Pandora to Assume 78 Store Leases in Germany

Jan 5, 2015 1:33 PM By Jeff Miller

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RAPAPORT... Pandora entered into an agreement with DHG Gmph to assume commercial leases on up to 78 locations in Germany as part of the jewelry brand's strategic expansion plans for concept stores. Pandora stated that it would pay a service fee to DHG for making the leases available, but the final amount is dependent on the number of leases.

Allan Leighton, the CEO of Pandora, said, “We have carefully mapped the German market, in terms of how an ideal concept store network would look in the country. With this agreement , we have now in one strategic move gained immediate access to a very large proportion of the desired locations.”

Niels Møller, the president of Pandora Central and Western Europe, added, “This will be a significant strategic step for Pandora in Germany, which accelerates our strategic plan for this market. All commercial leasehold concerns stand alone and are located at prime locations in Germany, fitting well into Pandora's existing concept store expansion strategy in Germany."

He explained that Pandora will own and operate concept stores in the new locations and some existing stores will be relocated to the new leases. A number of these stores may even revert to franchise stores as the retailer's operations in Germany strengthens.

The total investment for new owned and operated stores, including relocation of stores, costs related to temporarily inactive stores in the transition, service fees to DHG as well as all other costs is expected to be around $60 million (EUR 50 million). Most of the figure will be booked as capital expenses, and the impact on revenue and earnings before interest, taxes and amortization is expected to be limited due to the gradual roll out, according to the company.

Pandora recorded revenue of $60 million (DKK 372 million) in Germany during the first three quarters of 2014, representing an 8.1 percent increase compared with 2013. Pandora currently owns and operates 61 of 83 concept stores in Germany.

Tags: Germany, Jeff Miller, Jewelry, Pandora