Denmark's Pandora falls as rapid U.S. sales growth slows

Pandora posted third quarter operating profit in line with forecasts but its shares fell after the report showed slower U.S. growth raising doubts the
Danish jewellery maker could maintain its rapid pace of expansion and growth.

The company is expected to open a new store a day this year after reaping revenue growth of over 30 percent and operating profit of almost 50 percent last year.

Such growth rates have made Pandora the darling of investors since it listed in 2010 -- it is one of the most traded shares on the C20 CAP main Copenhagen index and the stock has risen almost 300 percent since the initial public offering.

But doubts over the pace of growth appeared last month after brokerage Carnegie conducted a survey of U.S. dealers and cut its estimates for sales in the region for the third quarter. That report sent Pandora's shares tumbling.
Revenues in the Americas, Pandora's largest cash cow in the second quarter, increased 8.3 percent year-on-year, down from 19.4 percent in the last quarter.

"The U.S. should be weak and was expected to be weak and we must look at the next numbers to make a final conclusions (about long term market terms in the U.S)," Alm. Brand analyst Michael Friis Jorgensen said.

Giving reasons for why sales slowed in that region, analysts said Pandora shifted focus away from its trademark collectible charms hung on bracelets and also moved some of its marketing budget to Europe.

Pandora's shares fell on opening and by 0845 GMT they were 1.8 percent down at 780.50 Danish crowns. That compares to their record peak in August of 820 crowns.

"The company maintains its expectations for the full year thus we have not gotten the positive surprise we had hoped for," Nordea analysts wrote in a note to clients. "Having said that, the results show a Pandora in great shape."

The company reported core earnings (EBITDA) of 1.45 billion Danish crowns ($209 million) compared to 1.3 billion Danish crowns a year ago.

Revenues rose 36.1 percent in Europe and 62.9 percent in the Asia Pacific including Australia compared to a year ago. The company in the quarter generated 37 percent of revenues from the Americas, 47 percent from Europe and 15 percent from Asia.

Pandora maintained its 2015 outlook of revenues of more than 16 billion Danish crowns and an EBITDA margin of 37 percent. It opened 112 concept stores in the three months to September.

$1 = 6.9419 Danish crowns