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Bang & Olufsen announces preliminary financial results for the third quarter

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Jeff
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Jeff posted on Tue, Mar 26 2019 4:10 PM

Submitted without comment, for now:

B&O Report

“The results we have delivered in the third quarter are clearly not
satisfactory. We have overestimated the speed at which we have been able to
drive the change towards a more retail-led and demand driven sales and
distribution network. Combined with the unexpected decline in TV revenue in
the quarter, this has led us to reassess our outlook for the year,” says CEO Henrik Clausen.

Jeff

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seethroughyou
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I completely agree with Jeff above. 

 

A B&O TV was perhaps 2-4 times the cost of a good Sony or Panasonic in the 80s and 90s. You paid the price because it was just in reach and the integration, reliability and functionality was worth it. B&O TVs now cost 10 times. By raising prices to Oligarch levels, they lost their working and middle income folk - what a disastrous strategy. 


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seethroughyou
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I completely agree with Jeff above. 

 

A B&O TV was perhaps 2-4 times the cost of a good Sony or Panasonic in the 80s and 90s. You paid the price because it was just in reach and the integration, reliability and functionality was worth it. B&O TVs now cost 10 times. By raising prices to Oligarch levels, they lost their working and middle income folk - what a disastrous strategy. 


AnalogPlanet
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Not enough snobs nor oligarchs, judging by their financials. LOL just wondering if even this will bring B&O leadership to their senses.

BeoFrederic
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I wonder how the Shape is selling?

mawheele
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seethroughyou:

I completely agree with Jeff above. 

 

A B&O TV was perhaps 2-4 times the cost of a good Sony or Panasonic in the 80s and 90s. You paid the price because it was just in reach and the integration, reliability and functionality was worth it. B&O TVs now cost 10 times. By raising prices to Oligarch levels, they lost their working and middle income folk - what a disastrous strategy. 


I see a lot of wishful thinking in these responses versus facts that come from the financial report:

 

Someone says the Eclipse is based on ageing technology. Really! What are the differences between an LG C8 and C9 platform? And the C8 is still on sale and doing well..... Ugggghhhhh.

People comment on the prices, yet sales are actually going up. Where does 10x the price come from? A C8 costs £1699. A Sonos Playbar costs £1398 - so I see a 3x cost multiplier at the very most before any discounts on either side - and the reality is 2.3 - 2.5x after promos.

And people say an Eclipse is 10k, but there has always been a 20% discount offer of some sort and as a result sales are up 25% - HUGE! Are LG sales up that much. No. Seems to me, they've priced it perfectly. And for those needing help, there is always the 0% interest free finance over two years.  After the available offers, we're talking £290 per month, less any trade-in equity. I got a great return on my 4-year old Avant55.

And lastly on price; B&O has been living at this same price point for at least 3 generations of product now; Eclipse55, Avant55 and BV7-40. You could argue that with inflation, the price has gone down.

B&O is a luxury product. Stretched attainability is what defines luxury in every category. The Bentley Bentayga is just a VW Touareg at 3x the price, but I don't see people moaning about why they should pay the extra for the luxury version. If folks want premium, then get a Loewe. 

But most of all, let's stick with the facts versus wishful supposition.  It had to be said.

 

moxxey
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mawheele:

People comment on the prices, yet sales are actually going up.

But most of all, let's stick with the facts versus wishful supposition.  It had to be said.

Really?

Sandyb
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moxxey:

mawheele:

People comment on the prices, yet sales are actually going up.

But most of all, let's stick with the facts versus wishful supposition.  It had to be said.

Really?

He is correct that BV's have always been some multiple and that this is not new.

Where he is entirely wrong is that things are going well.

 

Duels
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Duels replied on Mon, Apr 1 2019 10:08 AM
moxxey:

Really?

Depends which numbers you use (who’d a thought?)

Total sales are expected to be 10% down this year. In the third quarter TV sales from the factory have reduced significantly. But TV sales in that period from dealers to end users are actually up 6%. Sales of the horizon and eclipse alone are 25% up on the third quarter of last year.
mawheele
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Yes. The release and webcast were both clear that the sell-through of TVs had enjoyed increased sales.

 

mawheele
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Sandyb:

He is correct that BV's have always been some multiple and that this is not new.

Where he is entirely wrong is that things are going well.

 

25% sales increase for Eclipse on a year-for-year compare is exceptional in this market. @Sandby - what is good to you if that is not going well? FACTS please.

Sandyb
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They did report slightly higher TV sales yes.

Did they also not report a much lower than anticipated demand from dealers to restock?

Regardless, few would argue all is well, for reasons well rehearsed.

poodleboy
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mawheele:

Sandyb:

He is correct that BV's have always been some multiple and that this is not new.

Where he is entirely wrong is that things are going well.

25% sales increase for Eclipse on a year-for-year compare is exceptional in this market. @Sandby - what is good to you if that is not going well? FACTS please.

FACTS? 

After your earlier post I read the earnings warning again and saw different things than you. Revenue down but gross margin up. If your opinion is correct, and that sounds feasible, the discounting happened at the dealer level, which means their revenue went up while their gross margin went down.  Your 20% discount and free financing means dealers have less cash and no inclination to buy new inventory. That also might explain B&O EBITDA going up because their capacity cost went down, while discount were not taken at the factory level (but that is a guess). 

Bottom line is that only a sunshine pumper would call the earning warning and conference call good news. The institutional investors got a head up and acted accordingly. That is 2 quarters in succession. The CEO comment about third parties causing trouble in the market resulted from a self-inflicted wound; distribution strategy. They sacrificed the CFO and CTO. What's next?

The ACTUAL good news, unless you were a retail investor, is trading volume appears back to normal and the fall is hopefully stopped.   

As far as cars go, I think VW/Audi and BMW saved our coach-built business, and outside investment will hopefully help give Aston Martin and Morgan long future, too. 

moxxey
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mawheele:

25% sales increase for Eclipse on a year-for-year compare is exceptional in this market. @Sandby - what is good to you if that is not going well? FACTS please.

You'd expect the ONLY large TV from the brand to increase its sales as they've internally eliminated their own products - the 14-55 option has gone, the Avant 55 and so on. By process of internal elimination alone, this will increase sales of the Eclipse: there aren't other options!

So, sure, you can say they are 'facts', but increased sales of the only large screen TV you have available doesn't necessarily mean you're suddenly selling more TVs. 

BEOVOX141
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Apparently, dealers in Denmark are firing back at B&O after the "dealers are not buying" statement, requesting,- You guessed it: new products!

"We are in a void and simply adding new colours is not going to do it"

The Board of directors Ole Andersen might not even be hanging in there.

So whatever extra number of TVs were sold (or not), things definitely are not looking great! 

Jeff
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Jeff replied on Mon, Apr 1 2019 5:47 PM

Blame the dealers...B&O has treated their dealers quite poorly, naked beekeeper indeed.

Jeff

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Puncher
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https://www.bloomberg.com/opinion/articles/2019-03-26/bang-olufsen-has-speaker-tv-competition-from-apple-amazon-lg

 

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