RAPAPORT… Pandora has rescinded its revenue guidance for 2020, as the coronavirus pandemic has hit sales and forced it to shut stores temporarily, it said Monday.
In February, the company had forecast revenue would fall between 3% and 6% for the year.
“Pandora’s financial guidance announced on February 4, 2020, excluded any impact from COVID-19,” the company noted. “As a consequence of the global escalation of the situation, the financial guidance for 2020 is no longer meaningful and hence now withdrawn.”
Excluding China, revenue in January and February was strong, with total same-store sales — at branches open for more than a year — exceeding expectations, the Danish jeweler said. However, the virus has impacted sales in all markets since then.
Same-store sales in China have been down 70% to 80% since late January, the company reported. European markets have been “visibly” impacted since February, most significantly in Italy. While same-store sales in Italy were “solid” in the first two months of the year, sales have been at a near standstill in March, Pandora added. Revenue in Australia has also been impacted by a decline in tourism.
“In the markets affected by lockdowns and other governmental measures, revenue is expected to be negligible while these circumstances prevail,” Pandora advised. “The timing and pattern of the return to normalized business is obviously subject to uncertainty and outside the control of Pandora.”
The company believes it can absorb several months of slowdown and remain profitable for the year, as it cuts down on other costs, including media, rent and miscellaneous store expenses.
“Despite the headwind caused by COVID-19, profitability is expected to continue to be strong in [the first quarter] of 2020,” Pandora noted.
The company will temporarily close stores and offices in various locations in accordance with government rules in those countries. Its Thailand manufacturing facilities will continue operations.
Image: A Pandora charm bracelet. (Shutterstock)
Pandora Nixes Guidance, Shutters Stores
The Bottom Line
- Pandora rescinded its 2020 revenue forecast after the COVID-19 outbreak severely affected sales and forced temporary store closures.
- Same-store sales in China dropped 70% to 80% since late January, with European markets, especially Italy, also experiencing sharp declines.
- The company expects to remain profitable in 2020 by cutting costs despite negligible revenue in lockdown-affected markets.
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