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Pandora moves to buyback jewellery from retailers for smelting

Pandora has taken the extraordinary step of ‘buying back’ its jewellery from retail stockists a few weeks ahead of an international ‘brand relaunch’ event in Los Angeles. The Danish company has set a worldwide budget to clear retail stock levels of poor performing and unsaleable product ranges.

In an email to Pandora stockists, Phil McNutt, managing director Pandora Australia and New Zealand, said the company “is initiating an inventory purchase program for select multi-branded [independent jewellers] partners in Australia. The purpose of the Program is to assist with your inventory management by allowing you to sell to Pandora older, outdated merchandise and enabling you to purchase better, faster turning merchandise.”

The returned jewellery will eventually be smelted.

While the announcement is good news for its declining retail network, which has been struggling with the brand because of poor designs, which has resulted in unsaleable product and overstocking, not all jewellers are happy with the strict conditions of the inventory buyback program.

Phil Mc Nutt, managing director Pandora Australia & New Zealand
Phil Mc Nutt, managing director Pandora Australia & New Zealand
“The purpose of the Program is to sell to Pandora older, outdated merchandise enabling you to purchase better, faster turning merchandise"
Phil McNutt, Pandora

McNutt’s email outlined that Pandora will provide a list of eligible products to be purchased from the retailer and only items on that list will be eligible for compensation. Pandora will then buy the product back at the "then-current wholesale price less handling fee for each item that it purchases”.

The handling fee is 20 percent and the retailer will be paid on 31 October, 90 days after the product was scheduled to be returned. In addition, a further 10 per cent handling fee will be charged if the items received are not packed – and invoiced by the retailer – as per a strict set of instructions.

One Pandora stockist, who did not wish to be identified, said, “This is typical of Pandora. They ‘force’ us to take stock that we don’t want or need, and have increased the number of drops [collection deliveries] per year, and we have to pay them in 30 days. However, when their products fail to sell – often because they do not fit well with our customer base – they offer to buy it back at only 70-80 per cent of what it cost us and then delay our payment for 90 days.”

McNutt advised retailers that the “inventory purchase program is temporary and may not be repeated.”

All retailers were set a maximum value for the unsaleable product that could be returned and that “only accounts that do not have an overdue balance will be paid.”

Further, the stockist cannot offset the buyback amount owed to them by Pandora against the amount they owe Pandora, which means the buyback program adversely impacts the store’s cashflow.

The inventory purchase program is part of an international initiative and documents obtained by Jeweller explain that Australia and New Zealand’s buyback budget was set by “Pandora Global, which has been carefully distributed to multi-branded accounts based on historical purchases.”

Market failings

Pandora has faced many challenges in recent times to the extent that it has organised a ‘brand relaunch’ event in Los Angeles on 28 August, kicking off a global roll-out of new store designs, online platforms and product collections over the second half of 2019 and into 2020.

The autumn 2019 collection will debut at the event in front of 400 guests and media representatives.

The company is listed on the Danish stock exchange and 12 months ago its share price traded above DKK400 ($AU84), however; it now hovers around DKK250 ($AU52) or below.

Pandora’s new CEO, Alexander Lacik, said the 'relauch' event would mark the company’s focus to a more consumer-driven model, following several years of disappointing sales results. 

“The event in Los Angeles marks the beginning of our journey to become more relevant for consumers. We have received very positive feedback to the marketing pilots we have conducted earlier this year, so we are eager to take this to consumers around the world and show a fresher and more contemporary Pandora,” he said in a statement.

The news comes following a six-month review by Pandora Australia, which lead to the announcement that the company’s Australian in-house distribution centre will close early next year.

Alexander Lacik, CEO Pandora
Alexander Lacik, CEO Pandora
"The event marks the beginning of our journey to become more relevant for consumers … and show a fresher and more contemporary Pandora"
Alexander Lacik, Pandora

In an email dated 17 June to Pandora stockists, McNutt said, “The services performed by the PDC [Pandora distribution centre] will be transferred to alternate suppliers in a phased approach from now until January next year.”

“The Pandora distribution centre and its staff have been a critical and extremely successful member of the Pandora family and value chain, and we will be disappointed to see them and their contribution leave the business,” he added.

“The PDC staff are currently working through the proposed changes with HR over the next short period.”

At the time Jeweller attempted to clarify the exact number of job losses and whether the decision would mean that, in the future, Pandora stockists would have to deal directly with the outsourced distribution company on returns, faults and repairs.

McNutt did not return phone call or emails at the time.

Jeweller later sought clarification on the buyback program and, in particular, the amount and dollar value of the unsold product in the Australian market.

McNutt was also asked why Pandora would not fully compensate its retail ‘partners’ 100 per cent of their purchase price, rather than the 70–80 per cent it has offered.

He has remained silent on the matters.


More reading:
Pandora: the beginning of the end
For Pandora, arrogance is a two-edged sword
Pandora - Charm before the storm?

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