After what management called an “unsatisfactory” 2018, Pandora is shifting gears and now wants to reignite “passion for Pandora.”

In a conference call following the release of its fiscal 2018 financial results, Pandora executives identified the following challenges for the company, which stemmed from a survey of 28,000 consumers:

– While Pandora has high brand awareness, it “lacks a brand identity” and needs to do better with “brand position, promise, storytelling,” which needs to be “sharper and more culturally exciting.”

“It is worth restating Pandora’s magic product DNA,” said chief operating officer Jeremy Schwartz on the call. “We create precious, miniaturized little jewels.… Each piece contains a meaningful human story.”

When asked if Pandora might explore linkups with celebrities and influencers, Schwartz said that going forward, “sacred cows need to be challenged…. We have to be more connected to today’s culture.”

– It needs to do more to drive charm collection and buying.

“We are going to have a marketing and a business model that is coming back to the idea of collecting,” Schwartz said. “Yes, things are about new product, but it’s in a context of getting more people to buy and collect.”

– Too much “promotional activity” and a “cluttered assortment” has hurt its brand equity.

– It has inconsistent execution.

Pandora wants to remedy this with a “commercial reset” that will include developing a “new brand promise and visual identity,” a new bracelet platform, and a revamped store and eStore experience. It also plans to boost its marketing and introduce a new store concept.

“We need to create a disruption to the Pandora brand,” said Schwartz. “We have to make the brand come alive by expressing the brand in a new and culturally sharp way.”

It also plans “less of a decentralized structure” when it comes to marketing and merchandising.

“The global consumer is more similar than it’s different,” Schwartz said. “And when we find a big idea that may have taken two years to develop, we need to get behind it and amplify it worldwide.”

As a result, chief commercial and brand officer Stephen Fairchild will now have responsibility for “global brand expression and execution across all touch points.”

Some of the steps it’s taking—like reducing promotions and increasing wholesale inventory—will hurt comps in the short term, Schwartz admitted. He predicted that comps would fall 2–4 percent over the next fiscal year.

2019 “will be a big transition year,” said chief financial officer Anders Boyer on the call. “And usually with the transition, you get the costs before you get the benefit.”

Pandora has already shifted its strategy in one significant way: It has stopped buying back stores from franchisees, which it now views as partners going forward.

But, even as Pandora talked about additional investments in this business, it also said that it wanted to reduce DKK 1.2 billion in costs, which equals more than 5 percent of revenue. It just cut 700 workers from its factory in Thailand, Boyer said.

Overall, Pandora’s revenue grew 3 percent in local currency for fiscal 2018 to DKK 22 billion ($3 billion), but comps fell 4 percent, with a 7 percent decline in the fourth quarter.

U.S. sales for fiscal 2018 totaled 4.88 billion DKK ($730 million), a 5 percent decline in local currency. Its fourth quarter U.S. sales were better, totaling 1.18 billion DKK ($180 million), a 7 percent jump from the previous year in dollars.

(Image courtesy of Pandora)

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