Back in October, ChanneNews reported that European TV brand Loewe was taking over several struggling Bang & Olufsen stores in Europe, including in Denmark where B&O products are designed, as the Danish company struggled to deliver profits.
Now, as B&O showcased its third quarter results for the period ending February 29, it continues to struggle with Europe and China being challenging markets for the company.
In a statement posted about its third-quarter earnings, B$O stated that macroeconomic conditions in key markets in Europe “did not improve as the company expected.” It added that it “does not expect the Chinese economy to improve significantly in the near future.”
For the first nine months of 2023-2024, its revenue declined by 8 per cent year-on-year. Its free cash flow stood in the negative at -A$7 million.
However, for the third quarter, it posted a net profit of approximately A$671,000.
EBITDA before special items reached A$63.68 million corresponding to a margin of 11.8 per cent and an increase of A$39.14 million from A$11.28 million in the first nine months of 2022-23.
“This was another quarter with a record-high gross margin, and we delivered the best nine-month EBIT results in half a decade, even at a lower revenue level. We do not see the expected improvement in the macroeconomic conditions in key markets in Europe and China, and this unfortunately impacts our sales. This meant that we had to adjust our outlook for full-year revenue in March,” said CEO Kristian Teär.
“We’re transitioning towards higher margin revenue in line with our strategy. We do that by focusing more on creating the right experience in our branded channels, ensuring high product quality, and strengthening our luxury positioning. That transition takes time, but we believe this is the right way for us to create profitable growth for Bang & Olufsen in the long term.”
In the third quarter, B&O noted that its brand partnering and other activities declined by 16 per cent which it said was “mainly driven by reduced license income from the automotive industry as the industry slowly recovered from factory strikes in the US and a decline in licence income from HP.” Also, like-for-like sell-out declined by 2 per cent. In APAC, sell-out grew by 23 per cent driven by sell-out growth in China of 36 per cent, while EMEA declined by 13 per cent, while sell-out also declined in the Americas by 7 per cent.
