Pandora Lowers Guidance
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.