As part of a restructuring plan, Pandora has said that it will introduce a “flat operating model” in order  to drive “world class retail execution”. The new organisational structure, with all the changes,  will take effect from  April 2, 2020.

As part of the plan, the Company  will close  three of its regional organisations “thereby eliminating an organisational layer between global headquarters and the local markets”, the jeweller said.

Elaborating on the measures that are on the anvil, Pandora said that the 100 plus markets where it operates will be grouped into 10 clusters, each headed by a General Manager based in the largest market in the cluster. These General Managers will report to the Chief Commercial Officer (CCO), which is a newly created position.

“The CCO will report to President & CEO Alexander Lacik and be part of Pandora’s Executive Leadership Team,” the Company  explained. “The CCO will also be responsible for a retail centre of excellence to improve Pandora’s global retail skills including global merchandising, store development, planning and execution.”

For the  CCO position, the Company has  appointed a  professional from outside. The name of the incumbent – who  is due to join Pandora early in Q2 2020 – will be announced shortly.

 Yet another new function – the Network & Franchise Management –  has been planned “to oversee the retail estate and support franchise partners globally”.

Pandora noted that the global organisation has been “designed” in a manner to deliver “a brand experience based on deep consumer insights”.

Further, the jeweller plans to establish two Global Business Units with “end-to-end responsibility for product performance”.  This is being done to offer more impactful products and marketing concepts and a more consistent consumer experience across markets, Pandora said.

Pandora has asserted that it will invest in building stronger global functions including Marketing, Digital, Merchandising and Business Intelligence.

“A Global Business Services centre will be established to deliver efficient and scalable transactional processes and drive efficiencies through standardisation and higher quality,” Pandora said. 

Alexander Lacik, President & CEO of Pandora said on the day the restructuring was announced:  “With today’s announcement, we bring our global headquarters closer to our local markets and consumers, and ensure that feedback from consumers can more quickly fuel new concept creations. The reorganisation will reduce organisational complexity, enable Pandora to execute with more speed and agility, and add critical capabilities required to support growth.”

However,  the  strategic reorganisation comes with consequences.  It will lead to 180 employees from Pandora’s regional offices and markets  “leaving”  the company. “The three current regional presidents will step down from the Executive Leadership Team,” Pandora added. “David Allen, currently President of Pandora EMEA will stay with Pandora and support Programme NOW, while Sid Keswani, current President of Pandora Americas, will become President of the North America cluster. Kenneth Madsen, current President of Pandora Asia Pacific, will leave the company.”

On the financial side, the reorganisation “will entail additional non-recurring restructuring costs amounting to around DKK 0.2 billion”, the Company stated. The costs will primarily be related to severance payments, additional consultancy support, extraordinary recruitment costs, and other costs of closing down the regional offices. “The total restructuring costs in 2020 are thereby expected to amount to around DKK 1.3 billion,” Pandora said.

The Company clarified: “The cost reductions from the redundancies of 180 employees are expected to be largely offset by costs related to the further strengthening of the global organisation. The net cost savings are consequently expected to be limited.”

In a  separate development, Reuters reported that  Pandora has shut 30 of its 148 shops in Italy due to the coronavirus outbreak. However, it has reopened most shops in China (it had earlier closed more than 100 out of the 237 outlets there), which however are experiencing  “slow store traffic”. 

The report also said that “Italy, which is battling to contain the biggest outbreak of the virus in Europe, is Pandora's third largest single market after the United States and Britain.”