Pandora shares surged more than 18 per cent on Tuesday after the Danish jewellery maker reported record sales, higher than expected fourth-quarter profit and increased its share buyback programme.

The company, best known for its charm bracelets, said operating profit rose 54 per cent to 1.38 billion Danish kroner in the last three months of the year, beating a consensus forecast for DKr1.25 billion.

Pandora also surprised analysts by increasing its share buyback programme for 2015 to DKr3.9 billion from DKr2.4 billion last year, and increasing its dividend to DKr9 from DKr6.5.

Pandora ran into trouble in 2011 after a move into more expensive jewellery alienated its core customers. In 2012, it shifted back to more affordable products and has seen a recovery in sales, helped by deals such as a 10-year tie-up announced in August to add Disney characters to its designs.

The company also said on Tuesday it had entered into a strategic alliance in China.

Pandora said it expected its earnings before interest, taxes, depreciation and amortisation margin to reach 37 per cent this year after 36 per cent in 2014 and for sales to rise to DKr14 billion from DKr11.9 billion last year.

Pandora opened 310 concept stores in 2014 and it expects to launch another 300 stores, bringing the total to more than 1,700.

“We’ve totally still got some room to go in terms of opening concept stores,” outgoing chief executive Alan Leighton said, without specifying the ultimate target.

Mr Leighton will be replaced by former Scandinavian Tobacco Group chief Anders Colding Friis next month.

Pandora, which raised its profit guidance three times last year, said it would boost capital spending by 76 per cent this year and expects spending to stay at an elevated level through 2017.

Reuters