Pandora

Deminor is investigating elements which led to severe losses for investors in Pandora A/S (common shares and ADR's, respectively: ISIN: DK0060252690 and US6983411041; Ticker: PNDORA DC EQUITY and PNDZF; exchanges: Nasdaq OMX Copenhagen Exchange and OTC "pink sheets") (hereafter the "Company"), a Denmark-based company designing, manufacturing and selling jewellery at affordable prices.

On August 2nd, 2011, Pandora issued a profit warning announcing a new sales and earnings outlook for the year 2011 (hereafter the "Profit Warning"). The guidance for expected growth revenue changed from no less than 30% to 0%. This announcement was in sharp contrast with the revised guidance disclosed by the company on April 18th, 2011.The CEO resigned with immediate effect. Pandora indicated that the downward revision had been made because of the cumulative effect of the pricing strategy in the light of soaring commodity price increases (gold and silver) and the impact of the destocking by retailers due to lower sales-out and an uncertain economic outlook. The reaction of the market was a severe and sudden 65.35% drop of the stock price in a single trading day.

On December 22nd, 2011, following an in-depth investigation relating to the Profit Warning, the Copenhagen Stock Exchange (Nasdaq OMX Copenhagen) reprimanded Pandora for not having communicated the Profit Warning in a timely fashion. The Danish Financial Supervisory Authority confirmed the findings of this investigation on January 10th, 2012.

 

We understand that Pandora A/S experienced a strong deterioration in revenues as from Q2 2011. It took the company and its management until August 2nd, 2011 (Q3 2011) to disclose to the investor community that it faced some "inadequate operational sales" and "marketing execution" problems. It could have known by the middle of Q2 2011 that a slowdown was happening: if Q1 revenue growth was +43% and overall H1 2011 was +22% (as indicated by the company), then Q2 revenue growth was only approximately 3%, meaning that May and June 2011 were likely to be (very) weak. It cannot be excluded that the first signs of a slowdown were already visible before April 2011 or towards the end of the first quarter 2011. Slower growth in orders can also be deducted from the strong rise of inventories that was already occurring during the first quarter of 2011.

 

Moreover, the company admitted that the effective implementation of a new pricing strategy as from January 1st, 2011 has not been well perceived by the final customers and retailers. The company's Chairman acknowledged on August 2nd, 2011 that Pandora A/S was wrong to have increased prices ("we have been doing that at a time when consumers have become more value conscious", "we will move back to where we really should be, which is within affordable luxury"). In some markets, the price increases were substantial (up to 40%). The company could and should have known that price increases of such magnitude would have a substantial impact on its revenues and on its business model. The company never made a secret (including in its IPO Prospectus of October, 2010) about the fact that its business model was focused on selling jewellery in the affordable luxury market segment. Therefore the company should have informed investors about the upcoming price increases.

 

Each investor who purchased common shares and /or ADR's between January 1st, 2011 and August 1st, 2011 (including) (hereafter the "Proposed Class Period") are invited to contact Deminor before May 20th, 2012. Please note that such period could be reduced / extended (without prior notice) depending on the factual elements of the case.

If you would like more information about the case, please contact:

Edouard Fremault

Manager

edouard.fremault@deminor.com

+ 32 2 674 71 10

Jean-Philippe Timmermans

Head of back-office

jean-philippe.timmermans@deminor.com

+ 32 2 674 71 10