By Jacob Gronholt-Pedersen
COPENHAGEN (Reuters) - Shares in jewellery maker Pandora (CO:PNDORA) rose on Tuesday as higher online sales and a strong return of consumers to reopened stores in Germany encouraged investors, despite a steep decline in first-quarter operating profit.
The world's biggest jewellery maker was forced to close almost all its 2,746 shops worldwide in the first quarter due to the coronavirus lockdown, but said it was on track to resume growth after strong sales in the first two months of the year.
"The second quarter will not look pretty in comparison to last year, but the more important thing is that we see economies starting to reopen and consumers coming back out again," Chief Executive Alexander Lacik said in an interview.
Analysts, who had warned the crisis could be a threat to the struggling company's efforts to revive its fortunes, were encouraged by the results, including a fourfold increase in online sales in April.
"If one believes in normality at the retail level in the next quarter or two, Pandora shares are worth owning," Handelsbanken analyst Frans Hoyer said in a note.
Shares rose as much as 7% in early trade and were trading 5.1% higher by 0823 GMT.
Having found a niche between cheaper accessories in stores such as H&M (ST:HMb) and more expensive jewellery on offer from the likes of Tiffany & Co (N:TIF), Pandora's sales increased more than 10-fold in the decade to 2017.
But more recently a lack of innovation and overstretching itself at the top and bottom of the market kept both shoppers and investors at bay.
Pandora said it had secured enough funding, including bank credits and the sale of treasury shares in an accelerated bookbuild, to sustain the closure of all of its physical stores throughout 2020, its worst case scenario from the pandemic.
"We have a very strong financial position and we will use that when markets reopen. That's probably more than a lot of other retailers can say today," Lacik said.
He was encouraged by the quick return of shoppers in Germany, where 116 shops reopened at the end of April.
"German shoppers have in eight days returned to the same level of activity that took 10 weeks in China," Lacik said.
Earnings before interest and taxes (EBIT) and excluding restructuring costs fell 41% to 638 million Danish crowns ($93.3 million) in the quarter, but topped the 622 million crowns expected by 11 analysts in a poll compiled by Pandora.