Pandora Plans Biggest Buyback After Profit Beats Estimates

Pandora A/S, the Danish jeweler known for its charm bracelets, announced its biggest ever share buyback after fourth-quarter profit beat estimates, helped by a Christmas offering that included reindeer and snowflake designs.

Pandora will buy back as much as 2.4 billion Danish kroner ($440 million) of stock in 2014, the Glostrup-based company said today as it reported a 76 percent increase in net income for the final three months of 2013. The shares rose as much as 4.2 percent to the highest in almost three years.

The buyback is “the big news today” and “signals that the management of the company is confident that they will create a substantial cash flow this year,” Jesper Christensen, an analyst at Alm. Brand A/S, said by phone.

The 2014 buyback marks a step up from the 700 million kroner that Pandora spent repurchasing shares last year, the first time it did so. The jewelry maker is turning a page following a collapse in demand in 2011, introducing new products more frequently to gain customers. It today said it expects revenue and profitability to improve further this year.

Pandora traded 2.5 percent higher at 326.30 kroner as of 10:18 a.m. in Copenhagen. The stock has gained 11 percent this year, after more than doubling in both 2012 and 2013.

Fourth-quarter net income rose to 739 million kroner, the company said, exceeding the 714 million-kroner average estimate of six analysts. Revenue for the period increased about 30 percent to 2.8 billion kroner, it said last month.

Candy-Cane Charm

“The results were driven by progress across all major regions,” Chief Executive Officer Allan Leighton said in the statement.

Sales benefited from products introduced in the last 12 months. Its Christmas collection featured items such as a striped candy-cane charm priced at 30 pounds ($50) in the U.K.

Pandora today forecast revenue of more than 10 billion kroner for 2014, up from 9 billion kroner in 2013. The margin on earnings before interest, taxes, depreciation, and amortization will widen to about 35 percent from 32 percent, it predicted.

The company proposed a dividend of 6.50 kroner per share.

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