A sterling silver “Knotted Heart T-Bar Necklace” ($275) from Pandora. While its charms segment performed poorly, Pandora’s necklaces and pendants segment saw double-digit growth.
Copenhagen, Denmark—Pandora had a rough start to its fiscal year, reporting weak first quarter results as slowing demand for its charms sent like-for-like sales tumbling.

Quarterly revenue totaled 4.80 billion Danish kroner ($719 million), slipping 6 percent compared with 5.12 billion kroner ($820.5 million) in the previous first quarter.

Like-for-like in-store sales were down 10 percent as foot traffic fell 14 percent.

The in-store sales decline mainly occurred at jewelry stores and other outlets that carry Pandora, rather than at the company’s own stores, Q1 results show.

Revenue from company-owned retail outlets was up 16 percent in the quarter, accounting for 64 percent of its total sales. Wholesale, which accounted for 31 percent of total sales, decreased 34 percent in the quarter.

Online sales rose 7 percent. Pandora’s online store generated 10 percent of total revenue in the quarter with almost 1 million orders placed.

On a regional basis, quarterly revenue in the U.S. dipped 12 percent to 977 million DKK ($146 million).

Revenue in the Americas overall, which includes Canada, Latin America and the Caribbean as well as the United States, was down 5 percent.

Revenue from the EMEA region, which includes Europe, the Middle East, and Africa, declined 11 percent while sales in the Asia-Pacific region fell 6 percent.

China was one of the only regions to see revenue growth, up 15 percent in the first quarter. Pandora released a 15-piece Peach Blossom collection, exclusively available in China, in April.

Breaking it down by category, Pandora’s charms are still its bread and butter, accounting for 51 percent of its sales, but their popularity seemingly continues to wane.

Revenue from its charms segment sank 17 percent in the first quarter, while the necklaces and pendants segment saw double-digit growth, up 14 percent in the quarter.

Revenue from rings and earrings were also on the rise in the low-to-mid single digits while bracelets, a carrier for the charms, saw a slight dip in revenue.

Pandora is in the midst of Programme NOW, its two-year turnaround plan that aims to cut costs and revitalize the brand.

On Tuesday, the company announced it will close 50 “low-margin” concept stores, including those that are not profitable or diluting margins.

“The brand as well as the company has reached a point of maturity and it is not without some serious challenges,” new CEO Alexander Lacik said in the company’s earnings release. “The recently announced transformation Programme NOW, which I fully support, is a great transition into the future.”

Also as part of the transformation plan, Pandora will reduce the size of its sell-in packages, buy back inventory from wholesale partners and run fewer sales.

The company said it has saved 100 million DKK so far, scaling back on everything from consultancy costs and employee benefits to workforce scheduling and lease agreements.

Pandora Chief Financial Officer Anders Boyer noted that while the first quarter “emphasizes the need for our planned brand relaunch,” the company’s initial commercial pilots and marketing tests show “good results.”

The company’s fiscal year financial guidance remains the same, with organic growth expected to decline 3-7 percent with like-for-like sales improving slightly.

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