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Pandora admits 2020 sales growth unlikely

By Lawrence Gash

Jeweller hit hard by Chinese coronavirus shut down

Danish jewellery maker Pandora has reported a fourth quarter improvement but admitted that a return to sales growth is not likely in 2020.

Organic sales growth fell by 8 per cent last year and the jeweller now expects this to rise to -3 and -6 per cent. Excluding restructuring costs, the company expects an operating profit margin of 23 per cent, compared with 26.8 per cent in 2019.

CEO Alexander Lacik stated: “We have made significant changes in a very short time, and the results in Q4 give us confidence. Consumers are responding positively to our commercial initiatives.”

Pandora pointed out that it beat fourth-quarter earnings forecasts of 2.75bn DKK (£310m, $410m, €370m) with earnings of 2.81bn DKK. However, the jeweller itself compiled the poll that it beat, and its earnings report excluded interest tax and restructuring costs.

Shares in the jeweller had gained by almost 20 per cent after it stated in early January that it would meet its 2019 profit margin and sales targets. However, following its latest admission Pandora shares have fallen 3.55 per cent to stand at 336.90 DKK by mid-morning trading.

The coronavirus has also contributed to its falling share price with Pandora’s operation in China essentially stagnating. The Chinese and Hong Kong market accounts for around 10 per cent of the firm’s annual sales. Thus far 70 out of its 240 shops in the region have closed by government instruction with those that remain open experiencing almost no foot traffic, thanks to wide scale quarantines and public fear.

The company stated: “In recent weeks, the coronavirus has led to an unprecedented decline in consumer traffic in China and Hong Kong. Due to the unpredictable nature of the situation, the full-year impact cannot be reasonably estimated at this point in time.”

The coronavirus has not yet completely hobbled the Chinese economy. According to a recent Markit/Caixin report China’s manufacturing sector still expanded in January despite the epidemic.

FURTHER READING: Chinese manufacturing expands despite coronavirus

FURTHER READING: LVMH acquires Tiffany in $16.2bn deal

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