From Bloomberg News

By Meera Bhatia
     March 14 (Bloomberg) -- Bang & Olufsen A/S, the Danish
stereo and television maker that ousted its top executive this
year, cut its forecasts for the second time in two months as
U.S. demand for luxury electronics withers.
     The shares plunged, losing a quarter of their value. Full-
year sales will be between 4.25 billion kroner ($890 million)
and 4.35 billion kroner, down from January's estimate of 4.45
billion to 4.55 billion kroner, Struer, Denmark-based B&O said
today. The company almost halved its operating profit forecast,
saying it's likely to be as low as 225 million kroner.
     Bang & Olufsen, whose BeoVision 7 40-inch television with
DVD player costs about $13,250 in the U.S., lost more than a
quarter of its value on Jan. 9 after saying pressure on American
and British incomes had led to ``disappointing'' holiday sales.
Torben Ballegaard Soerensen was removed as CEO the next day
after more than seven years in the job. European sales also fell
in the third quarter, B&O said today.
     ``Recent economic development has influenced both the U.S.
and several European markets negatively,'' the company said in
its statement. ``Retail sales are seen as being very
unpredictable at the moment.''

                          Shares Slide

     The stock was down 69 kroner to 238 kroner at 9:08 a.m. in
Copenhagen trading, the lowest in more than four years.
     The company's three largest markets, Denmark, the U.K. and
Germany, have been ``disappointing,'' while sales in Asia and
markets including Russia ``remain positive,'' it said. Sales of
the company's audio-visual products are expected to be
``slightly below'' last year for the rest of the financial year.
     ``They are mainly citing macroeconomic developments, and we
agree,'' said Rune Moller, an analyst at Jyske Bank A/S, who
said he'll now cut the stock to ``accumulate'' from his previous
``buy'' recommendation. ``Private consumption is slowing in
Europe and the U.S.''
     Operating profit will be 225 million to 275 million kroner,down from an earlier forecast of as much as 425 million kroner
the company said. B&O is scheduled to report third-quarter
results on April 8.
     ``We believe that they need a blockbuster product launch
this year,'' Moller added. ``They need a blockbuster product
launch every year and we didn't get one so far this year.''

--Editors: Keith Campbell, Paul Jarvis.

Thanks for the update. 

I will not re-open the B&O strategy debate but there is a cold economic wind blowing around the world at the moment and all makers of high-end goods may find that there are some difficult times to come in the next few years. This article reinforces that.

 Simon

they've got nobody but themselves to blame , i'm afraid

too much concentrating on the next ott design and not enough on the basic features that everyone takes for granted

also , bno used to be cutting edge in that they would adopt new technology much more rapidly

i recall their stance on cd etc was pretty radical in the 80's - very early adoptors compared to their competition

now with blu ray and the net integration their tech dept. should be chomping at the bit 

We had the B&O strategy debate when the first profits warning came out.

I think it's symptomatic of the experiences a lot of companies selling luxury products will be having as the world economy slows down.

As a comparison, how are other high end manufacturers doing on the whole? Wether it be Louis Vuitton, Giorgio Armani, Sunseeker Powerboats, Helicopter Manufacturers, Lear Jet makers, Rolex, Cartier etc etc

It's fine blaming a global economic downturn, but if the others are forging ahead we have a problem!!  Anyone want to have a 'research' and report their findings?

Lee

🙂

In general, the worldwide luxury market has grown powerfully since 2001, driven by demand in Asia (not Japan) and the former Eastern Block, but also fueled by generous lending programmes in the US and Europe which put a lot of money in the pockets of consumers. The LVMH group has had outstanding growth in this period, as have many other luxury brands.

B&O has not managed to keep up, in many analysts' opinion a function of the CE market being more price sensitive and also as a function of B&O not being seen as driving innovation in the category, leading customers to bleed off to other brands. (And believe it or not, B&O is not seen as luxurious enough by quite a few customers in this segment.

Of course, things are tanking now, worldwide, as a function of the financial meltdown happening in the US and commodities racing away across the board.
 

Some findings from last year, from Bain & Company's 6th Annual Luxury Goods survey. 

• Total luxury goods market 2006 sales growth of 9% over 2005 equaled the percentage growth of 2005 sales over 2004 - which nearly doubled the 5% growth of 2004 over 2003 sales
  
• Growth was spread across all major brands.  Eighty-five percent of companies analyzed reported positive year-over-year sales growth - the highest percentage recorded since the inception of the study in 1999
  
• Accessories (handbags, shoes, etc.) showed the strongest product category growth with a 15% increase over 2005 sales growth, followed by apparel and hard luxury both with 10% year-over-year growth
  
• 'Menswear' over-performed the market and continues to gain a bigger share of the luxury goods market. Sales in the U.S. and Europe generated 95% of the menswear growth
  
• The 9% year-over-year growth was less than the 11% growth reported in the income statements by the 200 luxury goods companies in Bain's 'Luxury Goods Worldwide Market Observatory' database. A key reason for the discrepancy is emerging retail channel leadership, growing 13% over 2005, as compared with the 7% growth achieved in wholesale market growth

• Japan, which represents 13% of the Euro 159Bn luxury goods market, grew at only 1% over 2005 primarily as a result of a weaker currency and stagnating incomes in the second half of 2006