Following a record-breaking year in which group revenues jumped 40 percent, Pandora said it was looking to streamline its structure to support growth in what is becoming an increasingly difficult environment for jewelry brands.
“What got us here will not get us to where we want to be in the future,” said Pandora’s chief executive officer Anders Colding Friis, speaking on a conference call with analysts on Tuesday. “We need to take out layers and reduce the distance between management and stores and eventually move business closer to the consumer.”
Dubbed “Agility,” the project is to make the organization more nimble and improve visibility throughout the value chain, which will also include job cuts. Friis revealed that “100 people have left or will leave the company in the coming months.”
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Despite the strong growth, Pandora’s shares were down 7.6 percent in early morning trading after the Copenhagen-based jewelry firm said it expects group revenue to increase more softly in 2016 to about 19 billion Danish kroner, or $2.8 billion at current exchange. Shares closed down 7.3 percent.
In 2015, Pandora continued to show strong momentum across all regions and product categories. With sales totaling 16.7 billion Danish kroner, or $2.5 billion, for the full year, the jeweler reported that its net profit gained 19 percent to 3.7 billion Danish kroner, or $551 million.
In the three months ended Dec. 31, revenues advanced 43.4 percent, or 35.8 percent in local currency, to 5.7 billion Danish kroner, or $837 million, as net profit climbed 36.5 percent to 1.4 billion Danish kroner, or $205 million.
Dollar figures are converted at average exchange rates for the periods in question.
All geographies boasted double-digit growth, led by Asia-Pacific, up 58.5 percent in the fourth quarter, followed by Europe, 51.2 percent, and the Americas, 28.2 percent.
By category, sales of rings grew the fastest, logging an 86.8 percent increase in the quarter.
Friis said the brand’s category focus in 2016 would be expanded to include earrings in developed markets, a category which soared 90 percent in 2015 but represented only around 3 percent of group revenue, while store expansion would remain key. “Our focus on the branded store network continued and during the year we added almost 400 new concept stores globally,” he said, noting how “the strong top-line development was also reflected in our EBITDA, which increased more than 40 percent.”
In 2016, the company is slated to expand in both new and established markets and add more than 250 stores, of which roughly 60 percent are allotted for Europe, 20 percent for the Americas and the balance in Asia-Pacific.
Along with the U.K. and Australia, where the brand has been present for a decade, Friis singled out Africa and China as markets offering growth opportunities.
In 2015, Pandora signed an agreement with Hong Kong-based Oracle Investment Ltd. for the joint distribution of the brand in China, whose jewelry market is estimated to be worth 705.5 billion Hong Kong dollars, or $90.9 billion, as reported.