After a significant drop in sales in the second quarter of 2011, Pandora’s CEO, Mikkel Vendelin Olesen, is being let go from the company.
Earlier this year, Pandora estimated that earnings would be up 30% from 2010, but are now saying that sales will be on par with 2010. The drop is blamed in large part on the hefty price increases we have seen across the line of Pandora’s products, especially here in the US where retail prices have gone up around 40% (!!) since the beginning of last year.
When the company went public last fall, people could not get enough of the shares, and this demand increased their value by 75%. At one point, the shares were selling for around $70, but after the news today, they are going for roughly $9.70.
Allan Leighton, chairman of Pandora, said they need to go back to their “mass-market, affordable luxury positioning”. He continued “The situation can be remedied – but over time”. The company has already lowered the prices on “key products” and will not be increasing prices on anything any time soon. They are also planning to be more aggressive in their marketing, and 190 new concept stores are in the works.