B&O Struggle To Shift Inventory As Losses Mount
Consumers are walking away from buying overpriced Bang & Olufsen headphones and TV’s with the Danish Company reporting another bad quarter and analysts writing the Company off.
In the three months to November which are peak months for consumer electronics and audio Companies B&O reported an ($11 million) loss with the business still struggling to get rid of excess inventory.
In Australia Aqipa claimed that they dropped distributing Bang & Olufsen products because of a lack of margin.
Analysts claim that consumers don’t want to buy $999 B&O headphones or a $30K TV branded Bang & Olufsen when the perception is that other Companies deliver superior a superior product. In Australia German TV brand Loewe is significantly outselling Bang & Olufsen TV’s in the top end European TV category.
Their latest results are the third consecutive quarterly loss as the Danish HiFi maker struggles with a buildup of inventory especially their B&O Play product which is seen as not competitive in a highly competitive category.
While inventory is down compared to May, it’s still up 31% on the year, their stock has fallen from 100 Danish Kroner to 29 Kroner during the past 12 months.
The Company has made four profit warnings since December 2018.
Bloomberg claims that Kristian Tear, who became chief executive officer in October, has his work cut out for him as the company expects full-year sales to drop as much as 18%.
Speculation that Bang & Olufsen has appointed Melbourne based Synnex as their distributor has been rejected with the CEO of Synnex Kee Ong telling ChannelNews that he was not aware of the move.
Currently Bang & Olufsen is offering retailers incentives to clear out a buildup of products that are becoming obsolete, which is taking longer than expected and is weighing on margins.
Last week I walked into a Bang & Olufsen store in San Diego in the USA at 2.00pm I was told that I was the second customer for the day.
Simply Wall Street said that Bang & Olufsen’s revenue didn’t grow at all in the last year. In fact, it fell 19%. That looks pretty grim, at a glance. In the absence of profits, it’s not unreasonable that the share price fell 60%.
B&O’s problems have hit as the market itself is up 32%.
SWS said “last year’s performance caps off a bad run, with the shareholders facing a total loss of 1.3% per year over five years. We realise that Buffett has said investors should ‘buy when there is blood on the streets’, but we caution that investors should first be sure they are buying a high quality businesses. You might want to assess this data-rich visualization of its earnings, revenue and cash flow”.