Jewellery giant Pandora has declared 2019 as a year of transition as it looks to reignite a passion for Pandora and bounce back from last year’s disappointing revenue.

At the end of last year Pandora announced the launch of Programme NOW, a “forceful programme” designed to help the business bounce back from disappointing revenue. Today it has revealed the next steps of this initiative.

According to Pandora, a thorough analysis of the challenges facing the company has found that: the brand has high awareness, but lacks a clear positioning; Pandora can improve its relevance to consumers and better deliver on its demands for an inspiring shopping experience; and the firm has an opportunity to leverage its unique product assortment for more impact.


“These challenges are within the control of the company and by addressing these issues with determination, Pandora can return to positive like-for-like growth in the medium term and continue to deliver industry-leading margins,” says the brand in a statement. Adding: “Programme NOW will deliver the transformation required, including the change of the network expansion strategy as announced in November 2018, significant investments to ‘reignite a passion for Pandora’, a necessary commercial reset, DKK 1.2 billion (£141.3m) in cost reductions, and a new global-local operating model.”

A key part of Programme NOW will be to “reignite a passion for Pandora”, building on its strong fundamentals and unique position as one the world’s biggest jewellery brands.

As such, Pandora aims to infuse new energy to the brand, and inspire and attract more people with a passion to collect and wear Pandora jewellery.

Through Programme NOW, we are taking immediate and forceful action to address the disappointing aspects of our financial performance in 2018. We are confident that this company-wide business transformation will reignite Pandora, restore sustainable growth and support our industry-leading margins, states chief operating officer, Jeremy Schwartz.

During H2 2018, Pandora carried out a thorough analysis of the challenges facing the company. The diagnosis points to four key issues which, when corrected, Pandora believes holds the potential to restore long-term sustainable growth:

  1. Blurred brand experience: the Pandora brand benefits from high industry awareness, but lacks a sharp brand identity and promise that is exciting for today’s consumer. The concept store and eSTORE experience can be significantly enhanced to drive consumers to engage with the brand.
  2. Weak initiatives on charms collecting: in spite of the recent focus on new products, the marketing, visual merchandising and retail execution have not provided new and existing consumers sufficiently strong incentives to buy, wear and collect multiple bracelets and charms, which is the backbone of Pandora’s offering.
  3. Over push: increased promotional activity has diluted the brand equity and led consumers to wait for the next promotion instead of buying at full price. Additionally, the increase of new product introductions coupled with an immature merchandising process has led to a cluttered assortment presentation in the stores and a further build-up of inventory.
  4. Executional inconsistency: decentralised structures have compromised execution excellence between global direction and local execution and led to a slow upgrading of for example merchandising, omnichannel, store design and loyalty programmes.

Programme NOW is a comprehensive two-year road-map designed to respond to the above challenges and to support sustainable long-term growth.

As a first step in the programme, Pandora announced a change in its network expansion strategy in November 2018 by significantly reducing franchise acquisitions and new store openings. The change of strategic direction has been successfully executed and no new acquisition deals were signed in Q4 2018.

The next four steps for Programme NOW are described below:

Commercial reset
Pandora will address the ‘push effect’ through a commercial reset to significantly reduce non-value added promotions and improve the level and ageing of inventories at wholesale partners.

Promotions: To protect long-term brand equity, increase full-price sell-out over time, and create the commercial environment that allows Pandora’s innovation and new marketing initiatives to thrive, the company will reduce promotional activities between the major gifting-retail-promotional periods. The big and relevant gifting promotional periods will remain. This will lead to healthier and more sustainable revenue for the long-term but will have a short-term negative revenue impact.

Pandora expects organic growth and like-for-like to be negatively impacted in 2019 by 2-4 percentage points. This is a one-time impact resetting revenue to a lower but sustainable level

Wholesale inventories: Pandora will support the reduction of slow-moving stock and initiate an inventory buyback programme in selected markets.

Furthermore, to strengthen the focus on sell-out and reduce slow-moving stock and overall stock levels, Pandora changes the size of the New Product Introductions (NPI) sell-in packages. The changed NPI sell-in packages will benefit franchise partners from day one as it frees up cash and limits the risk of building excess inventory, while allowing Pandora to respond faster and replenish in line with actual consumer demand.

