Pandora CEO quits embattled jewellery giant

Mikkel Vendelin Olesen walks out as sales flatten out.

Pandora chief executive Mikkel Vendelin Olesen has resigned following news that the jewellery giant has taken a battering in the market.

The board at Pandora has issued a warning after revenue fell 30% year on year in July, which it described as a “sharp deterioration”.

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Pandora’s share price plunged from DKK147.5 to DKK50 (£17.27 to £5.85) on release of the news.

Pandora had told investors to expect a revenue growth of at least 30% in 2011 and a minimum EBITDA margin of 40%. It has now said it expects revenue to be in line with 2010’s figures with an EBITDA margin in the low 30s.

It has adjusted its forecast capital expenditure for 2011 to DKK230m (£27m) with an effective tax rate of 18%.

Pandora said in a statement: “Our growth has been impacted by the cumulative effect of substantial price increases in the light of soaring commodity price increases. In addition our sales, marketing and operational execution has been poor in many cases and is as big a contributory factor.”

Pandora will now embark on refocusing its business to focus on lower price points after it had to increase its already inflated prices by a further 15% following the realisation that this upwards price push had had a negative volume impact on sales-out.

The volume impact of the cumulative price increases has been more substantial than Pandora first forecast. Its revenue increased by only 3.6% (10.2% in local currency) to DKK1.39bn (£1.63m) and EBITDA fell 6.2% to DKK512m (£59.9m) in Q2 2011 against the same period last year.

Pandora stated: “The re-set of our affordable luxury positioning, improved operational execution and restoring growth trajectory is now the focus of our company.”

The jewellery company expects this repositioning to take at least 18 months.

As well as global price pressures, sales at Pandora have also been hit by retailers destocking due to poor sales and an uncertain economic outlook. However, Pandora chairman Allan Leighton admitted that the company itself was also to blame.

Leighton said: "Although our price increases combined with some destocking are significant contributors to our slowdown in sales and profitability, our own inadequate operational sales, and marketing execution is as big a factor."

Olsen has left Pandora with immediate effect and board member Marcello Bottoli has stepped up to take over his role in the interim period as the jewellery company searches for a permanent replacement.





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