Investors welcomed a new strategy from Danish-owned jewellery maker Pandora, which is struggling to regain its competitive edge in a weak retail market, sending its shares up more than 16%.
The charm-bracelet maker, currently looking for a chief executive, has been challenged by a fall in the number of shoppers, while new jewellery lines have failed to entice shoppers.
It cut its 2018 sales outlook twice in consecutive quarters last year and the shares lost 38% of their value in the past year.
Pandora said it would target annual cost savings of 1.2bn Danish crowns (€160m) and push marketing efforts to try reignite interest from women in particular. It expects up to 2.5bn crowns in restructuring costs this year and 2020.
“We can clearly see that our brand could be sharper and more focused,” chief financial officer Anders Boyer said. “Our marketing has not provided the juice needed to drive positive like-for-like growth.”
Pandora will launch a new concept for both its physical and online stores. It owns 40 Irish stores and concession points, including 24 stores in the Republic.
Pandora has been leaderless since ousting Anders Colding Friis following a first profit warning last year. Former Body Shop CEO Jeremy Schwartz and recently appointed CFO Mr Boyer are running the business for now. “Strategic review focuses on cost savings, improved brand positioning, reducing promotions, inventory buy-back and new ways of working, all of which are the right steps in our view,” said RBC analyst Piral Dadhania. However, the firm will have to execute against a challenging retail backdrop, the analyst warned.
Sales this year would fall 3% to 7%, hit by a decision to reduce promotional activities, the company said.
“The level of promotions have been too high the past couple of years, so we reduce this now and it will hit our sales, but we will come back at a lower but more solid level,” Mr Boyer said. Pandora had enjoyed dramatic sales growth over the past decade but would not return to double-digit growth, he said. The company has already announced it will cut 397 of its 27,000 employees to streamline operations and to protect profitability.
- Reuters. Additional reporting Irish Examiner