  • The inventory buyback programme is expected to negatively impact the reported EBIT margin by around 2 percentage points in 2019. The extraordinary cost for this effort will be included directly in cost of sales and will be reported as a restructuring cost
  • Reduced NPI sell-in packages is expected to negatively impact organic revenue growth in 2019 by around 1 percentage point. This is a one-time impact in 2019

Reignite a Passion for Pandora
While Pandora has successfully built a globally recognised brand, there is a need to clarify the brand expression to reignite the traction and heat of the brand, and inspire further desire for charm collecting. This requires a positive brand disruption, ‘Reignite a Passion for Pandora’, and a change in the balance between commercial push (promotions etc.) and consumer pull driven demand. In short, Pandora will materially change the investment and ambition level of all elements of the consumer experience.

The historical DNA of Pandora is focused on the product. While products remain a highly important component of the growth recipe, they cannot stand alone. In 2019, Pandora has planned for additional investments of DKK 0.5 billion (£58.9m) in OPEX and around DKK 0.2 billion (£23.5m) in CAPEX. The incremental spend will be focused on improving key elements in the consumer experience from product to store and marketing. In 2019, Pandora will launch the following initiatives:

  • Brand: A new brand promise and visual identity are under development. From late 2019 this will be unfolded in a new, different and modernised campaign platform for all touchpoints that will appeal across generations of consumers
  • Product: In 2019, a new bracelet platform will be launched to support making Q4 bigger and better. Reducing the promotional level will provide more time and space for new collections to be visible to consumers in stores, and an online bracelet builder will be made to recruit more customers to buy, wear and collect more bracelets and charms
  • Media and channel execution: Pandora will increase marketing spend significantly to increase traffic and mitigate the temporary drag expected from the commercial reset. Pandora’s social media channels will undergo a facelift with an increased focus on inspirational and shoppable content
  • Store experience: A new store concept is under development and will be piloted in selected stores before year-end 2019
  • eSTORE and omnichannel: Substantial improvements of the existing eSTORE are being developed including better navigation, more inspirational product descriptions and imagery. Furthermore, a complete facelift of the eSTORE will transform the perception and way consumers engage with the brand digitally. Some omnichannel elements have already been piloted in the US and these will be progressively rolled out across both owned and operated and franchise stores

Reduce costs
To fund the growth initiatives and support profitability a total of DKK 1.2 billion (£141.3m) annual costs will be eliminated as a run rate by the end of 2020. Pandora targets cost reductions of around DKK 0.6 billion (£70.6m) OPEX and cost of sales in the calendar year 2019. These cost reductions come on top of the DKK 0.35 billion (41.2m) cost reductions communicated in connection with the Q2 2018 announcement.

Cost reduction opportunities have been identified across the company. Among the larger cost reduction areas are cost of sales, IT, costs in own concept stores and administrative expenses.

Implement new ways of working
Pandora has evaluated its organisational design and operating model, how and where decisions are made, how the company operates, and in which areas to lift capabilities to match the organisational design to meet the business needs. This work will be ongoing, but the following four immediate elements will make an impactful change:

  • Chief creative and brand officer to lead combined product and marketing organisation. To support ‘Reignite a Passion for Pandora’, and provide one holistic strong customer experience across markets and channels, Pandora will combine its creative and brand efforts. Stephen Fairchild, chief creative and brand officer, will have full responsibility for the global brand expression and execution across all touchpoints. A forceful shift to a sharper global-to-local execution where local markets execute excellently on a global lead
  • Global merchandising function. Pandora is setting up a global end-to-end merchandising function to optimise the assortment and inventory in stores to aid full price sell-out, improve inventory management and increase traffic to stores through improved visual merchandising. A new senior vice president, global merchandising, has been recruited.
  • One global trading calendar. Beginning 2019, Pandora will operate with one global-to-local consumer-centric trading calendar, seamlessly accommodating both product launches, promotions, local holidays and celebrations. Pandora will no longer focus its efforts around 7-10 ‘drops’ or product launches, but rather 14 trading events where the product, promotions and local events are amplified in their own right
  • Performance management. Pandora is changing its performance management routines including business review cadence, globalising its standard reporting and data, and aligning incentive programmes to shareholder value creation

Execution: Total restructuring costs of up to DKK 2.5 billion (£294.4m) over the period 2019 and 2020.

Pandora expects up to DKK 2.5 billion (£294.4m) in restructuring costs during 2019 and 2020 of which up to DKK 1.5 billion (£176.6m) will be expensed in 2019. The majority of the restructuring costs will be cash based.

2019 will be a transition year for Pandora, and the financial outlook will be significantly impacted by the actions taken in Programme NOW.