PARIS — Noting slowing traffic in stores, beleaguered jeweler Pandora reported declines in sales and profit over the second quarter as it gears up for a series of brand-relaunching events that kick off next week — including painting Los Angeles streets pink.
“This is only the start of our journey to improve our brand relevance and more will come in 2020. There is no quick fix in improving brand relevance, it is something we will build over time,” Alexander Lacik, president and chief executive officer of the Copenhagen-based company, said during a conference call with financial analysts. The Swedish executive joined the company over the quarter, following an extended interim period following the departure of Anders Colding Friis last August.
Faced with slumping traffic in malls around the world, the global charms-maker has embarked on a restructuring program that entails buying back wholesale inventory, revisiting its store network and reducing discounts.
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Sales for the period were 4.69 billion Danish kronor, a 10 percent decrease on a like-for-like basis, with a steep drop in wholesale revenue. Net profit came to 526 million Danish kronor, a 50 percent decline.
Results were “in line with plans,” said Lacik, who noted that sticking with the full-year forecast implies an improved performance over the fourth quarter. Pandora targets a dip in full-year organic revenues at between 3 percent and 7 percent.
“No negative surprises,” said Piral Dadhania, analyst with RBC Europe, in a research note to clients, noting revenue was slightly ahead of consensus expectations. “Pandora is in a better place today than in the past three years,” added Dadhania, citing a “credible plan” from new management.
“Our preparations and marketing pilots spur confidence in our direction — by improving execution with a focus on Pandora’s core proposition, we can improve our relevance for consumers around the world,” Lacik said.
Regaining brand relevance is the company’s most important objective, he explained, who noted that buying bracelets and collecting charms remain in demand.
“The model is not broken, we just need to deliver better on consumer preferences,” he added.
The label plans to kick off a series of brand reviving events in Los Angeles on Aug. 29, inviting some 400 guests while streets and five buildings in the center of the city will be painted pink — a color representing the new look of the brand and emphasizing the O carrier, a new hoop-shaped charm carrier that can be worn on necklaces or used to decorate bags and jeans.
The Millie Bobby Brown campaign is slated to start in October. The “Stranger Things” star signed on to a two-year collaboration with the jeweler, which will feature her in her adopted hometown of Atlanta wearing her selection of pieces from a new Pandora collection of 55 pieces, aimed at Generation Z consumers.
There are also Harry Potter charms in the works, following a new deal with Warner Brothers.
The jeweler is betting on higher marketing investments, which will be refocused on both base products as well as new ones, rather than only emphasizing new launches, as it had in the past. Pilot projects in Italy and the U.K., driven by an increase in advertising spending, resulted in higher store traffic, according to the executive, who said they were profitable and pledged to “immediately increase investments” over the second half of the year.
The company is also testing a new store format with its first boutique in Leicester in the U.K., before trying it out elsewhere in the U.K., Italy and China.
Lacik pledged an update on company plans for its online and off-line sales outlets during the fourth-quarter report in early February next year. “We are looking at all sorts of options,” he noted.