By  on July 31, 2014

PARIS — Shares in Pandora A/S fell Thursday after a group of investors said it had sued the Danish jewelry company and its president and chief executive officer Allan Leighton for compensation for losses suffered after the brand issued a profit warning in 2011.

Shares declined 3.1 percent to close Thursday at 382.40 Danish kroner, or $68.78 at current exchange, having at one point slid 5.3 percent to 373.3 Danish kroner, or $67.07, in early afternoon trading.

A statement issued by Belgian law firm Deminor, the legal representative of a group of 36 “mainly institutional” investors, said “the regulatory commission of the Copenhagen Stock Exchange and the Danish Financial Supervisory Authority each concluded that Pandora should have communicated a profit warning at an earlier stage than 2 August 2011.”

The profit warning had downgraded the company’s 2011 sales projections, causing Pandora’s shares to plummet 65.4 percent in a single trading day which, according to the plaintiffs, resulted in the destruction of 12.5 billion Danish kroner, or $2.3 billion at average exchange, of the brand’s market value.

Erik Bomans, partner at Deminor, told WWD the amount of compensation the law firm is seeking for its clients would be calculated once the exact period during which Pandora allegedly provided “misleading information” has been determined by the Danish court that will examine the case. The period in question could be anytime between October 2010, when the company went public, and Aug. 2, 2011.

According to Bomans, alarm bells should have rung when, in March 2011, the jewelry brand issued guidance for growth of 25 percent, below market expectations, causing the stock to plunge. On April 18, the company said growth could reach 30 percent, although negative customer reactions to price increases and slowing sales indicated otherwise, the lawyer said.

“That was reckless,” argued Bomans, who believes his clients have a strong case in light of the two regulatory bodies’ rulings against Pandora. “We can’t imagine losing this, even though Pandora denies all responsibility.”

The case is also being investigated by the Danish Public Prosecutor for Serious Economic Crimes.

A spokesman for Pandora confirmed the company had been subpoenaed, but would not comment further.

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