Pandora’s Q2 Sales Dip Ahead of Brand Relaunch

Copenhagen, Denmark—Pandora’s like-for-like in-store sales fell double digits in the second quarter, including a 6 percent decline in the United States.

Quarterly revenue totaled 4.69 billion Danish kroner ($697.2 million), slipping 3 percent compared with 4.82 billion kroner ($716 million) in the second quarter of last year.

Like-for-like in-store sales were down 10 percent as foot traffic declined. In contrast, like-for-like online sales jumped 22 percent.

As in the first quarter, in-store sales saw a greater decline at the wholesale level (down 14 percent) than at Pandora-owned retail stores (down 7 percent).

By market, quarterly revenue in the U.S. was flat at 1.04 billion DKK ($154.4 million) while like-for-like sales fell 6 percent. The U.S. remains Pandora’s top market, accounting for 22 percent of global revenue.

Quarterly revenue in China was up 9 percent while like-for-like sales fell 4 percent. Pandora released a 15-piece Peach Blossom collection exclusive to the Chinese market in April followed by a pop-up shop marketed via WeChat, a popular Chinese messaging app.

The company saw improvement in the key markets of the United Kingdom and Italy after increasing marketing efforts in the areas, including more social media and TV campaigns.

Like-for-like sales in the U.K. were down 8 percent in the second quarter while like-for-like sales in Italy dipped 10 compared.

Following the positive results, Pandora said it plans to increase its marketing investments in France and Australia in the second half of fiscal 2019.

By category, bracelet sales were down 2 percent while ring sales dipped 6 percent.

Revenue from its necklaces and pendants segment sank 14 percent in the second quarter despite seeing double-digit growth in the first quarter.

The earrings segment was the only category to see growth, increasing 1 percent.

Pandora said Tuesday that it plans to simplify its product portfolio, reducing its offerings by approximately 30 percent.

The company said since 2015, it has consistently added more designs than it has discontinued leaving it, simply, with too much product that isn’t selling.

“As an example we have, I think, 150 different variations of a heart on a charm. And when you speak to customers, they clearly don’t see the incremental value,” CEO Andrew Lacik said in an interview with Reuters.

In a company presentation, Pandora pointed to a “blurred” brand experience, weak initiatives on charm collecting, executional inconsistency, and “overpush,” which refers to increased promotional activity that leads consumers to wait for the next sale rather than pay full price, as its main problems.

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