A shift in Pandora’s promotional strategy hurt its U.S. charms and bracelet sales in the third quarter, the company noted in its third quarter financial results.
In addition, the Danish charm company dropped 116 more unbranded North American retailers from its network, mostly in the United States. This is the third quarter in a row Pandora has announced substantial closings of unbranded outlets. In the second quarter, it dropped 125 retail accounts; in the first, 105.
Overall U.S. revenue for the quarter came in at $150 million (DKK 1.057 billion), marking a 5.7 percent increase in local currency terms. The United States was the only market not to show double-digit growth this quarter, said CEO Anders Colding Friis in a conference call following the release of its financial results.
U.S. revenue was impacted by a change in promotions: Instead of its traditional third-quarter campaign spotlighting bracelets, it shifted to a promotion that touted charms.
“We have had a promotion that has been running for 10 years or so in more or less the exact same week,” said Friis. “What was happening was people were lining up outside our stores to get a free bracelet. We did not believe that is what we wanted for our brand. So we decided to change it.
“Predictability is never good when you are looking at promotions,” he continued. “We will continue to do meaningful promotions. We will look to be a lot less predictable.”
The company did see strong sales from rings, which now comprise close to 20 percent of its U.S. revenue.
“We are trying to build Pandora into a jewelry brand, so that is good support for that,” Friis said.
Overall, U.S. revenue of bracelets and charms fell, “but I cannot confirm any exact percentages,” said executive vice president and chief financial officer Peter Vekslund.
Comps at its U.S. concept stores rose 1.7 percent and were also affected by the shift in promotions. (The prior quarter they rose 8 percent.) Pandora’s statement said that the stores the company took over from Hannoush in 2014 in the Northeast are starting to see positive growth after several negative quarters.
In addition to rings, the company’s U.S. growth was driven by network expansion, including the launch of its eStore and continued strong sales from its Disney charms. It has expanded its alliance with Disney to 13 markets in the Asia Pacific region, including Australia, China, and Japan.
Overall group revenue in third quarter was $560 million (DKK 3.91 billion).