COPENHAGEN (Reuters) - Luxury TV and stereo maker Bang & Olufsen cut its outlook for the third time in six months after it sold fewer TVs in Europe than expected in recent months, sending its shares plunging 20% on Tuesday.
The Danish company’s profit warning comes as subdued consumer spending has hit retailers across Europe, but also reflects slow progress on B&O’s turnaround plan.
It now expects revenue to drop 13-14% in its 2018-2019 financial year, which ended in May, it said late on Monday. This follows warnings in March and December from an initial outlook for 10% growth.
B&O, whose TVs can sell for up to 96,000 Danish crowns (£11,441), is in the midst of a turnaround plan that aims to cut its distribution network, leaving it with fewer selling points in a bid to boost margins.
However, the company cut its EBIT margin forecast for the financial year ending next May to 2-3%, against a previous forecast of 4-5%.
“Clearly our financial performance this year has not been satisfactory, and we are very disappointed with the development,” Chief Executive Henrik Clausen said.
He added that the company expects profitable growth in the 2019-2020 financial year.
“Despite a disappointing development the past quarters, it is important to stress that we have come a long way with the transformation of Bang & Olufsen,” Clausen said.
B&O’s share price is now down roughly 70% over the past year with its shares falling around 20% in early trading on Tuesday, at one point hitting their lowest level since January 2015.
“Investors’ patience came to an end a long time ago,” Nordnet analyst Per Hansen said in a research note.
The company was founded in 1925 and built its initial success on innovative audio technology.
B&O’s biggest shareholder is Chinese investor Qi Jianhong, who owns just under 15 percent in the company through his Sparkle Roll companies, Refinitiv data showed. In April 2016, Bang & Olufsen rejected a takeover bid by Sparkle Roll.
Reporting by Stine Jacobsen; editing by Jason Neely and Susan Fenton