Pandora warns Covid-19 escalation may hurt peak season trading

Danish jewellery brand Pandora has warned that while brand momentum in the third quarter has driven positive sales, recent Covid-19 escalations has created a “new uncertainty” about the peak season trading.

In the third quarter, it reports positive sales momentum, with like-for-like sales growing 8 percent in October. However, it adds that new lockdowns recently announced in Wales, England and across Europe in France and Belgium, will result in a temporary closure of at least 18 percent of its 2,700 physical stores in November. While an additional 24 percent of its retail network will be operating at reduced opening hours.

Alexander Lacik, president and chief executive of Pandora, said: “Pandora continues to adapt to the challenges posed by the Covid-19 pandemic and our priority remains the safety and well-being of our employees and consumers.

“Pandora has shown resilience and agility during the pandemic and the double-digit growth in the US and the UK in Q3 signals that we are turning the business around. We are now facing a period with new lockdowns, but we are prepared to navigate through the heightened uncertainty, and we have the financial strength to sustain a prolonged period with lockdowns.”

Pandora like-for-like sales up 8 percent in October

Pandora, which has been going through a rebrand as part of its Programme Now transformation plan, said that the performance in Q3 2020 was a “solid indication of the continued brand turnaround” as five out of the seven key markets generating positive sell-out growth despite Covid-19.

The performance it added states that the Programme Now initiatives are driving traffic and engagement with the brand and that the new operating model implemented in April 2020 is “proving effective with faster and better alignment between clusters and global functions”. Pandora added that this has resulted in better merchandising and best-practice sharing, which has supported the conversion rate both online and offline.

However, it did also report that while consumers are generally returning to physical stores “faster than expected,” the number of shoppers visiting stores was still down 50 percent compared to last year. That being said, Pandora added that the quality of the traffic was better, with a higher proportion purchasing its jewellery.

When it comes to online shopping, the organic growth of its online store was 89 percent in Q3 2020 driven by an improvement in the conversion rate and continued triple-digit growth in the large UK online store.

Pandora Q3 performance driven by strong sales in the US and UK

The jewellery brand noted that performance in the US was strong with double-digit positive sell-out growth despite continued reduced opening hours in the vast majority of physical stores. The performance was driven by the online store but did add that there was also positive sell-out growth in the physical stores.

While the UK market generated 17 percent sell-out growth despite Covid-19 restrictions for the physical store network. The positive sell-out growth was driven by the online store which continues to deliver significant triple-digit organic growth, supported by innovative digital solutions to provide virtual assistance with Pandora staff through the website.

In addition, the brand added that its collaborations with Harry Potter and Star Wars were helping to drive sales and brand relevance. In July, Pandora reactivated its collaboration with Harry Potter and in August and September, new product collections were launched. While in October, its product collaboration with Lucasfilm with 11 Star Wars charms and one bracelet launched. The collection it states “is off to a good start” and accounted for 9 percent of global revenue in the first week of sales. The ‘Baby Yoda’ charm is the current top-seller.

Image: courtesy of Pandora