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Copenhagen, Denmark--Sales slipped double-digits in the third quarter for Pandora, including a 5 percent decline in the U.S. market. Pandora’s interim CEO called the results “far from satisfactory.”

According to financials released by the company on Tuesday, third quarter revenue totaled $284.5 million, down 12 percent from $324.3 million in the third quarter 2011.

Sales in the Americas as a whole increased 4 percent, slipping in the U.S. but climbing 74 percent in the rest of the region. Sales fell 29 percent in Europe and 1 percent in Asia-Pacific.

Reported net profit decreased 41 percent, from $105.4 million to $61.9 million. Gross margin increased from 73 percent to 74 percent, aided by price increases but hampered by rising commodity costs.

“Our performance in Q3 2011 has been far from satisfactory. However, we have implemented or are in the process of implementing the corrective actions identified in our commercial, product and marketing areas as well as in our organization that we communicated to the market on Aug. 2,” Pandora interim CEO Marcello Bottoli said. “Based on results year-to-date and our plans for the key Christmas period, we expect to meet the full-year guidance communicated in August. Finally, the strategic review we are performing with the help of external consultants is approaching its end and we plan to present the final assessment as well as a complete update on the implementation of operational changes and 2012 guidance at the time of 2011 full-year earnings release in February 2012.”

In August, Pandora announced that its CEO, Mikkel Vendelin Olesen, was stepping down in the midst of slow sales--almost wholly due to the company raising its prices--and lack of execution in operations and marketing. The company said at the time that it was planning to review its strategy going forward.
http://www.nationaljeweler.com/nj/majors/financial-reporting/article_detail?id=26993

In a presentation on Tuesday, Pandora reiterated that it won’t be raising prices anymore for the rest of 2011 and in 2012 and plans to offer more merchandise at entry-level price points. It also will permanently reduce the prices of some items while offering promotions on others

The company notes that some of its clients have “unsatisfactory stock turn” on discontinued and slow-moving products and is considering discontinuing slow-moving products, offering promotions to flush out discontinued merchandise, conducting terminal sales through retail and e-commerce outlets and/or offering one-off exchanges for new products.

Pandora said it is pouring more resources into opening concept stores and into the retail stores that deal heavily in the brand while cutting back on those that only carry a few collections.

Pandora plans to accelerate the closure of low-value “white-level” retailers--those retailers who sell just one or two collections and have basic Pandora displays-- in developed markets while emphasizing the opening of concept shops and shop-in-shops.

In the third quarter, Pandora opened 75 concept stores, 50 shop-in-shops and 123 “gold-level” retailers, those retailers that dedicate a larger area of their store to the brand and carry four to five collections.

The company, meanwhile, closed accounts at 200 white-level and 22 “silver-level” retailers, those that sell only three Pandora collections.

Despite the slow third quarter, Pandora said its outlook for the remainder of fiscal year 2011 remains unchanged and that it expects year-end revenues to be in line with fiscal year 2010.