Can Pandora Recapture the Marketing Charm?

Pandora--a jewelry firm known primarily for its intricate charm bracelets--began selling shares of stock last year, with great fanfare. The company was doing very well, riding on a wave of consumer love for its choose-your-charm fashion.

In the past year, the price of gold and other materials has moved steadily upwards. Jewelry has become more expensive as a result, even as some buyers reconsider or postpone purchases because of economic uncertainty.

Recently, Pandora announced that sales would not be growing at double-digit rates, sending the share price into the basement. In fact, 2011 turnover is expected to be about the same as 2010 turnover.

In the US and UK, two of Pandora's key markets, sales declined during the previous quarter, hurting profits as well. Revenue is down in Australia, but up in Asia, so Pandora does have some areas of strength.

Pandora positions itself as 'affordable luxury' but the chairman tells the Guardian: 'We are not a luxury goods business. If we start to pretend or think we are a luxury goods business, we've got a problem.' 

What next for Pandora? It markets in 55 countries, through a channel of 10,000+ stores, including 500 Pandora-brand stores. It reaches out to buyers through Facebook, YouTube, and apps. How quickly can the company change its marketing to restore the charm of its brand?