Pandora’s global revenue dropped 12.2 percent in the third quarter of this year (DKK 1569m) compared to the third quarter of 2010 (DKK 1788m).
The Group’s revenue in the US, UK, Germany and Australia (which together account for 73.1 percent of the Group’s revenue) dropped by 4.7 percent, 33.3 percent, 6 per cent and 19.3 per cent respectively in the same period.
Announcing Pandora’s Q3 Financial Results, interim CEO Marcello Bottoli said the Group’s performance in Q3 was “far from satisfactory”.
However, he stressed that Pandora had already begun to implement the corrective actions needed to improve results in 2012.
These actions, which were originally announced to the public on August 2, include:
- No further price increases anticipated in 2011 and 2012
- Adjusted recommended retail prices in selected markets through better entry prices and promotions
- Review of future collections to ensure right sizing of assortment and price points
- Absolute focus on in-store space management in existing stores
- Developing a more aggressive emerging markets programme
In his first 60 days as interim CEO, Bottoli said he had identified four key issues behind the Group’s lacklustre performance:
- Deterioration in trading caused by cumulative price increases in 2010 and 2011
- Suboptimal price and product architecture
- Poor sales and marketing programs
- Poor execution in upgrades and store openings, especially in emerging markets
He said the Group had overestimated the consumer appetite for higher price points and had thus raised prices “too high and too fast” while losing “density at entry price points”.
“Pricing is a critical issue for the business,” he said, adding that many consumers currently viewed “some Pandora collections” as “too expensive”.
Pandora will now focus on “restoring its growth trajectory” by re-establishing the brand’s affordable luxury positioning and improving its operational execution with a number of new strategies in 2012 including:
- Permanent or promotional price reductions on selected items
- Significantly increased density at entry price points
- Significantly reduced global assortment
- Tailored regional offers to better address needs and preferences
- More differentiated store-type offerings
- More frequent product drops and limited editions to enhance freshness and appeal of offering
- Evolution of store design and functionalities
Bottoli concluded that despite the Group’s recent drop in revenue the company’s “growth opportunities remain exceptional” due to committed franchisees, a growing number of engaged consumers (particularly through Facebook) and an “expanding global footprint”.
Pandora jewellery is sold in more than 65 countries through 10,000 points of sale.