Jewellery giant Pandora has released its Q1 results, which reveals that the brand is in a strong financial position to sustain the prolonged COVID-19 crisis, despite the global pandemic forcing 90% of its 2,700 stores worldwide to close during the quarter.
During the quarter, revenue was down by 14% across the worldwide company.
While Pandora posted positive organic growth in January and February, revenue for the rest of the quarter was negatively impacted by the global pandemic, which caused the majority of the brand’s store network to close, first in China and then worldwide in March.
In the last week of March, sell-out growth (including temporarily closed stores) was around -70%. It has since then improved to approximately -55% by the end of April based on a strong online performance and a gradual re-opening of physical stores, so far mianly in Germany.
Last month the brand recorded triple-digit online growth – a positive sign that consumers are ready to spend once again.
In the UK the brand continued its solid momentum from Q4 2019, and generated 0% organic growth for the full quarter despite the negative impact on consumer sentiment during March and lockdown with store closures from 20 March 2020.
New product launches were very strong in the UK as the Birthstone concept resonated particularly well with consumers. Revenue from the online channel comprises more than 20% of revenue in the UK, and the online store grew with strong double-digit growth rates during the first quarter of the year.
Pandora president, Alexander Lacik, says: “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.”
Looking ahead, immediate cost and cash initiatives have been initiated to protect the company’s financial position, while the execution of Programme NOW continues with focus on leveraging the brand momentum when demand returns.
To protect the business during the pandemic and preserve a conservative balance sheet during these uncertain times, Pandora has arranged funding for a stress-test scenario. Pandora thereby has liquidity to sustain a stress-test scenario where all physical stores are temporarily closed throughout 2020.
Additional committed loan facilities of DKK 3.0 billion with the main relationship banks have also been established. Additionally, Pandora intends to sell 8 million treasury shares in an accelerated book-building.
Shares in Pandora have increased since the release of this financial statement as higher online sales and a strong return of consumers to reopened stores in Germany has encouraged investors, despite a steep decline in first-quarter operating profit.