I hadn’t expected to talk to talk to John White, president of Pandora in North America, so soon after our talk in Las Vegas. But given the recent headlines about its parent company, which sparked commentary and debate from myself, the industry, and over 30 commenters, we thought it was important to include the company’s point of view. Highlights of our conversation follow:
What should the jewelry industry know about what is happening at Pandora?
I think everyone needs to keep things in perspective. Clearly, our second quarter results are extremely disappointing compared to the expectations put forward in the marketplace. The marketplace appropriately punished the stock. That said, it wasn’t a failure of the company as a whole to deliver solid revenue growth. If you look at North America, [revenues] are up 30 percent. [Ed note: The U.S. was up 12 percent in dollars.] Those are not the expectations we had. But it’s still solid growth.
So what changes should retailers expect?
The first and most immediate effect is there will be no further price increases for the remainder of the year. Commodities like silver and gold have been exploding and we have been one of the first to take those prices and pass them on to the consumer and maintain the retail margin. We did that without fully understanding the consumer perspective. That might have been a mistake. We are not passing on further price increases. You will also see us working more intimately with our customers to make sure we develop the right product.
Your company chairman seemed to indicate that the company would focus more on beads and charms, as opposed to some of the newer products, like sunglasses.
I think it’s fair to say we have too many products. We don’t have the right pricing architecture. We don’t have the right entry price points. There will definitely be changes. But take sunglasses. They are not part of our assortments. We don’t have any plans to make sunglasses a part of our assortments.
A lot of people think Pandora grew too fast, and it impacted relations with retailers.
I think that any company that grows at the rate Pandora did will obviously have challenges. And any company that does well will naturally attract detractors. Our customers are extremely happy with our growth and the customers we have brought into the jewelry industry. There is always the opportunity to serve our customers better.
The chairman also seemed to indicate that the company was losing ground to competitors.
I think what everybody sees in the jewelry business is that there is a lot of success that is happening on the high end and there are successes on the low end. We have been caught in the middle. By allowing ourselves to inch up on price points, we allowed others to come in at lower price points. Are there more competitors out there? Absolutely. We need to be careful and offer value for money.
So are you convinced that Pandora is not, as many say, a “fad”?
If you are talking about North America, North America posted solid growth. Our retailers posted solid growth. This is still an extremely profitable organization, still the third largest jewelry brand in the world. This is more a resetting of expectations in the market than it is a brand that fails to resonate with consumers.