hansen, an analyst at Sydbank A/S. “But I still believe that we will see a higher guidance from Pandora when they release their third-quarter earnings.”

The shares fell 1.3 percent to 214.7 kroner at 1:35 p.m. in Frankfurt trading, reversing an initial gain of as much as 4.8 percent. Concern that majority shareholder Prometheus Invest ApS could seek to sell some of its stake may also be driving the stock lower, according to Hansen. Prometheus, which is controlled by Copenhagen-based private-equity fund Axcel and Pandora’s founding Enevoldsen family, owns nearly 41 percent of the company, according to data compiled by Bloomberg.

Surging Sales

Pandora shares advanced 75 percent this year through yesterday as the jewelry maker cut prices and replaced unwanted products after a collapse of demand two years ago.

“Although there are still many areas in which we can improve, we are pleased with our progress,” Allan Leighton, who started as chief executive officer July 1 after previously being the company’s chairman, said in the statement.

Sales rose 53 percent to 1.93 billion kroner, beating the 1.85 billion kroner that analysts estimated. Last year’s second-quarter sales were hurt by an inventory balancing campaign conducted in 2012.

The earnings were “a positive surprise,” said Jesper Christensen, an analyst at Alm. Brand A/S in Copenhagen. “But it was mainly attributed to unexpected currency income, so that is not something that we can expect going forward.”

Net financial income was 49 million kroner in the quarter, of which 48 million was an exchange-rate gain. That compared with a net financial expense of 96 million kroner a year ago.

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