The CEO of Danish charm manufacturer Pandora A/S has resigned, the result of a ”sharp revenue deterioration” the company blamed on too many price increases.
In a statement issued Aug. 2, the company said that current board member Marcello Bottoli will become interim CEO, replacing Mikkel Vendelin Olesen. The company is currently searching for a replacement.
Olesen’s departure seems to have been caused by a steep drop in Pandora’s sales in the second quarter, particularly in July, where revenue slid 30 percent from the previous year. As a result, the company is updating its guidance on revenue—from its original projection of 30 percent up for 2011 to “on par” with 2010.
“These results are unacceptable,” chairman Allan Leighton said in a presentation to analysts. “There is no excuse for them. They reflect poor execution.… [This company] requires a re-set, back to its mass-market, affordable luxury positioning, and back to good old-fashioned execution of the basics.”
Leighton blamed the sales drop partly on the company’s price increases over the past year.
“We clearly did get wrong the impact of our pricing,” he said. “If you look at our price increases over an 18-month basis, [for] prices in the U.S., the average selling price is up 40 percent. While we’ve been doing that, we haven’t really been thinking about out our price and product architecture.”
He continued: “If you look at our recent collection, not only have they been weak in sales, there has been far too many products there, the price architecture has been on the high end, rather than the low end, we have not had enough entry price-point product.… We have been doing this at a time when consumers are more value-conscious.”
In the United States, sales for the second quarter were up 12.1 percent in dollars, but down 0.7 percent in Danish krone.
The company added there has been a deterioration in revenue from its signature charms across all markets, with the United States the largest single contributor.
“We absolutely have a consumer group that wants this product,” Leighton said. “The problem is, we have priced it away from lots of them. At the same time, a lot of [competitors] have not priced it in the same way and have been a lot smarter in the way they have promoted it and put it through.… Customers are saying: ‘This is great product, it’s just too expensive.’”
Leighton promised a “strategic review” for the company that would devise its strategy. He also pledged a “more aggressive” plan for emerging markets.