Reporter | Huang Shan
Edit | Lou Shuqin
Danish jewelry retailer Pandora announced at the Capital Markets Day event on Sept. 14 that the company's long-term goal is to triple its revenue in the Chinese market and double the U.S. market on top of its 2019 results. Alexander Lacik, president and CEO of Pandora, said, "Our goal is to become the largest and most popular brand in the light luxury jewelry market. ”
This new reform strategy focuses on Pandora's significant business opportunities in its core markets and plans to achieve sustainable, profitable revenue growth targets through four areas: branding, design, personalization and core market reforms.
At the recent event, Pandora further shared the key details of the "Phoenix Project" through a media statement. China and the U.S. are Pandora's core markets, and the new strategic plan will focus on revenue growth in both markets. However, Pandora did not mention in the statement when he expects to achieve a new growth target in China and the United States.
Pandora has returned to pre-pandemic levels in the first half of 2021 and achieved growth. According to Pandora's Fiscal Second Quarter 2021 report, in the three months ended June 30, 2021, Pandora's global market sales revenue increased by 62% from the same period in 2020 and 7% from the same period in 2019. In the first half of 2021, Pandora's global market revenue increased by 41% compared to the same period in 2020 and 2% from 2019.
The U.S. market is a key factor driving Pandora back to growth. In the first six months of this year, U.S. sales contributed to Pandora increased by 58% compared to the first half of 2019, compared with a 63% increase in the second quarter of 2021.
But China, which Pandora sees as another core market, still has a poor sales performance and is far from the pre-epidemic level. According to the latest quarterly earnings report, Pandora's sales in the Chinese market in the first half of 2021 fell by 32% compared with the first half of 2019, which was mainly affected by the performance of the first quarter of this year, and the sales decline in the Chinese market in the second quarter narrowed to 13% compared with the same period in 2019.
Pandora said in the earnings report that the performance of the Chinese market in the first half of 2021 is in line with expectations. In the 2020 annual report, Pandora pointed out that there are still "structural challenges" in the Chinese market, and predicted that the operating income of the Chinese market in 2021 will still be lower than in 2019.
However, the Chinese market, where opportunities and challenges coexist, has always been regarded as a "top priority" by Pandora. In the first half of 2021, initial media testing, as well as collaborations with social media influencers, brought pandora revenue in the Chinese market.
During this period, Pandora also closed 12 stores in China. China became the market with the most closures in the world. Pandora said the closure of multiple stores was not related to the new strategy, "only because of the sluggish performance of some stores and the delay in relocating stores to new addresses." ”
In the second quarter report, Pandora stressed that the brand "sees a huge opportunity to expand its store network in China". In the second half of 2021, the brand said it will also take a series of measures to adjust the brand's positioning in the Chinese market.
In a report, Alexander Lacik said in a report that Alexander Lacik said in a fiscal second quarter 2021 conference call that after the stability of the Chinese market and the improvement of store traffic, Pandora will readjust her positioning in China by launching new marketing campaigns, strengthening cooperation with kols, and adjusting sales narratives.
According to the Phoenix Plan, Pandora will win the favor of "Gen Z" and "Millennial" consumers by enhancing brand attractiveness and expanding influence. But in fact, Pandora has long focused on the rejuvenation of the Chinese market, which is reflected in its marketing tools that keep up with the trend.
In the era of traffic stars, Pandora initially chose the popular Guan Xiaotong as a spokesperson. In addition, the brand's cooperation with fashion kols born on social media is also relatively close.
Pandora's biggest problem in the Chinese market is probably that he has not played a fist product that will impress consumers.
Lacik mentioned in the above-mentioned earnings meeting that Pandora is regarded as a "complete range of jewelers" in the Chinese market that is not special. Even the brand's "Moments series," which is popular in other markets, has not been successful in China, and consumers have not accepted the concept of product collection that the brand is trying to convey.
According to the "Phoenix Plan", Pandora's next reform focus will also be on supporting the fist product series "Moments", as well as further expanding production capacity. Pandora will build a new plant with an annual output of about 60 million units in Vietnam and increase the capacity of its existing plant in Thailand to 20 million units. Pandora plans to grow capacity by about 60% (or 80 million pieces of jewelry) per year.
If the Phoenix Plan goes ahead as planned, Pandora expects organic growth to grow at a CAGR of 5% to 7% from 2021 to 2023, while total operating income will grow at a CAGR of 6% to 8%. Non-net profit growth in 2023 is expected to be 25% to 27%.