Danish charm maker Pandora released another set of mixed financial results, with second quarter profits and sales both falling, including in the United States.
The company has also appointed a new president for Pandora North America: Scott Burger, the division’s former chief operating officer. He replaces John White, who left to take a position at another company.
Sales in the U.S. fell 14.3 percent in dollars in the second quarter—though the company notes that comp sales at its concept stores rose 3 percent. Overall group revenue decreased by 9.5 percent, to DKK 1,260 million ($210 million), compared to DKK 1,392 million ($232 million) the year prior.
Profits also saw steep declines. Net profits sank by 89.9 percent to DKK 63 million ($10 million), compared to 626 million ($104.5 million) last year—a number which nevertheless topped analyst estimates.
CEO Björn Gulden tells JCK that sales and revenues were heavily affected by the company’s stock balancing campaign, which will continue throughout the year. The company received $30.5 million in returns in the second quarter, and replaced more than $50 million in merchandise.
“That had a major impact on the top line,” he says. “It is 100 percent cannibalization. But the reaction from the retailer has been very positive, it is solving their problems.”
Excluding the impact of that campaign, Pandora expects 2012 full-year revenue to grow in single digits.
Gulden also predicted the U.S. market will turn around, noting the company received positive feedback on its new lines at the JCK Las Vegas show.
He added that the company, after exploring different product lines such as watches and sunglasses, now sees its main businesses as charms and rings.
“We are really focusing on bracelets and charms, where we lost some leadership in the past,” Gulden said. “I would like to sell earrings and necklaces, too, but charms and rings are the categories we are focused on.”
Regarding White, he said, “John did a fantastic job and he created an excellent team. This has been a structured and planned takeover in a very cooperative manner.”
Overall, Gulden concluded, “We feel good about what we have been able to accomplish in a transition and resetting year. We think that the initiatives that have been taken are the right ones and now our task is to execute, execute, execute.”
In other executive changes, in addition to his current function as chief development officer, Sten Daugaard has been assigned to head Pandora’s Asian headquarters in Hong Kong. David Allen, former vice president of sales at Pandora Australia, has been appointed the division’s president. He succeeds Karin Adcock, who retired July 1.
The company is also continuing to open concept stores, with 68 opened globally in the second quarter, particularly in new markets, including Italy, Russia, and Asia.