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.
As I mentioned in my Pandora Bracelet post, Pandora charms and bracelets have become incredibly popular over the past few years, and they are a perfect example of how a simple (good) idea can turn into a worldwide phenomenon (for another, very similar, example, see the Thomas Sabo Charm post). All it takes is determination, a bit of business savvy, and believing in your product.
The Pandora jewelry company was started in 1979 by Danish goldsmith Per Enevoldsen (and his then wife Winnie). Per’s father, Algot Enevoldsen, was also a jeweler, a silversmith who made wonderful, modernistic jewelry in the 1950s, and it is his initials (ALE) that are stamped on all authentic Pandora pieces (the hallmark has belonged to the family since 1950). You will see ALE 925 on sterling silver charms, and ALE 585 (14k) or ALE 750 (18k) on gold charms. For more, also see my Authentic Pandora Charms And Bracelets vs. Pandora Style Beads post.
Photo: Jeweller Magazine
Per and Winnie opened their first store in Copenhagen in 1979, selling Per’s designs. The Enevoldsens traveled frequently to Thailand, and in 1982, they started importing Thai jewelry and selling in their store. The business was doing very well, and as demand for their products increased, they started wholesaling more and more and outsourced part of the production of Per’s designs to Thailand.
The Enevoldsens eventually closed their store (in 1987) to focus solely on wholesale. Two Danish designers were hired – Lone Frandsen and Lisbeth Enø Larsen – and the idea for the Pandora bracelet started to form.
In 1989, Per and Winnie decided to move to Thailand and open up their own manufacturing facility. They started out with 10 employees, and invited their two in-house designers to join them to help train the local artisans. Ten years later, the first charm bracelet was born, however it didn’t quite yet have the signature look we know so well today (nor the Pandora name), but a year later, the current style Pandora bracelets were introduced in Denmark, and the rest, as they say, is history.
The company doubled its sales every year from then on, and today, Pandora jewelry is a well-recognized brand sold in more than 40 countries. The jewelry collection consists of over 1,800 designs, and there are more than 200 Pandora stores worldwide. The company is headquartered in Denmark, where the products are designed and developed, and also have two manufacturing facilities outside Bangkok where more than 1500 employees finish the products by hand.
In 2008, 60% of Pandora’s shares were sold to Axcel, a Danish private equity fund, in an effort to further strengthen and grow the brand.
Per Enevoldsen still lives in Bangkok and continues to manage the production in Thailand. He said in an interview “At no stage did I ever dream Pandora would become what it has. One of the reasons is that we have always been too busy concentrating on new designs and product quality, that the success sneaks up on you.”