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Pandora Considers Restructuring Its Struggling China Business Amid Sales Decline

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Danish jewelry giant Pandora is exploring options to restructure its operations in China after years of steep declines in both online and offline sales, according to sources familiar with the matter. The company is reportedly in talks with China-based investment funds and e-commerce partners about potentially licensing its brand and assets, including existing inventory, for a period of five years.

Pandora, the world’s largest jeweler by volume, has faced significant challenges in China, the world’s second-largest economy. Post-pandemic consumer slowdown, a widespread property market crisis, and intense competition from local, digitally savvy brands in the crowded e-commerce space have all taken a toll. Additionally, Chinese consumers have shown a growing preference for gold and higher-value jewelry over Pandora’s offerings.

In a statement to Reuters, Pandora acknowledged the need to reposition its brand in China and said it was working on a turnaround that “will take time.” The company reaffirmed its commitment to the Chinese market but did not comment directly on possible restructuring plans.

Financial filings reveal Pandora’s revenue in China fell nearly 80% to 416 million Danish crowns ($65 million) in 2024, down from 1.97 billion crowns in 2019. The country’s contribution to Pandora’s overall revenue shrank from about 11% to roughly 1% during that period. The business has seen considerable leadership turnover, with three managing directors since 2022. The current managing director, Thomas Knudsen, began in January, shortly before Pandora announced plans to close 50 stores in China this year.

Experts warn that finding a suitable partner or stakeholder for Pandora’s China business may be difficult given the ongoing market headwinds and weak performance. Jonathan Yan, a principal at consulting firm Roland Berger in Shanghai, said financial investors are unlikely to be interested, though e-commerce firms focused on higher-margin brand ownership might consider a deal.

The restructuring model being considered could resemble Gap’s 2022 sale of its China business to Baozun, a leading Chinese e-commerce partner, for $40 million to $50 million. The potential value of a Pandora deal remains unclear.

Sources indicate that Pandora’s e-commerce sales in China have declined more sharply than in physical stores. An acquisition by a local operator with expertise in Chinese e-commerce could offer a better chance at recovery, though any turnaround effort is expected to be costly.

Yan noted, “They will need to burn money and have a very innovative approach, and even then it won’t be easy.”

Macy’s Discovers $154 Million in Hidden Expenses by a Single Employee

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Macy’s has uncovered accounting irregularities involving a single employee who intentionally hid up to $154 million in expenses over nearly three years. This revelation has prompted the retailer to postpone its quarterly earnings report, originally scheduled for Tuesday, to December 11.

The former employee, whose identity has not been disclosed, concealed small package delivery expenses through “erroneous accounting accrual entries,” according to the company. While Macy’s has not clarified the motive behind these actions, it emphasized that the issue did not impact cash management or vendor payments.

Details of the Discovery

The irregularities were identified during an internal audit and have led to an independent forensic accounting investigation. Despite the large sum involved, the hidden expenses account for a fraction of Macy’s $4.36 billion in delivery expenses recognized since the fourth quarter of 2021.

In a statement, Macy’s CEO Tony Spring reassured stakeholders about the company’s commitment to ethical conduct:

“While we work diligently to complete the investigation as soon as practicable and ensure this matter is handled appropriately, our colleagues across the company are focused on serving our customers and executing our strategy for a successful holiday season.”

Investigators have not found evidence implicating any other employees in the scheme.

Investor Concerns and Preliminary Earnings

The revelation has raised questions about the effectiveness of Macy’s internal controls and auditing processes. Neil Saunders, a retail analyst at GlobalData Retail, criticized the oversight, stating:

“Such things create more nervousness for investors who are already concerned about the company’s performance.”

Adding to investor unease, Macy’s released a preliminary earnings report showing a 2.4% decline in quarterly sales to $4.7 billion. Weakness in digital sales and cold-weather merchandise contributed to the drop, exacerbated by unseasonably warm fall weather.

Macy’s shares fell nearly 3% at Monday’s open and are down 20% year-to-date.

Operational Challenges and Strategic Plans

The 165-year-old retailer continues to face challenges in its middle-market segment, which has been underperforming. Macy’s is executing a turnaround strategy that includes closing hundreds of underperforming stores. Despite this, sales at remaining stores also declined.

Conversely, the company’s premium segments, including Bloomingdale’s and Bluemercury, performed better, with sales rising 1.4% and 3.2%, respectively.

Earlier this year, Macy’s rejected offers from private investors to take over the company, opting instead to pursue its own recovery strategy.

As the investigation proceeds and the company navigates its turnaround, the incident underscores the importance of robust internal controls in maintaining investor confidence.