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FinancialsNov 03, 2020
Pandora Posts Strong Online Growth in Q3 as Lockdowns Loom
The jewelry company expects to have to close 18 percent of its stores this month due to COVID-19 restrictions.
A pair of 18-karat gold-plated silver Oak Leaf earrings featuring two cubic zirconia ($150) from Pandora’s autumn/winter 2019 collection
Copenhagen, Denmark—Pandora’s strong online sales helped to offset lower in-store traffic in the third quarter, but the Danish jewelry company is wary of new lockdowns on the horizon.
Third-quarter revenue totaled 4.07 billion Danish kroner ($640 million) compared with 4.42 billion kroner ($694.4 million) in the third quarter last year, an 8 percent drop.
Quarterly like-for-like sales were up 1 percent year-over-year. (Like-for-like represents true comparable sales from stores that have been open for at least a year, excluding currency fluctuations.)
Revenue for the first nine months of the year fell 20 percent to 11.12 billion Danish kroner ($1.75 billion) compared with 13.91 billion kroner ($2.19 billion) in the previous period.
Like-for-like sales were down 2 percent.
By product category, sales of charms were down 11 percent while sales of earrings fell 2 percent. Bracelet and rings sales both fell 6 percent.
The sole gainer was the necklaces and pendants category, up 4 percent.
By sales channel, Pandora-owned retail stores, including the online store, brought in 2.79 billion Danish kroner ($440.2 million), essentially unchanged from the previous year.
Wholesale sales sank 20 percent to 1.13 billion Danish kroner ($175.1 million).
In the third quarter, 25 concept stores closed. Franchisee takeovers in the U.K. boosted the number of Pandora-owned concept stores by six.
Pandora expects a net permanent closure of 50 stores in 2020, as previously announced.
Online sales were strong, totaling 841 million Danish kroner ($132.3 million), growing 89 percent year-over-year and accounting for 21 percent of total revenue.
Pandora said its online conversation rate improved, highlighting triple-digit growth in its online store in the U.K. in particular.
In the United States, Q3 revenue totaled 901 million Danish kroner ($141.7 million), up 4 percent year-over-year.
In the first nine months of the year, U.S. revenue has dropped 13 percent to 2.52 billion Danish kroner ($396.8 million)
Pandora said its performance in the U.S. market was strong, with online sales making up for reduced operating hours in most of its physical stores.
In the U.S., more than 275 stores offer a “click-and-collect” option.
“Traffic into Pandora stores was clearly outperforming general mall and jewelry industry traffic, driven by successful efforts in the reopening phase,” said Pandora, giving credit to its data-driven marketing initiatives that have allowed for greater personalization.
Looking ahead, Pandora raised its full-year guidance last month, expecting organic sales to fall 14 to 17 percent.
While Pandora did not change its guidance when reporting Q3 results Tuesday, it did note that
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its prediction presumed there would be no major lockdowns and that less than 10 percent of its physical stores would be closed due to COVID-19.
Pandora now expects 18 percent of its stores to be closed in November, with 24 percent of the network open but with reduced hours.
All Pandora stores in the U.K, France and Belgium are, or will be, temporarily closed.
“We are now facing a period with new lockdowns, but we are prepared to navigate through the heightened uncertainty, and we have the financial strength to sustain a prolonged period with lockdowns,” CEO Alexander Lacik said.
Pandora now expects 18 percent of its stores to be closed in November, with 24 percent of the network open but with reduced hours.
All Pandora stores in the U.K, France and Belgium are, or will be, temporarily closed.
“We are now facing a period with new lockdowns, but we are prepared to navigate through the heightened uncertainty, and we have the financial strength to sustain a prolonged period with lockdowns,” CEO Alexander Lacik said.
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