Pandora positive despite 3.1% decline in Europe

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Jewellery brand expects to hit £832m in 2013 and open 150 new stores.

Pandora has announced its full-year results for 2012, describing them as "slightly better than anticipated but adversely impacted by the effect from the stock balancing campaign".

The brand’s group revenue totalled DKK 6.65 billion (£769m) for the 12 months, with net profit of DKK 1.2 billion (£139m).

Pandora’s European sales decreased 3.1%, while its Americas sales increased 5.3%. The brand’s impact the Asia Pacific region was also shaky in 2012, with a fall of 10.4%, with Pandora changing its Japanese distributor.

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Financial Highlights
Its gross margin decreased to 66.6% in 2012, compared to a gross margin of 73.0% in 2011, while its EBITDA margin was 24.9% in 2012 (EBITDA decreased by 27.3% to DKK 1.6 billion (£191m).

Reported net profit decreased by 41% to DKK 1.2 billion (£139m) in 2012, compared to a net profit of DKK 2.03 billion (£235m) in 2011.

Pandora launched a stock buyback program in February 2012, taking back old or slow moving stock from retailers. The brand has made it clear the program affected business, wrapping up the program in Q3 2012.

In November last year it said that revenue has been adversely impacted by the effect from the stock balancing campaign launched in Q1 2012. By November the brand had received returns of discontinued products totalling DKK 609 million (£65.4m), and replaced it with stock of a slightly lower value, totalling DKK 599 million (£64.3m).

It also launched its first ever sale in December last year, discounting 200 lines with between 30% and 40% off RRPs.

2013 Forecast
Looking ahead, Pandora said it expects revenue for 2013 to be above DKK 7.2 billion (£832m) and expects an EBITDA margin above 25%.

The brand has also announced a share buyback programme to be completed in 2013, with the primary purpose of reducing the company’s share capital at its AGM in 2014.

The brand also plans to open 150 new concept stores in 2013.

Chief executive’s commentary
The company’s chief executive Bjørn Gulden said: "2012 was a year of re-setting the business. We started the year with two major initiatives: realigning the products and prices and improving the quality of stock with our retailers by replacing slow moving items with best sellers. After a difficult first half where we worked hard on implementing these initiatives, it is encouraging to see the positive developments in Q3 and Q4 2012.

"The new innovative products at commercial prices launched in 2012 have sold in and out very well. The retailers have reacted very positively to our stock balancing programme and we can now see that their stock have improved, both in terms of quality and value compared to a year ago.

"The sales-out has improved in all major markets and we are especially pleased to see the development in Australia and the UK. The US has continued to perform well. The German market has improved in sales-out but it will take more time and consistent execution until we improve our sales-in.

"We are continuing to invest in new markets and have in 2012 seen a very positive development in markets like Russia, Italy and France."

Gulden described the brand’s 2012 results as "confirmation" of the brand’s strength in the global market and the segment of branded affordable luxury jewellery.

Pandora has also analysed the structure of its board of directors and with the outcome a combination of its change in dividend policy the launch of its share buyback programme.
 

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