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Pandora Jewelry managing director, Karin Adcockhas attributed the dip in Pandora's revenue to a delayed after-effect of the GFC
Pandora Jewelry managing director, Karin Adcockhas attributed the dip in Pandora's revenue to a delayed after-effect of the GFC

Pandora upbeat despite Australian revenue drop

Delayed ramifications of the Global Financial Crisis and poor consumer confidence lay behind Pandora’s drop in Australian revenues last year, according to managing director Karin Adcock.
Pandora’s annual company report revealed that the brand’s revenues fell 11.2 per cent in Australia in 2010.

This is the first year that the Australian arm of Pandora has been fully accounted for in the international results following the full takeover of the Australian distributorship by the parent company last year.

Although most economies were impacted by the GFC in 2008 and 2009, Adcock said the true impact of the crisis did not affect Australia until 2010 because government incentive packages kept the economy afloat in 2009.

“In 2010, we have seen a more cautious and nervous Australian consumer being impacted by increased interest rates and a general increase in the cost of living,” Adcock said.

“This led to a large increase in personal savings that impacted discretionary spending,” she added.

Despite controlled spending from Australian consumers, Adcock said better than expected Christmas sales figures was a positive and added that the 11.2 per cent drop in revenue, when compared with the jewellery sector in general, was “lower than many retailers experienced”.

The annual report was released not long after Pandora announced the closure of around 100 accounts in Australia and New Zealand, signalling a new phase in the company’s operations after a six-year run of meteoric growth.

In late February, Adcock revealed to Jeweller the criteria for the account closures and divulged how the brand would align itself with a new rationalisation strategy.

Despite Australia’s underperformance, Pandora still recorded positive growth figures in the Asia Pacific region with a 28.3 per cent revenue increase from 2009.

Pandora’s financial report attributed this to the “acquisition of a controlling interest in the Australian distributor in July 2009 and a strengthening of the Australian dollar”.

“This means they gained a greater chunk of earnings from Australia and this helped Asia Pacific’s performance,” Adcock said.

The acquisition started in August 2009 when Pandora bought over 60 per cent of her and her husband’s shares. By October last year, Pandora Plc fully owned the Australian subsidiary.

Pandora’s global chief executive Mikkel Vendelin Olesen said the acquisition was a key step in “realising [Pandora’s] vision of becoming the world’s most recognised jewellery brand” because Australia was perceived as a key former distributor market.

Despite the fall in revenue, Pandora maintained that it “still [had] a strong brand and market position in Australia”.

Adcock added, “We are excited about 2011. We have a healthy network of retailers who support the Pandora brand and we are looking forward to offering yet more new and unique collections to the Australian consumer.”

Global outlook optimistic
Pandora almost doubled total global revenues, with a 92.6 per cent increase from DKK3.46 billion ($637.0 million) in 2009 to DKK6.67 billion ($1.23 billion) in 2010. Its net profits also soared 86.2 per cent to DKK1.87 billion ($344.2 million) from 2009 to 2010.

Pandora reliance on its charms category decreased during the year, with revenue from rings and other jewellery skyrocketing 281.8 per cent and 185.2 per cent respectively year on year.

Together, rings and other jewellery now constitute 18.7 per cent of Pandora’s overall revenue. In 2009 this figure was 11.6 per cent of Pandora’s overall revenue.

Olesen explained that the company was pleased to have recorded such a strong result in the face of its IPO.

“We listed the company on the stock exchange without losing momentum in our daily operations,” Olesen said.

“2010 was a remarkable year in Pandora’s history, and I am both proud and very satisfied with the achievements we have accomplished together with our partners,” he added.

Pandora is optimistic about 2011 and projects a revenue increase of no less than 25 per cent and an EBITDA margin of minimum 4 per cent.

More reading:
Pandora to close accounts
Pandora reveals criteria for account closures
Pandora concept stores to debut in NZ

Ellendale Diamonds Australia

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