Pandora paying all staff in full through pandemic

The world’s biggest jeweller, Pandora, has no plans for the permanent closure of any of its thousands of stores despite the coronavirus pandemic.

Chief executive Alexander Lacik told the BBC he also intended to continue paying all staff in full.

The firm could “withstand a big drop in sales” before he would even start considering store closures, he said.

At the height of the pandemic, 80% of the company’s 2,700 stores around the world were closed.

However, Pandora “kept its staff on the payroll”. Even those among the 28,000 employees who were unable to work because stores were closed by government restrictions were paid in full.

Mr Lacik is proud of that and said that as well as this being “a very good decision” for the business, it was the “ethical thing to do” and the loyalty to staff was now being rewarded.

He said: “Looking at how people have kind of returned that when stores reopen, I think it was a fantastic thing to do.”

This month, he reckons 18% of the stores will be closed as a second wave of coronavirus sweeps across Europe. That is likely to hurt sales in the run-up to Christmas, which is traditionally one of the busiest times of the year.

As with many other companies, there has been a huge growth in online sales. They almost doubled, growing 89% in the three months to the end of September and accounting for 21% of the company’s $648m (£493m) of sales.

Mr Lacik says that despite the huge growth in online, physical retail will “continue being an important part of the industry at large”, because consumers want a “seamless” experience between the virtual world and the physical world.

Just over a year ago, the company invested heavily in a big relaunch to allow customers a more hands-on experience in-store.

The stores are “incredibly profitable” and Mr Lacik said his company would not close any for good, because it was “not an average retailer”.

Whether they are buying rings, bracelets or earrings, Mr Lacik concedes that digital does not have all the answers. Customers “want to see it, they want to touch it, they want to feel it”, he said.

However, they increasingly have an initial look online, then go into a store for advice before making a purchase, either in-store or online.

“The most successful players now, they are good at integrating all of this,” he said.

On average, Pandora says, it sells three pieces of jewellery a second. It is perhaps best known for its charm bracelets, which let customers choose different symbols to personalise their pieces. They are seen as critical to its profits, which started to fall a few years ago, but have improved after a turnaround plan was launched by Mr Lacik.

Frans Hoyer, an analyst at Swedish bank Handelsbanken, said the company “lost focus on its core products and its messaging to customers, which led sales to fall”. Pandora, however, was “always profitable”.

This underlying strength, combined with fewer promotions and raising money from investors, meant the company could keep paying its staff during lockdowns, Mr Hoyer added.

“Keeping staff on the payroll so they were ready to go when stores reopened, and a continued spend on advertising when others weren’t, has helped the jeweller through the pandemic.”

Mr Lacik said recent collaborations with brands such as Harry Potter and Star Wars had definitely broadened the appeal of the jewellery, but were “never going to be the core of Pandora”.

Having the option to dangle Darth Vader or R2-D2 from your wrist “keeps the brand interesting and keeps it fresh”, he added.

Celebrity tie-ups have also helped, but Mr Lacik said it was important these partnerships had authenticity, or customers would not be convinced to part with their cash.

The new face of Pandora is Stranger Things and Enola Holmes star Millie Bobbie Brown, who Mr Lacik says “was a Pandora fan even before we started that collaboration”.

It doesn’t hurt that she also has 31 million Instagram followers and is hugely influential amongst the young women who are Pandora’s core market.

Analysts say these tie-ups have helped keep the company’s finances healthy. In the first nine months of this year, sales are down only 2% on the same period a year ago, at almost $1.8bn.

Mr Lacik said: “I could lose half the sales and I’d still be profitable in most of my stores.”

Store closures had a broader impact too, he said, adding: “What we see, for instance, in places where we have closed down physical retail, my ecommerce retail also goes down. So it’s a combination of the two. That seems to be the sweet spot, at least now.”