Pandora in a “strong financial position” despite Covid-19

Jewellery brand Pandora has stated that it is in a “strong financial position” to sustain a prolonged Covid-19 crisis, as it recorded positive organic growth in early 2020 and triple-digit online growth in April.

Q1 2020 organic growth was -14 percent and EBIT-margin of 15.3 percent, which Pandora starts was “negatively impacted” by the Covid-19 pandemic, initially in China and subsequently in all other key markets during March.

In the last week of March, sell-out growth, including temporarily closed stores, was around -70 percent. It has since then improved to approximately -55 percent by the end of April based on strong online performance and a gradual re-opening of physical stores, so far mainly in Germany, added the jewellery brand.

The financial performance was strong in January and February, added Pandora, with reported organic growth up 1 percent, driven by key markets including the US, the UK, Italy, France and Germany.

The positive growth it states indicates an “effective turnaround” before the Covid-19 escalation, suggesting that the brand momentum that was built during 2019 was continuing to improve in early 2020 driven by media investments and a “stronger and more consistent marketing message” since the brand’s relaunch.

Alexander Lacik, president and chief executive of Pandora, said in a statement: “We are focused on managing the current crisis, and we do our utmost to protect our employees and create a safe environment for them and our customers.

"Among our 28,000 employees, we have only had a few reported cases of Covid-19. The Group is now preparing for the recovery after the pandemic, and our strong performance in January and February makes us confident in the underlying brand momentum. We have implemented cost and cash initiatives to ensure that we have the necessary financial strength for a strong commercial comeback when demand starts normalising.”

Pandora reports positive organic growth in early 2020 and triple-digit online growth in April

In the brand’s Q1 update, Pandora said that it was preparing to protect the business during the pandemic and preserve a conservative balance sheet by arranging funding for a “stress-test scenario” meaning that it has the liquidity to sustain during the coronavirus crisis if all physical stores are temporarily closed throughout 2020.

In addition, it has secured committed loan facilities of 3 billion Danish Krone, and Pandora added that it intends to sell 8 million treasury shares in an accelerated book-building.

This comes after the news in March of the jewellery brand pushing forward with a new strategic reorganisation geared at establishing a consumer-focused business with what called a “strengthened leadership” team in order to support its future growth ambitions.

As part of the reorganisation, Pandora said it was closing its three regional organisations to eliminate an organisational layer between global headquarters and the local markets, meaning that 100 markets would be grouped into 10 clusters, each headed by a general manager based in the largest market in the cluster, effective from April 2.

As a consequence of the strategic reorganisation, 180 employees from Pandora’s regional offices and markets were made redundant, with the three current regional presidents stepping down from the executive leadership team.

Image: courtesy of Pandora