National Jeweler Network

Financial Reporting

Pandora sales down, CEO out


Copenhagen, Denmark--Pandora Chief Executive Officer Mikkel Vendelin Olesen has resigned in the face of sliding sales and what the company said was poor marketing and operational execution, Pandora announced Tuesday.

According to a news release issued by Pandora, Olesen’s resignation is effective immediately. Board member Marcello Bottoli is now serving as interim CEO as the company begins its search for a new top executive.

Pandora, which has been wildly profitable for a number of years and went public in 2010, saw sales grow only 4 percent in the second quarter to $266.7 million and notes a “sharp revenue deterioration” late in the second quarter and a 30 percent drop in revenue year-over-year in July.

Second-quarter sales in the Americas were up 16 percent, while sales in Europe fell 12 percent and Asia-Pacific sales were up 8 percent. Net profit was up 56 percent.

Pandora lowered its expectations for 2011, from 30 percent growth to flat sales. Pandora originally was scheduled to release its second quarter financials on Aug. 16 but moved up their release given Olesen’s resignation.

“Although our prices increases combined with some destocking are significant contributors to our slowdown in sales and profitability, our own inadequate operational sales and marketing execution is as big a factor,” Pandora Chairman of the Board Allan Leighton said.

In light of soaring commodity prices, Pandora recently had to increase prices 15 percent, on top of price increases already implemented in the United States and United Kingdom in 2010. This has had a negative impact on sales “in an environment where consumers are becoming increasingly value conscious,” the company said.

In addition, Pandora said it has been hurt by retailers’ destocking due to lower sales and uncertain economy and on top of already high Pandora inventory.

Moving forward, Pandora said it plans to “re-set its affordable luxury positioning,” improve its operational execution and restore sales growth. It said the re-set will take 18 months.

The company also has initiated a strategic review of company plans.

Pandora did not immediately respond to request for comment from National Jeweler on its announcement.