Pandora hopes to charm consumers as it adapts to simpler tastes in jewellery
The firm has admitted it has been too slow to change — in 2017, it sold 200,000 charms a day but sales fell last quarter as customers opted for fewer per bracelet
Copenhagen — Investors in Pandora, the world’s biggest jewellery maker, need to be patient as it adapts its trademark charm bracelets for today's more simple tastes while expanding in areas such as necklaces and rings, its design head says.
Chief creative officer Stephen Fairchild is charged with speeding up innovation at the Danish company, which ousted its CEO two months ago after a profit warning that wiped a quarter off its market value. The company has repeatedly admitted that it has been too slow to change. In 2017, it sold 200,000 charms a day, but sales fell last quarter as customers opted for fewer per bracelet.
It has now launched a new collection, called Reflexions, with interchangeable, flat charms instead of its signature dangling ornaments, and prices ranging from $30 to $200.
"As a publicly traded company we always have to protect the bottom line, but at the same time we need to have products that drive the brand and not necessarily the volume. We need to create desire," said Fairchild in an interview on October 5.
"I think sometimes the expectations of the financial world are not realistic," added the designer, who previously worked at Giorgio Armani, Ralph Lauren and Calvin Klein and has been in his current role for seven years.
Fairchild said he looked at consumer data when designing new pieces, but also drew inspiration from popular culture such as Netflix shows. "It's a very fine balance between logic and magic," he said.
Pandora has vowed to accelerate the number of new design launches and to expand in categories such as necklaces, rings and earrings, where it expects to generate 50 percent of sales by 2022 from around 25 percent today.
Earlier this year, it debuted a gold-plated jewellery collection, Shine.
Northern Trust analyst Oliver Sherman worries Pandora may be risking the proven profits of the charms business — the company had a core profit margin of 37% in 2017 — in a rush to find new growth areas.
"I was hoping that even though they were moving away from focusing on charms for growth, they would still remain a highly profitable component of the business," said Sherman, who had a "buy" rating on Pandora but stopped covering the stock after its last profit warning.
He highlighted the risk of less distinctive pieces putting Pandora in direct competition with rivals such as Swarovski, which has similar prices.
Pandora was founded in 1982 by goldsmith Per Enevoldsen in a single shop in Copenhagen, with the aim of bringing jewellery to a wider market. It now has 10,000 points of sale worldwide.