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Warranty Problems & 29% Revenue Decline Plagues Bang & Olufsen

Is Bang & Olufsen having warranty problems with their disastrous B&O Play Products?

According to sources retailers in Australia are getting returns, but due to Aqipa who originally supplied the goods to retailers dumping the Danish audio brand, the liability for claims on products now fall on the manufacturer of the faulty speakers and headphones and that’s where the problem is.

Apparently Aqipa is not taking responsibility for the returns with the Danish Company now in a dispute with their former distributor over liability.

Under Australian Competition & Consumer laws a manufacturer is liable for all warranty claims.

Senior management at the Danish Company who ventured into the bottom end audio market back in 2017 said recently that 2019/20 was a disappointing year for Bang & Olufsen.

According to their latest financials’ revenue declined 29% compared to the prior year and EBIT margin dropped to -15%.

CEO Kristian Teär said that the shortfall in revenue adversely impacted profitability.

He said that 2020 had been “A disappointing year for Bang & Olufsen. The unsatisfactory results were primarily due to lack of progress with the ongoing transition towards a demand-driven retail model and higher-than-expected sales through unauthorised channels. We launched several initiatives to address these challenges, but just as we were starting to see the first results of these efforts, we were hit by the COVID-19 pandemic and the lock-down of countries around the world.”

In Australia the Danish Company moved to a store within a store model and despite having products that aesthetically looked European, modern and different the quality of the sound was often seen as “not worth the money” that Bang & Olufsen was asking retailers to sell their products for.

Now the Company is facing new Competition from German Company Loewe who are set to launch a new range of audio products into the mid value audio market. This will complement the new Loewe 2020 TV range.

Rear said “On 1 July, we successfully completed a capital increase that will enable us to get through the COVID-19 crisis and continue to execute on the strategy presented in April. With our new strategy we aim to solve some of the fundamental issues in our core business and ensure that we become profitable again”.

He said that the Company recognised that it will be a challenging year, as they try to deploy their new strategy “in the midst of the uncertainty related to COVID-19. In 2020/21, we expect to return to growth, driven by product launches in all categories, stronger sales and marketing execution, and the continued transition of our retail network with focus on our core markets.” He said.

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