Bang & Olufsen Turns Itself Around But Is It Enough?
Bang & Olufsen has released a lot of new products lately with David Jones and the likes of Len Wallis in Sydney, and Sight & Sound Galleria in Melbourne selling their new products.
The big question is whether consumers shopping at the likes of David Jones will pay $2,500 for a portable speaker made by a Danish Company who have struggled for several years after quitting a model that saw their luxury audio products sold via a now failed B&O branded retail store network.
There is some good news for the Danish Company their share price up 17% this month but sadly sales are down 18% over the past 3 years.
But that is small recompense for the exasperating returns over three years with the share price falling 79% over the past 36 months.
In the last three years Bang & Olufsen saw its revenue shrink and their share price significantly weaken dropping 21% per year.
As at November 2020 Bang & Olufsen had debt of $19M and cash reserves of $128M.
The Company is predicting that their revenues over the next few years are expected to grow by 64%, indicating a highly optimistic future ahead.
If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value claims Simply Wall Street.
As for shareholders Bang & Olufsen they received a total shareholder return of 239% this year.
That certainly beats the loss of about 0.6% per year over the last half decade.
One Analyst said, “This makes us a little wary, but the business might have turned around its fortunes”.
Back in April Bang & Olufsen backed its full-year revenue and operating profit guidance after swinging to a fiscal third-quarter net profit amid cost cuts, new product launches, and high demand for home-entertainment equipment due to COVID-19 lock downs.
“The cost-reduction program progressed as planned, core markets grew across all key channels, and we continued to strengthen our digital focus, which enabled us to more than double our online revenue and enhance the consumer experience,” said Chief Executive Kristian Tear.
The Company admitted that like a lot of European audio Companies continued supply challenges related to component scarcity hit growth in the last quarter and is tipped to hit the next quarter.