Pandora mulls ways to restructure struggling China ops: Reuters

Pandora mulls ways to restructure struggling China ops: Reuters

Danish jewellery maker Pandora is exploring ways to restructure its business in China following years of declining sales, both online and offline. The world's largest jeweller by volume of pieces sold is in discussions with China-based funds and e-commerce partners to potentially license its brand and all of its assets, including existing inventory, for a five-year period [1].

Pandora, like many consumer-facing multinational companies operating in China, has been significantly impacted by post-pandemic consumer malaise and a property crisis that has rippled through the economy. The company has also faced stiff competition from local, digital-savvy brands and a shift in consumer preference towards gold and high-value jewellery. In response, Pandora has recognized the need to reposition its brand in China and is working on a turnaround, stating that "it will take time" [1].

Pandora's China revenue tumbled nearly 80% to 416 million Danish crowns ($65.10 million) in 2024 from 1.97 billion crowns in 2019, with the country's revenue contribution slumping to around 1% from 11% over that period. The China business has had three chiefs since 2022, with the current managing director, Thomas Knudsen, starting in January, soon after which Pandora announced plans to close 50 China stores this year [1].

Finding a stakeholder or licence partner could be challenging given the trends in performance and broader consumer headwinds, according to Jonathan Yan, a principal at consultancy Roland Berger in Shanghai. He suggests that e-commerce partner firms looking into higher-margin brand ownership may be interested, citing the sale of U.S. apparel retailer Gap's China business to Baozun for $40 million to $50 million in 2022 as a possible model for such a deal [1].

Pandora's e-commerce business has seen sales slide more dramatically than at physical stores, indicating a significant challenge in the digital space [1]. A takeover by an operator familiar with competing in Chinese e-commerce would be positive, but any turnaround will be costly and require innovative strategies [1].

References:
[1] https://ca.finance.yahoo.com/news/exclusive-pandora-exploring-ways-restructure-073717071.html