UPDATE 2-Jeweller Pandora's shares hit record high as it ups revenue forecast

Tue May 13, 2014 9:42am EDT

* Q1 EBITDA 937 mln DKK vs 814 mln average forecast

* Raises 2014 revenue outlook

* Shares hit all-time high (Adds details, shares, quotes)

By Shida Chayesteh

COPENHAGEN, May 13 (Reuters) - Danish jeweller Pandora raised its annual revenue forecast after quarterly results beat analysts' estimates, providing further evidence its turnaround plan is working and sending its shares to an all-time high.

Pandora, best known for its charm bracelets, had a strong market debut in late 2010 but ran into difficulty after a move into more expensive jewellery alienated its core customers who wanted "affordable luxury". Within a year, its shares had dropped 80 percent and it had sacked its then chief executive.

In 2012, it launched a new strategy in a bid to stem a decline in sales, shifting away from more costly products and allowing retailers to swap unsold stock for lower-priced items. The unsold jewellery was melted down and crafted into new pieces.

Pandora on Tuesday reported first-quarter earnings before interest, tax, depreciation and amortisation (EBITDA) of 937 million Danish crowns ($172.7 million) - up about 46 percent year-on-year and above an average forecast of 814 million in a Reuters poll of analysts.

Revenue rose about 29 percent to 2.59 billion crowns, beating the average forecast of 2.32 billion.

The results were further evidence that its strategy shift was paying off, after sales rose by a third in 2013 to about 9 billion crowns.

It raised its expectations for 2014 revenue to more than 10.5 billion crowns, from a previous forecast of more than 10.0 billion crowns made in January. It stuck with its prediction of an EBITDA margin of around 35 percent.

Pandora shares reached an all-time high of 396.70 crowns on Tuesday and were up 7.8 percent at 391 crowns at 1307 GMT.

The firm's shares are up 33 percent this year, outpacing the main Copenhagen blue chip index which is up 15 percent.

STORES

"Like-for-like growth (in the first quarter) was very strong for all the main geographies despite tough comparisons, which confirms our view of a strong start to the year," Nordea senior analyst Dan Wejse said in a note to clients.

The United States is Pandora's biggest market, accounting for more than a third of revenue last year, according to Thomson Reuters data, followed by Britain and Australia.

The company says it has about 10,000 "points of sale" - as well as selling through other retailers, it has more than 1,000 concept stores globally, where only Pandora jewellery is sold.

Wejse said revenue growth was boosted by Pandora's concept stores, which accounted for 51 percent of total revenue in the first quarter, up from 44 percent a year ago.

Chief Executive Allan Leighton said sales were also helped by a good reception for new collections and revenue growth would remain strong this year but at a more moderate level.

"Our view is that there was a number of one-offs in the first quarter that won't be there for the rest of the year," Leighton told Reuters.

"The key is we had a very good Christmas and therefore a lot of the retailers entered the year with quite low stock levels so you've got that stock replenishment that's kicked in," he added.

Pandora, which manufactures its jewellery in Thailand, also raised its target for new store openings this year to more than 225 from more than 175.

($1 = 5.4264 Danish Crowns) (Editing by Pravin Char)

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