Bang & Olufsen Struggles to Sell $15,000 TV Sets 

(Bloomberg) --

Bang & Olufsen A/S reported its third consecutive quarterly loss as the Danish hifi maker struggled with a buildup of inventory after consumers balked at buying $500 headphones.

• The 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.

Key Insights

• The company blamed November sales for the poor quarter, adding that price pressure increased on earphones. Bang & Olufsen made four profit warnings since December 2018. 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%.
• 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. Tech reviewers have noted while Bang & Olufsen makes good appliances with an eye for aesthetics, there are cheaper alternatives from the likes of LG and Samsung.

Market Reaction

• The stock was little changed in Copenhagen after an early drop of as much as 1.4%. Bang & Olufsen has lost three-quarters of its value between 2018 and 2019.

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To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Thomas Mulier, John Lauerman

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