Slipper fits as Pandora signs Disney deal to arrest slippery US sales
Like Cinderella, Danish jewellery maker Pandora was most definitely at the ball in the US, where profits had been exploding every year up until 2013, but ominously like the fireworks that illuminate the heroine’s midnight dash.
And while Pandora hasn’t woken up from the night before in rags, the 5 percent year-on-year growth recently declared for the US in its 2004 Q2 results, compared to 65 percent in Europe, is a disappointment.
Pandora blamed a sharp decline in demand for its products after its efforts to turn its brand into a luxury good backfired.
In short, Pandora needed a prince, so who better to turn to than Disney.
Pandora’s new box
Last week, Pandora confirmed that it had signed a ten-year partnership with Disney to sell a new collection inspired by film characters at the movie producer’s theme parks in the US: Walt Disney World Resort and Disneyland Resort.
The strategic alliance, according to Pandora’s chief executive Allan Leighton in a press release, is “going to be very good for the business”.
The agreement is with Disney Consumer Products and the Disney Parks Group, through a strategic alliance with the Walt Disney Company, and Pandora was clearly jubilant following its confirmation.
“Many partners in the US have wanted Disney products for a while,” a triumphant Jakob Langelund, the press officer for Pandora Denmark, told the Copenhagen Post.
The launch of the collection, which is in keeping with Pandora’s new strategy to introduce new products more frequently, will be aided by sponsorship deals and well-placed unique retail installations at the parks.
“We are pretty proud of the deal as it shows the strength of Pandora as a brand, as well as showing the faith Disney has in us,” Langelund added.
The collection will consist of 25 hand-finished sterling silver and 14-carat gold charms, with an additional 16 available at selected stores, and Pandora has confirmed that Mickey and Minnie Mouse will be among the featured characters.
The collection will also be on sale at Pandora outlets in Canada, Mexico, Puerto Rico, Central America and the Caribbean from November, but not in Europe. However, a 16-charm collection will be on sale at DisneyStore.com.
The price will be in keeping with Pandora’s focus on affordability.
“We will maintain our affordable luxury price point with all of our products,” US Pandora spokesperson Keshia Holland told the Copenhagen Post.
“So the pricing of the Disney-themed charms will be in line with our current assortment.”
While the partnership is likely to improve sales in the US, there are other plans too.
“We are doing a lot of other things to improve our sales.” said Langelund.
“You may have heard that we have recently bought 27 stores from US jeweller Hannoush and we plan to refresh them to the level of our concept stores.”
Meanwhile, Pandora’s share price has risen by more than 9 percent. And following some shaky developments, there is clearly optimism at the jewellers again.
“We're very excited about the opportunity to engage with families and be a part of their Disney theme park experience as they create those special memories,” enthused Holland.
Looks like Cinders has got her prince and is on her honeymoon.
- Founded in 1982 in Copenhagen
- Manufactured in Gemopolis, Thailand
- Sold in more than 80 countries across six continents via more than 10,000 stores
- Employs over 9,000 people worldwide and 7,000 of these are Thai manufacturers
- Floated on the stock exchange in October 2010 and was Denmark’s biggest IPO in 16 years
Booming Q2 factbox
- While EBITDA rose 69 percent on last year, total revenue came in at 2.5 billion kroner, of which 1.097 billion was in the US and 1.064 billion in Europe.
- Significantly, while revenue in Europe has jumped 65 percent since last year, it rose just 5 percent in the States, but following the Disney deal, Pandora is optimistic this will change in 2015.
- It has raised its 2014 turnover target from 10.5 to 11 billion kroner.
- Pandora expects to open 275 new stores this year, rather than the 225 it previously expected.
- Its shares rose by 9 percent following the announcements.