Pan­dora Low­ers Guid­ance

WWD Digital Daily - - Wwd - BY KATYA FORE­MAN

PARIS — Copen­hagen-based jew­elry firm Pan­dora con­tin­ues to lose its charm.

Com­ing off a dis­ap­point­ing third quar­ter and chal­leng­ing start to the fourth quar­ter, the be­lea­guered com­pany on Tues­day low­ered its full-year guid­ance and said it would scale back on fran­chise ac­qui­si­tions and store open­ings to fo­cus in­stead on de­vel­op­ing om­nichan­nel in well-de­vel­oped mar­kets.

Pan­dora re­vealed it has launched a pro­gram dubbed Now, fo­cused on re­duc­ing costs and work­ing cap­i­tal, reignit­ing sus­tain­able like-for-like driven rev­enue growth and ad­just­ing its net­work ex­pan­sion plans to “lift the busi­ness to the next level of ma­tu­rity.”

The search for a new chief ex­ec­u­tive of­fi­cer is still on fol­low­ing the de­par­ture in late Au­gust of An­ders Cold­ing Friis, the brand’s fifth ceo since it went pub­lic in fall 2010.

Man­ning the ship in the in­terim are An­ders Boyer, a for­mer board mem­ber of Pan­dora who was ap­pointed chief fi­nan­cial of­fi­cer on Aug. 1, and chief op­er­at­ing of­fi­cer Jeremy Schwartz, for­mer ceo of The Body Shop and a met­al­lur­gist by train­ing, who joined the firm in Septem­ber.

Com­ment­ing on re­ports that Pan­dora has hired Roth­schild to ad­vise the com­pany on po­ten­tial buy­out suit­ors, Boyer told WWD: “It’s com­pletely nat­u­ral for a listed com­pany with an open share­holder struc­ture to al­ways know that, if and when a bid should come for what­ever rea­son, we know who would ad­vise the com­pany in such a sit­u­a­tion.”

In a con­fer­ence call with in­vestors and an­a­lysts, mean­while, Boyer stressed the im­por­tance of get­ting to know the cus­tomer bet­ter.

“Pan­dora is not yet a cus­tomer-driven com­pany and yet the global store es­tate and e-com­merce site can be a su­per-rich source of first per­son data. The op­por­tu­nity to cre­ate per­son­al­ized, one-on-one re­la­tion­ships is to be done,” he said.

Boyer added that the com­pany has launched a “de­mand-cen­tric” growth model sur­vey­ing 28,000 cus­tomers world­wide “to un­der­stand who our present and fu­ture cus­tomers are and what they want.” The find­ings will be pre­sented in Fe­bru­ary in tan­dem with the firm’s 2018 an­nual re­port.

“Iron­i­cally, Pan­dora charms are all about a per­son­al­ized ex­pe­ri­ence, and that is what our e-comm’ needs to do, too,” Boyer added.

Rev­enue from Pan­dora e-bou­tiques in the quar­ter rose 52 per­cent in lo­cal cur­rency terms to 400 mil­lion Dan­ish kro­ner, or

$61.3 mil­lion, rep­re­sent­ing 8 per­cent of to­tal sales, with a strong per­for­mance across all key mar­kets, es­pe­cially China and the U.S., the com­pany said. Pan­dora sells on­line in 20 coun­tries glob­ally.

The strug­gling jew­elry firm is re­view­ing its net­work ex­pan­sion, shift­ing the fo­cus to e-com­merce and still search­ing for a ceo.

Phys­i­cal open­ings will be fo­cused on tar­geted lo­ca­tions in mar­kets with white space, in­clud­ing China, In­dia and Latin Amer­ica, it said. The firm didn’t pro­vide an ex­act fig­ure but said open­ings in the 2018-22 pe­riod are ex­pected to be lower than the cur­rent guid­ance of 1,000 stores as e-com­merce grows. Pan­dora op­er­ates 2,614 con­cept stores, with 286 added in the last 12 months.

The charm bracelet spe­cial­ist still plans to add around 250 con­cept stores in 2018. Half will be lo­cated in the EMEA mar­ket, with the other half split be­tween the Asi­aPa­cific re­gion and the Amer­i­cas.

Pan­dora re­ported rev­enues in the third quar­ter to­taled 4.98 bil­lion Dan­ish kro­ner, rep­re­sent­ing a 3 per­cent de­crease in lo­cal cur­rency terms, mainly driven by changes in in­ven­tory lev­els in the whole­sale chan­nel, which saw rev­enues fall 27 per­cent to 2.05 bil­lion Dan­ish kro­ner in lo­cal cur­rency. Net profit for the pe­riod to­taled 951 bil­lion Dan­ish kro­nor.

The earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­za­tion, or EBITDA, mar­gin stood at 29 per­cent, down from 37.8 per­cent dur­ing the same pe­riod a year ago.

In terms of cat­e­gories, sales of charms, which rep­re­sented 53 per­cent of to­tal rev­enues, fell 9 per­cent in lo­cal cur­rency terms in the pe­riod. Sales of bracelets rose 13 per­cent, while sales of neck­laces and pen­dants rose 23 per­cent.

In the nine months, to­tal rev­enues rose 2 per­cent in lo­cal cur­ren­cies to 14.91 bil­lion Dan­ish kro­ner. Net prof­its in the pe­riod to­taled 3.15 bil­lion Dan­ish kro­ner, ver­sus 3.82 bil­lion Dan­ish kro­ner in 2017.

Un­der its re­vised guid­ance, Pan­dora sees sales in­creas­ing by 2 per­cent to 4 per­cent in lo­cal cur­ren­cies in 2018, ver­sus a pre­vi­ous fore­cast of 4 per­cent to 7 per­cent growth. The com­pany main­tained its fore­cast for a full-year EBITDA mar­gin of about 32 per­cent, due to the al­ready im­ple­mented cost sav­ings as well as a strong cost fo­cus across mar­kets and func­tions.

The com­pany also canceled its long-term rev­enue growth am­bi­tions of 7 per­cent to 10 per­cent, and said it is re­view­ing its longterm EBITDA mar­gin tar­get of 35 per­cent.

Ear­rings byPan­dora.

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