Anders Colding Friis. Picture: TWITTER
Anders Colding Friis. Picture: TWITTER

Copenhagen — Shares in Pandora recouped much of last week’s sudden loss as management spent Tuesday reassuring investors that 2018 would mark a turning point for the troubled jewellery manufacturer and retailer.

CEO Anders Colding Friis and the departing head of finance, Peter Vekslund, promised to tackle investor concerns and pledged handsome returns, during a presentation that won praise from analysts.

Tuesday’s capital markets day was the Danish company’s first since 2016.

The CEO acknowledged 2017 had been marred by "hiccups" and said there were "things we can do better". He also made clear Pandora would "expect to return quite a lot of cash to our shareholders" in 2018-22.

The stock gained as much as 6.4%, its biggest increase since November.

Friis is confronting shareholders who have lived through a 27% stock-price decline in 2017 and losses in early 2018. Management said on Thursday the company had not lived up to its targets for 2017 and signalled profit growth would be more modest through 2022.

Pandora has been under siege in the past year by foreign hedge funds who are sceptical about its economic future
Per Hansen

The only investors to make money on last week’s bad news were the hedge funds that bet against Pandora, after consistently ignoring its assurances.

Pandora used to be a stock-market darling, consistently exceeding its guidance. Its shares jumped 17-fold in the five years through 2016 as management beat market expectations quarter after quarter and revenue and net income tripled.

But as the company has grown, Friis has tried to make the point that a bigger base meant slower growth. That message is proving hard to get across.

"Pandora has been under siege in the past year by foreign hedge funds who are sceptical about its economic future," Per Hansen, an investment economist at Nordnet, said in a note on Tuesday before the investor day started.

"It’s now a question of delivering as convincing a presentation as possible, so that the hedge funds find nothing to chase and move on."

Some hedge funds have recently cashed in on profits. Lone Pine Capital and Coatue Management both reduced their short bets after Thursday’s selloff. But other funds have joined the speculation against Pandora. BlackRock Investment Management placed its first official short bet last week. Indus Capital Partners also created a short position, according to a regulatory filing late on Friday.

Aside from a challenging US retail market, Pandora said a lack of product innovation had been problematic.

During its presentation on Tuesday, the company said it would provide guidance specifically for 2018 on February 6.

Lars Topholm, an equity analyst at Carnegie who once referred to Pandora as bordering on "uninvestable" because of a lack of transparency, prefaced a question to the CEO on Tuesday by praising the "good presentation" he had just delivered.

According to analyst data compiled by Bloomberg, there were still 15 buys, 3 holds and just one sell recommendation on Pandora. The average price target indicates a return of about 40% in 2018.


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