January 16, 2018 / 3:36 PM / 9 months ago

UPDATE 1-Jeweller Pandora to double product launches to regain lost charm

(Adds analyst, background, updates share price)

COPENHAGEN, Jan 16 (Reuters) - Jewellery maker Pandora , known for its silver charm bracelets, plans to double new product launches by 2022 to rectify a recent lack of innovation and weak growth in key markets, its chief executive told investors on Tuesday.

Pandora shares were up 5.2 percent to 605.20 Danish crowns at 1530 GMT as it met investors to try to dispel concerns after weak U.S. trading and a failed Valentine’s Day collection hit its 2017 performance.

“The management delivers transparency on how they will achieve growth going forward. But the confidence will not return in one day,” said Sydbank analyst Soren Lontoft Hansen, who has a “buy” rating on the stock.

Pandora shares rose almost 20-fold in the four years to 2016, topping 1,000 Danish crowns in May that year.

They have since shed almost half their value, hurt in part by a challenging U.S. market which has prompted some U.S. hedge fund to short the stock.

The stock remains below the Jan. 11 opening price from which it slumped more than 14 percent after the company missed its own sales forecasts and warned of thinner margins ahead.

“We’ve had a hiccup in products in 2017,” CEO Anders Colding Friis told investors at a capital markets event in Copenhagen.

“Our assortments have become too repetitive, so the consumers could not see a very big difference,” he said.

As a response, Pandora — the world’s largest jewellery manufacturer by production volume — will cut product development time to get new jewellery to market faster, he said.

By 2022, Pandora aims to launch 800 products, compared with 400 last year.

The growth in new products will in particular be in categories such as necklaces, rings and earrings, from which Pandora expects to generate 50 percent of sales by 2022 compared to 25 percent today.

Friis added that higher production costs for more complicated jewellery in new materials would put pressure on profit margins. The company manufactures in Thailand.

Pandora last week said it would target a core profit (EBITDA) margin of 35 percent in 2018-2022, down from 39.1 percent in 2016.

Pandora aims to lift online sales to between 10 and 15 percent of revenues by 2022 from 6 percent in 2017 but stores remain the main sales point.

“There’s something about buying jewellery, you want to feel it,” chief marketing officer Minna Philipson said.

Pandora, which produced 122 million pieces of jewellery in 2016, aims to increase the share of stores it owns to gain a larger share of revenue and better control of its brand.

Recent volatility in the stock has in part been due to short bets by U.S. hedge funds. Short-betters held positions for around 7.8 percent of outstanding shares according to data provider Astec Analytics.

Reporting by Stine Jacobsen; Editing by Mark Potter/Keith Weir

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