Business

Pandora capitalizes on real estate downturn by opening new stores

Danish jeweler Pandora, one of the few retailers currently increasing the number of stores they operate, is taking advantage of the downturn in real estate to improve rents and secure good locations. than.

Alexander Lacik, chief executive officer of the jeweler, said that before the Covid-19 pandemic, rents were “extremely hot” and it was difficult to get the best store locations in the city center or shopping malls. .

“Now, when times are tougher, there are plenty of opportunities to get good rents, but what’s more important is getting three Grade A locations,” he told the Financial Times.

Known for its glamorous bracelets, Pandora is one of the world’s largest jewelry makers in terms of the number of products sold and competes in the mass market rather than higher tier like far-flung corporations. slag like LVMH.

Last year, the Danish group opened 88 new stores on a net basis and expects to open another 50-100 stores by 2023. The group has 2540 stores around the world by the end of 2022, 2/3 of them are operated by themselves. The rest are run by franchisees or other distributors, while their merchandise is sold in nearly 4,000 other locations, such as stores in larger retailers.

“Half of our customers are men. Men need help with jewelry. We need to know what you are looking for. Brick and mortar is super suitable for us. I will die before this changes,” Lacik said.

Pandora’s stores increased operating profit within a month or two and had positive cash flow within a year, he added.

Many retailers are moving away from physical stores as online sales become increasingly important. For example, H&M, the Swedish fashion retailer, closed 336 stores last year – about 7% of its total – on a net basis and said it would close 100 more stores by 2023. .

E-commerce has also grown for Pandora as it accounted for 12% of total sales in 2019 and 21% last year. But its in-store sales were also up year-on-year, by nearly 20%. Last year’s revenue was 26.5 billion DKr ($3.8 billion) and operating profit was DK 6.7 billion.

Lacik says that when he founded the global real estate group at the Danish group “the first thing I asked for was to get rid of all the long-term leases.” Now, Pandora can get rid of “most” of its stores within three to four years.

He then asked his team to re-discuss the terms with the landlord. “I want more flexibility and a better position. If it costs the same, that’s okay,” Lacik said.

Pandora is forecast sales growth of negative to 3% this year, which means its profitability will be “unaffected”.

Lacik added: “The reason many retailers close their stores is because they [go] from black to red pretty quickly. High rent, high staff cost. I can halve the volume and still break even.”



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