Pandora necklace

Pandora aims to double its activities in the United States, triple in China

PARIS – Pandora intends to get up once more.

The Danish jewelry house, famous for its charms, has unveiled the detailed roadmap of its new growth strategy, dubbed Phoenix.

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Its new ambitions include doubling revenues in the United States and tripling sales in China, based on 2019 levels, improving the conversion of base product lines thanks in part to a greater focus on personalization and digital, as well as by recruiting younger consumers.

“We have vast untapped opportunities in our current core business and they will generate long-term, sustainable and profitable growth,” Pandora President and CEO Alexander Lacik said ahead of the Capital Markets Day of the company Tuesday. “Our goal is to be the largest and most desirable brand in the affordable jewelry market. And we have a solid foundation to achieve this goal.

The company is targeting an organic compound annual growth rate of 5-7% between 2021 and 2023 and an EBIT margin of between 25 and 27% by 2023, an increase of 2-3 percentage points. Pandora completed its previous two-year turnaround plan in May and has resumed growth in recent months. Its second-quarter revenue jumped 84% from the same period last year and 13% from the three-month period in 2019, prompting the company to raise its guidance for the year, as reported.

At the online investor event, CFO Anders Boyer pointed out that if all of the company’s new initiatives prove successful, it could achieve more than conservatively estimated sales gains, and it still sees more. many opportunities for long-term growth.

“When we started to develop this strategy, it quickly became clear that we had more growth opportunities than we could manage,” he told investors and analysts. “It’s clearly a matter of priorities,” he said, explaining that longer term opportunities for the company include expansion into markets like India and Japan as well as potential business from Mergers and Acquisitions. “We are only at the start of the growth journey we are embarking on.

The market rewarded the company’s announcements, pushing Pandora stock up 6.8% on Tuesday to close at DKK 855.

Nonetheless, some analysts called for caution. “Pandora has shown impressive resilience in a challenging COVID-19 economy with a healthy channel change to e-commerce. From there, we see its path to positive revenue growth more difficult, and we remain cautious on its path to sustainably positive retail. [like-for-likes]RBC luxury analyst Piral Dadhania said in a pre-event research note. “Easier gains under turnaround program such as cost savings, closing a handful of stores unprofitable, the rationalization of the range, the development of a new brand image and a new store concept and the increase in marketing spend have been widely discussed and are in the early stages of deployment. We are maintaining our point view that Pandora’s margins could be under pressure in a flat or negative retail LFL scenario. “

In addition to targeting gains in the United States, Pandora’s largest market, and in China, where it has struggled to differentiate its positioning, recruiting young consumers, especially Gen Z and Millennials , will be at the heart of the new strategy.

Ahead of the all-important holiday season, the brand will relaunch the Pandora Me range targeting Generation Z, with priority activation on social media and collaborations with musicians and artists, for example. “We will be speaking in their language on the channels in which they are located,” said Carla Liuni, Director of Marketing.

The company pointed to Bain and Altagamma’s estimates that Gen Z and Millennial consumers are expected to account for 60% of global luxury goods consumption by 2026, up from 39% in 2019.

With that in mind, Pandora believes the Me franchise has the potential to become a new mainstay, providing opportunities beyond Pandora Moments’ core business, built around its collectible charms, which account for around 70% of its sales. .

There is also the Pandora Brilliance laboratory-made diamond product line, which has been tested in the UK since May, for which the company has yet to decide on a global roll-out, he said.

In order to retain and improve personalized services, the company will build on the lessons of its digital hub implemented in Copenhagen last year, using AI to deliver personalized communications to consumers and improving its interfaces. online with consumers. He’s already made progress here. “Our conversion rate over the past two weeks has more than doubled since 2019,” said David Walmsley, chief digital officer and technology officer.

A new global loyalty program will be introduced next year, following the introduction of a local program in China this spring, along with customer services through WeChat that allow in-store staff to connect directly with their customers. “It’s a great learning base for the global platform that we plan to launch in 2022,” Walmsley said.

A new store concept is in the works, with three units slated for the last quarter of the year and several for the first quarter of next year, with a first wave of openings in China and Europe before an introduction in the States. United In total, between 100 and 150 stores of the new concept are planned for the next two years. These are designed to merge digital and physical elements, for example by giving store employees access to customer preferences as they enter a store.

Another key part of Phoenix’s plan is to increase manufacturing capacity by around 60%, investing DKK 1 billion, or $ 158.7 million at the current exchange rate, to secure future supply.

Most of the new capacity will come from a facility to be built in Vietnam, for which the firm is in the process of selecting a site, to be confirmed early next year. The first part of the new plant is expected to be commissioned by the end of 2024, and is expected to produce 60 million pieces per year from 2026. The remaining capacity expansion will come from the company’s existing facilities in Thailand. .

The new program also involves a range of sustainability initiatives that Pandora has proclaimed “the most ambitious in the jewelry industry to date”. The company has committed to halving its greenhouse gas emissions compared to 2019 across its operations and value chain by 2030, and intends to become a company to net zero carbon by 2040.

Among other announcements, the company said it will increase its share buyback program, announced on August 17, to buy back shares for a maximum total amount of DKK 3.5 billion, or DKK 555.2 million. dollars, compared to the 0.5 billion Danish kroner announced previously, or 79.3 million dollars. This move aims to increase the cash distribution to shareholders and will be completed by February 4, 2022.

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