Danish mass-market jewellery brand PANDORA reported a 1 percent drop in first quarter revenue to DKK 5.12 billion ($809 million) impelled by a 9 percent drop in the Asia-Pacific region due mainly to lower growth in China and a 16 percent decrease in revenue from the Americas. Revenue from the Middle East, Europe and Africa was up 15 percent, however.
Pre-tax profits were DKK 1.67 billion ($263.4 million), down from the DKK 1.88 billion ($297 million) reported in Q1 2017.
The company said it was taking steps to strengthen sales in the China market, which accounted for 12 percent of its overall first quarter revenue. CEO Anders Colding Friis told Reuters that among the issues being tackled was the grey market, which involved product being imported from other markets and then being sold online in China. He said the problem had accelerated in recent months and the company was doing all it could to limit it.
PANDORA also said that the UK and US markets were depressed due to fewer people shopping in malls and a lack of new products from the company.
The company manufactured on average, 334,000 pieces of jewellery every day in 2016. It said it planned to increase the number of designs being launched — 150 new products were launched in the first quarter of this year and 500 more are planned for the rest of the year — and looked to increasing the number of self-owned stores rather than franchises.
Financial guidance for the year remains unchanged.
Commenting on the results, the CEO said, "We have good momentum on our strategy towards 2022. Revenue from owned retail grew 32 percent and now represents more than 50 percent of the group revenue, providing us with greater control over the brand. We are also pleased with the positive reception of our new Spring collection, including PANDORA Shine. As anticipated, sales growth has started at a moderate pace, and is expected to improve as we gradually introduce more newness in our product assortment throughout the year."