Bang & Olufsen A/S reported its third consecutive quarterly loss as the Danish hifi maker struggled with a buildup of inventory and the decreased interest in high-end TVs and other luxury products.
The Danish company's operating loss was 77 million kroner ($11 million) in the three months through November. While inventory is down compared to May, it’s still up 31% on the year.
The company blamed November sales for the poor quarter, adding that price pressure increased on earphones.
Bang & Olufsen has been giving retailers incentives to clear out a buildup of products that are becoming obsolete, which is taking longer than expected and is weighing on margins. The company already warned that second-quarter sales dropped 31% when it lowered its profit outlook last month.
The company is seeking buyers for its new Beovision Harmony TV, which starts around $15,000. However, the market have changed since 90's and 2000's, when Bang & Olufsen's extremely expensive consumer electronics devices had a fanatic audience willing to spend a lot. Bang & Olufsen still makes good appliances with an eye for aesthetics, although currently there are more affordable alternatives from the likes of LG and Samsung,
The company's outlook is unchanged compared to the adjusted outlook it on 17 December 2019.
- Revenue growth (local currencies): Decline by 13-18%
- EBIT margin (excluding special items): Minus 4-9%
- Free cash flow: Negative DKK 100-150m
The company is preparing a three-year strategy plan that will be presented at a Capital Market Day on 3 April 2020.