US, Asia Troubles Hit Pandora Sales

RAPAPORT...Pandora's revenue fell in the first quarter as the jewelryretailer suffered from weakness in its US stores and a slowdown in China. Global sales slipped 1% year on year to $812.2 million (DKK 5.12 billion) for the January-to-March period, the Danish charm-maker reportedTuesday. Revenue in the Americas region dropped 4% in local currencies, with US sales down 8%. "The US continues to be impacted by a lack of productnewness in stores, and the physical network - including franchise stores -experienced a negative like-for-like performance," the company said. Asia-Pacific revenue declined 9% to $184 million (DKK 1.16billion), though the region's sales increased 1% in local currencies. Sales inChina rose 16% in yuan - a lower growth rate than the 62% it reported in thefourth quarter. That slowdown was due to an increase in grey-market trading, in which retailers sell a manufacturer's products without authorization, Pandora said. The company also failed to market its products sufficiently, CEOAnders Colding Friis noted in an investor call Tuesday, transcribedby Seeking Alpha. "Our analysis suggests that [grey-market trading] has an impact of around 10%to 15% of growth in China for the quarter," Friis said. Most of that activity occurs on larger e-commercesites on which Pandora does not list its goods, with the company working to reduce unofficial sales channels for its merchandise, he said. Pandora will also increase its spending on marketing for therest of 2018 as it attempts to reverse its weak performance in China, theexecutive added. Global net profit slumped 15% to $184 million (DKK 1.16billion) as the retailer expanded its network of company-owned stores,resulting in higher expenses, it noted. Image: Pandora