PARIS — With a collaboration with Shakira in the bag, embattled Danish jeweler Pandora is banking on tactics including a significant increase in marketing spend on celebrities and influencers to help get back on track after a weaker-than-expected first quarter and start to the second quarter.
Pandora also announced plans for further lay-offs in its Thai facilities following its lackluster performance, with 1,200 employees set to lose their jobs, but maintained its full-year guidance.
“We are facing issues that are in our own control and that we can deal with. It doesn’t mean this is easy to fix. It’s Q1 of a two-year journey, but there’s nothing that shows us that we can’t get back to a positive like-for-like on the other side of the program,” Alexander Lacik, Pandora’s newly installed president and chief executive officer, told analysts during a conference call on Tuesday.
He was referring to the group’s Programme Now turnaround strategy, which also involves a culling of underperforming stores and promotions. The plan is to limit openings to 75 stores this year.
Lacik said the return on selective testing of commercial pilots and marketing activities across markets will be visible in the next two quarters.
Like-for-like sales in the first quarter fell 10 percent to 4.8 billion kronor, or $720 million, partly impacted by lower traffic in physical stores, with sales of charms down 17 percent. Net profit in the period totaled 797 million kronor, versus 1.2 billion kronor in the corresponding period a year earlier.
Earnings before interest, taxes, depreciation and amortization amounted to 1.08 billion kronor, down from 1.44 billion kronor a year earlier, negatively impacted by operational deleverage. The company reported gross margins of 75.9 percent over the quarter, versus 75.8 percent in 2018.
In terms of full-year outlook, like-for-like revenues are expected to be down, to negative high single-digits.
Organic growth in 2019 is expected to fall by between 3 percent and 7 percent year-on-year, including a one-off negative impact of 3 to 5 percentage points related to the brand’s commercial reset, as reported.
Still, as difficult as the first quarter was for the Danish jewelry brand, the market seemed to take the strategy well, driving Pandora’s shares up 4.6 percent to 281.60 Danish kronor.