Given that Pandora Jewellery CEO Anders Colding Friis has just announced he’s quitting the business, the company could well be about to experience Wilson Mizner’s advice about meeting people on the way down.
Following a profit warning on Monday where the company announced its January sales forecast would be reduced to 4-7 per cent from its previous 7-10 per cent prediction and it would sack 400 staff, Friis decided it was time to go.
Pandora’s stock price immediately plummeted 20 per cent.
The business media and investment analysts have been keeping a close eye on Pandora’s stock price for some time, closely monitoring consumer sales. You would expect that, but what they have a little difficulty doing is monitoring Pandora’s relationships in the retail channel – with the stores that act as the conduit for product to consumers – and, as I have previously indicated, that is in an appalling state.
It was a little more than a month ago that I detailed how Pandora Australia had announced its latest round of retail account closures as it sought to reduce its retail distribution. The company sent emails to the affected independent stockists in June and then immediately attempted to allay the fears of its remaining stockists.
A company email attempted to explain the reasoning, and advised stores which were not affected by the latest round of closures that, “It is important to note that this announcement does not change the nature of our relation and will have no impact on your account.
On 6 July I wrote: The problem for Pandora is that no one believes a word of it!
And while I had some inkling about the anger of the retail stockists who had helped develop and build the brand over the past 5–10 years, I was caught by surprise to the extent that the anger had fermented – even the retail stockists who hadn’t had their accounts closed have had enough.
Consumer problems
Many are making moves for life after the Danish brand, which is why I commented, Pandora: the beginning of the end.
While Pandora might have problems at the consumer end, its problems at the retail end are just as bad. And they are only going to get worse unless the company changes its management style, which is all too often described as “arrogant” and “conceited”.
Those are two words that don’t sit well when you could be meeting the same people on your way up as you might be doing on your way down.
Perhaps Friis’ resignation has something to do with a change of management style. Who knows? But if it doesn’t, then Pandora’s problems have only just begun!
What also caught me by surprise is the extent that international market analysts and investment strategists closely monitor the jewellery business-to-business media. Following my last commentary, I have been contacted by a number of European strategists enquiring about the independent wholesale channel.
The late night conversations have been intriguing, not just because of the topics, but mostly because it only seems like yesterday that Karin Adcock stood on a 3X3 stand displaying a new range of jewellery charms, presented in ugly polystyrene boxes at the Sydney jewellery fair. In the early days the Australian arm of the business was run from her home garage.
Maybe the new Pandora Jewellery boss could learn a thing or two about modesty towards customers by visiting that Sydney garage. After all, it was the Australian retailers who, in the early days, were vital in propelling the brand into the international behemoth it eventually became.
Arrogance can be a two edged sword: it breeds success and it can also breed failure.
More reading
Pandora moves to buyback jewellery from retailers for smelting
Pandora: the beginning of the end
Pandora Australia closes more accounts
Background reading
The Pandora Phenomenon
Birth of brand Pandora