Shares in the Danish jeweler Pandora A/S took a huge dive after the company warned of steeper declines in sales in 2019.
The seller of charms dropped as much as 15.3% to Dkr287.3, adding to the two-third losses it already registered in the past three years.
The company said it expects sales to weaken from 3%-7% to 7%-9%, citing larger reductions than forecasts in inventory levels with its wholesale partners.
Guidance for operating profit margin was also lower to 26%-27% from the previous 26%-28%.
Pandora sales grew more than tenfold in the decade to 2017, as the company found its place between low-priced accessories in stores such as Sweden’s Hennes & Mauritz AB (H&M) and more luxurious jewelry on offer from Tiffany & Co.
However, its recent lack of innovation and overstretching at the upper and lower end of the market left investors worrying. They feared the outlook of the Copenhagen-based jeweler’s turnaround plan it launched this year.
Pandora has doubled down its efforts to renew its image this year. However, the costs of the revamp, including cutbacks on inventories and promotions, left a negative impact in the third quarter.
Chief executive Alexander Lacik stated that the brand had promoted heavily in the past. Lacik added that Q3 is the quarter where they have taken the axe the hardest this year.
Large-scale protests in Hong Kong had trimmed sales by half, according to the company. And this led to a one percentage point fall in like-for-like sales at group level.
Pandora Sale Guidance Contributes to European Stocks Drop
Pandora’s sale outlook also weighed on European stocks, with its shares sending the OMX Copenhagen 20 lower by 0.83% to Dkr1,073.37.
Equities in Europe kicked off the month with a positive mood. As a result, the STOXX 600 was on course for a record high it reached in April 2015.
Earnings season in Europe started optimistically. Most of the companies posted forecast-beating numbers.
That was not the case with Pandora and engineering group Siemens Gamesa Renewable Energy SA, which also slashed its outlook for 2020.
Shares in the wind energy firm slipped as much as 10.3% to reach its lowest level since January. This followed a guidance cut.
The chemicals sector of the main Europe index, on the other hand, added 0.5% to €998.61, after Koninklijke DSM NV and Evonik Industries AG both generated positive earnings.