PARIS — Expecting improved business at the end of the year, Pandora said it has been making use of coronavirus lockdowns to train staff on sales techniques, maintain marketing investments and design aggressive comeback plans for reopened markets.
“We have the financial muscle and [profit and loss] structure to increase spend across markets to build on the brand momentum and ultimately to win in the retail and gifting space,” said Pandora’s chief executive officer Alexander Lacik on a conference call with analysts.
The executive noted continued uncertainty linked to flare-ups of the coronavirus that continue to prompt store closures, and said the jewelry retailer is drawing up ways to cope with ongoing social distancing measures, looking at how to improve out-of-store experiences for consumers as well as expanding store space with pop-up stores, for example.
Under the direction of Lacik, who joined the jeweler a year ago, Pandora has been undergoing a brand reboot to regain popularity with consumers. Its sprawling network of stores had been struggling to cope with declining foot traffic in malls before the pandemic swept through its main markets.
Efforts to reset the brand — which included a focus on marketing spending, buying back wholesale inventory, redesigning stores, streamlining the product assortments with an emphasis on charms, reducing discounts and shoring up its digital means — had begun to pay off before the COVID-19 crisis hit, executives have said.
Lacik noted that consumers are engaging with the brand even when stores are closed and flagged an increase in the proportion of sales of full-priced products.
Online sales growth over the second quarter reached 176 percent, serving as an endorsement of the company’s emphasis on digital means, said Lacik, who noted higher traffic and sales conversion rates.
Pandora reported a 38 percent decline in organic sales over the second quarter and said it targets an annual sales decline in the range of 14 to 20 percent, a broad range that will be sharpened as the year goes on, according to Lacik.
“The pandemic may leave a lasting affect on consumer behavior, our ways of working and the use of technology,” said the executive.
“The world is still very uncertain and we have probably not seen the full consequences of COVID-19 yet,” he added.
The Copenhagen-based jeweler’s second-quarter revenue came to 2.88 billion Danish kronor, or $460 million as stores gradually reopened in key markets. By the end of July, the majority of stores were open in its seven main markets — the U.K., Italy, France, Germany, the U.S., Australia and China.
Earnings before interest, tax, depreciation and amortization were 325 million Danish kronor, while the net loss came to 175 million Danish kronor. The margin on earnings before interest and tax, before restructuring costs, was 1.1 percent over the quarter; Pandora is targeting between 16 and 19 percent for the full year.
The quarterly results were resilient, with revenues slightly higher than the consensus estimate, said Piral Dadhania of RBC Europe in a research note. RBC analysts have noted that the disrupted trading environment poses a challenge to the company’s broad turnaround efforts, with its core customer base likely strongly impacted by COVID-19 employment and earnings losses.
As the global spread of the virus began to gain steam in March, the company cut a layer of regional management, wiping out 180 jobs, regrouping its more than 100 markets into regional clusters.
The new management structure is fully operational, making for a nimbler organization, according to Lacik.
The brand is working on developing new product pillars while collaborations with Harry Potter, Star Wars and Millie Bobby Brown are serving to bolster the jeweler’s popularity.