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RAPAPORT...
Pandora reported in an interim statement that its first-quarter revenue fell 18 percent year on year to $249 million (DKK 1.42 billion) and net profit plummeted 34 percent to $59 million (DKK 338 million). Nonetheless, the brand maintained its gross margin level of 71.6 percent year on year. Sales in local currency fell 5.5 percent for the Americas, where Pandora sells a majority of its products. Sales in local currency from Europe fell 35.9 percent year on year and they dropped 22.3 percent across the Asia Pacific region. During the first quarter, Pandora initiated an inventory balancing campaign for which it took back $60 million (DKK 340 million) worth of products from distributors and retailers, lowered prices on some items and introduced new collections to generate excitement about the brand. Inventory for distribution rose 13.9 percent year on year to $292 million (DKK 1.67 billion) in the period. Additionally, the brand opened 26 concept stores in the quarter, with key growth markets being Italy, France, Russia and Asia. Pandora's chief executive, Björn Gulden, explained that the brand's re-invention strategy that was launched nine months ago is on track to manage costs and grow market share. ''Our operations developed as planned during the quarter. It is evident that we do have a number of short-term challenges, but I am encouraged to see that we have initiated actions to deal with all of them. ''I am also very happy to see how motivated and passionate our people are. They are all proud of being part of Pandora and are genuinely focused on continuing making Pandora a globally successful company,'' Gulden said. ''We will achieve this by working hard on three things -- understanding the consumer, improving our product offering and strengthening the sales-out.'' Gulden added that Pandora's inventory balancing campaign is on target, but due to the way it affects quarterly results, progress can be difficult to monitor. ''The most important fact is that we work together with our retailers, to make sure that the quality of their stock is improving. The fact that we have realigned the price architecture and product range and also reduced prices on several of our products is also assuring that we will have a larger offering in the commercial Pandora price points going forward.''
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