COPENHAGEN, Denmark — Smaller sales declines in key markets Britain and Italy and a step up in restructuring efforts helped to lift Danish jewellery maker Pandora's beaten down shares on Tuesday, despite a drop in second-quarter earnings.
The shares, which had fallen about 10 percent this month, were up 6.5 percent at 248.30 Danish crowns at 07:40 GMT.
Pandora, best known for its customisable silver charm bracelets, is struggling after new jewellery lines failed to entice shoppers, but is buying back older ranges from franchises and slimming down collections to try to improve its performance.
Sales from stores open more than a year fell 10 percent in the second quarter from the same period last year — the same as in the first quarter.
However, like-for-like sales in Britain and Italy were down 8 percent and 10 percent respectively, compared with first quarter slumps of 13 percent and 22 percent, after a pick up in marketing spending.
"We dialled up the volume on our media investments by a factor of two in order to try and see if we could move the needle on traffic. And that has been very successful," newly appointed chief executive, Alexander Lacik, told Reuters.
"We got a very strong return on investment," he added, saying the initiative would be implemented across other key markets.
Pandora said restructuring costs were now likely to be "up to 2.0 billion" crowns, compared with a previous estimate of up to 1.5 billion crowns ($221 million).
"We've upped that bill because we've simply found more dead wood in the business," Lacik said.
The company will also simplify its product portfolio.
"As an example we have, I think, 150 different variations of a heart on a charm. And when you speak to customers, they clearly don't see the incremental value," the chief executive said.
Explaining Pandora's share price rise, Sydbank analyst Soren Lontoft Hansen said: "I think that investors are reacting to the correct diagnosis of the challenges in the company."
Pandora's second-quarter earnings before interest, tax, depreciation and amortisation fell 13.7 percent to 1.29 billion crowns ($192 million), but the company kept its full-year guidance.
By Nikolaj Skydsgaard, additional reporting by Tommy Lund; editors: Rashmi Aich and Mark Potter.