PARIS — Danish contemporary jeweler Pandora on Tuesday said it is partly banking on the early release of its Christmas collection to boost business in the sluggish U.S. market, with a lull in mall foot traffic, a retail environment fixated on promotional activities and currency headwind from the U.S. dollar pulling on the group’s full-year outlook.
Representing almost 25 percent of the group’s revenue, the U.S. is Pandora’s biggest market.
“This was done to strengthen sales at a time where competition for consumer spend is fierce,” said chief executive officer Anders Colding Friis during a conference call with investors and financial analysts.
In a separate interview with WWD, the executive said the group sees opportunities for developing its footprint “in the lifestyle centers that are coming up, surrounded by an anchor of entertainment, restaurants and fitness opportunities, and based more in community areas than the traditional malls.”
The plan over the next few years is to open up to 100 new stores in cities like Florida as well as on the West Coast and in the greater New York area, he said. The group in the last 12 months has closed 1,612 points of sale, including around 700 in North America, as it looks to strengthen brand representation.
With damage from hurricanes on retailers located in the U.S. and the Caribbean islands in August and September also impacting results, Pandora is maintaining its financial guidance, although full-year revenue is expected to fall in the low end of the earlier guided range of between 23 billion and 24 billion Danish kroner, or $3.58 billion to $3.74 billion, Colding Friis confirmed.
Developing the product assortment also remains a key focus, he said, “as the group continues to see some challenges in terms of lack of newness in the more penetrated markets.”
Pandora a year ago implemented changes to its product team, including a new design team, also tasked with tightening the fast tracking of products and a shorter development cycle. Their first designs and a new concept are set to hit the market in early 2018.
“We have seen a little too much repetition in our designs… Probably a bit more important in the U.S. compared to other places is that we have new, interesting products for the consumers,” Colding Friis said.
The Pandora Rose line, which in the quarter introduced 32 new products, tripled sales compared to the same period last year. The plan is to launch at least four new concepts in the next three years, Colding Friis said.
In the three-month period ended Sept. 30, profit at the Copenhagen-based firm that specializes in stackable, collectible charms slipped 3 percent to 1.37 billion Danish kroner, while revenue rose 13 percent to 5.19 billion kroner, driven by double-digit growth in all product categories.
Sales of rings, earrings, necklaces and pendants rose 21 percent, representing 27 percent of group revenue, as the firm pursues its transition into a fully-fledged jewelry company. Sales of charms and charm bracelets, which represent around three-quarters of sales, accelerated by 9 percent and 13 percent respectively, year-over-year.
Citing underlying development “showing positives as well as negatives,” Colding Friis said most of the group’s major growth markets — Germany, Italy, Australia and China — continued to show strong performance with double-digit growth rates.
Operating profit, or EBIT, rose 5 percent year-over-year to 1.8 billion Danish kroner, resulting in an EBIT margin of 34.7 percent.
Among market bright spots, Pandora’s expansion in China, where 62 new concept stores were added during the last 12 months, drove a 26 percent increase in sales in the Asia-Pacific region in the quarter to 1.11 billion Danish kroner.
By comparison, revenue in the Americas inched up 1 percent in the quarter to 1.53 billion Danish kroner.
Revenues from Pandora-owned concept stores — which the group is looking to increase in selected markets including the U.S., the U.K., Australia and Canada — grew 41 percent in the period, while revenue from Pandora e-stores jumped 87 percent on a like-for-like basis to 264 million Danish kroner, corresponding to 5 percent of total revenue, with strong developments in all major markets.
At the end of the quarter, Pandora completed the acquisition of the company’s Spanish distributor, City Time, adding 50 Pandora-owned concept stores and 13 franchise concept stores. In July, Pandora finalized the acquisition of the store network in South Africa, adding another 16 Pandora-owned concept stores to the network.
Furthermore, Pandora acquired 53 concept stores from franchisees during the quarter, taking the total number of acquired concept stores in the first nine months of 2017 to 176.