By Lenore Fedow
Pandora posted a double-digit revenue drop in the first quarter as the coronavirus pandemic kept many of its stores shuttered and customers at home.
Copenhagen, Denmark—Pandora had a rough first quarter posting double-digit drops in revenue and like-for-like sales as the coronavirus pandemic kept many of its storefronts closed.

The jeweler temporarily closed 90 percent of its stores, though its production in Thailand has remained largely unaffected.

The company noted it would guarantee base pay for all store staff affected by the temporary closures until June 1 while the executive management and board of directors will take a temporary salary cut of 20 percent.

Quarterly like-for-like sales dipped 11 percent year-over-year, though Pandora said like-for-like was positive in most of its key markets prior to the coronavirus outbreak.

Like-for-like represents true comparable sales from stores that have been open for at least a year, excluding currency fluctuations.

First-quarter revenue totaled 4.17 billion Danish kroner ($606.5 million), down 14 percent compared with 4.80 billion kroner ($698.4 million) in the first quarter last year.

The company “is now preparing for the recovery after the pandemic, and our strong performance in January and February makes us confident in the underlying brand momentum,” said CEO Alexander Lacik in a press release.

By region, revenue in the Americas totaled 1.4 billion Danish kroner ($197.3 million), down 7 percent year-over-year.

In the U.S. specifically, revenue totaled 935 million Danish kroner ($135.9 million), down 7 percent year-over-year.

Sales in Asia-Pacific saw the highest percentage drop, down 45 percent year-over-year to 614 million Danish kroner ($89.3 million).

In a February interview with Reuters following Pandora’s fourth-quarter results, Lacik said the company had experienced an “unprecedented” drop in business in China.

“As I sit here and watch the Chinese business, it is in a standstill mode, I mean there’s pennies being sold,” said Lacik.

Even as stores began to reopen, Lacik said customer traffic was minimal.

In Europe, the Middle East, and Africa, sales dipped 2 percent to 2.2 billion Danish kroner ($319.8 million).

By sales channel, Pandora-owned retail stores, including the online store, brought in 2.62 billion Danish kroner ($381.3 million), a 15 percent decrease year-over-year.

With stores temporarily closed, online sales totaled 621 million Danish kroner ($90.3 million), posting organic growth of 29 percent year-over-year and growing by triple-digits in April.

“The online business is firing on all cylinders and this is a resilient channel that we can continue to push very hard,” said Lacik in an earnings call Tuesday morning.

Wholesale revenue totaled 1.33 billion Danish kroner ($193.1 million), down 13 percent year-over-year.

Sales were down double-digits across product categories with sales of charms, which account for 51 percent of first-quarter revenue, dropping 13 percent year-over-year.

Bracelet sales fell 11 percent while ring sales were down 14 percent.

Necklace and pendant sales, a segment that has seen growth over the last few quarters, were down 18 percent while earrings sales took the hardest hit, down 20 percent year-over-year.

There were 2,746 Pandora concept stores as of the end of the first quarter, 24 fewer than the previous first quarter.

The jeweler scrapped its original forecast for the quarter as the coronavirus situation escalated, a factor that was not taken into account when issuing guidance.

Looking ahead, Pandora said its strong cash flow and cost-cutting measures have put it in a good position to withstand “a sustained period with very weak demand.”

In March, Pandora announced a multipronged strategic reorganization, the next step in its turnaround plan.

The plan included cutting 180 jobs, less than 1 percent of its workforce, and closing some regional offices.

The jeweler outlined plans to bolster its retail skills, invest more in tech and data analytics, and separate its legacy products, like its charms, and its newer offerings into two separate global business units.

The company also recently hired former H&M executive Martino Pessino as its new chief commercial officer.

Pandora has raised additional committed funding of 3 billion kroner ($436.1 million) in a deal with banks and will sell 8 million in treasury shares in an accelerated bookbuilding, meaning a short-term, controlled sale to quickly raise funds.

The company said if stores were to open gradually throughout the second quarter and return to a near-normal state in the fourth quarter, it would not need the additional funds.

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