Bang & Olufsen A/S (BO) reiterated it will lose money this financial year as the Danish maker of luxury stereos and television sets reported a third-quarter loss after store closures and weak demand in Europe.
Bang & Olufsen reported a net loss of 90.7 million kroner ($15.7 million) in the three months through February, compared with a profit of 17 million kroner in the same period a year earlier, the Struer, Denmark-based company said in a statement today. Analysts had estimated a loss of 87.7 million kroner, according to a survey compiled by Bloomberg.
The company is in the second year of a five-year plan that aims to triple revenue and restore profitability to levels from before the financial crisis by closing stores in Europe and expanding in emerging markets. Third-quarter sales declined to 654.6 million kroner from 766.3 million kroner and the gross margin fell to 34.9 percent from 38.3 percent as capacity costs jumped 27 percent to 343 million kroner.
“The quarter was negatively impacted by the accelerated transformation of our retail network, as we transition to fewer, more productive stores in Europe,” Bang & Olufsen Chief Executive Officer Tue Mantoni said in a statement.
Bang & Olufsen repeated the outlook it gave on March 22, when it warned it will post a loss as wide as 200 million kroner before interest and tax in its fiscal year that ends May 31. The company today also said that John Bennett-Therkildsen, head of operations, will retire next summer and be replaced by Folkert Boelger, who is currently head of global procurement.
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