So B&O just showed their Q3 result, and even though there is a small loss, they show that they can handle the high extra expense on freight and components.
Here is some parts of the report that I find interesting:
As a result of steady progress on strategy execution
the company grew revenue by 10% in local
currencies in Q3. This was the seventh consecutive
quarter with double-digit growth.
Earnings for the period were a loss of DKK 16m
compared to a profit of DKK 13m last year.
Free cash flow was an outflow of DKK 14m (Q3
20/21: inflow of DKK 8m). The year-on-year decline
was related to higher component costs and higher
CAPEX.
Available liquidity was stable at DKK 511m (Q2
21/22: DKK 534m)
The two core Asian markets grew by 28% in local
currencies. Sell-out was at the same level as last
year. Sell-out growth was lower than sell-in in the
multibrand and etail channels as the company
transitions to new distribution partners. Also, the
Chinese New Year began earlier this year, thereby
impacting the number of sell-out days in Q3.
Americas grew 32% in local currencies, driven by all
product categories and distribution channels. Likefor-like sell-out grew by 18%.
Year-to-date, the customer base grew by 25%. The
company saw a 32% growth in customers owning
two or more B&O products, partly driven by
retargeting of existing customers
The company maintains the outlook for the financial
year 2021/22, but due to higher component costs,
the company now expects EBIT margin before
special items and free cash flow to be in the low end
of the range
Revenue from speaker sales more than doubled
compared to Q3 of last year. This increase was
driven by all products, especially Beolab 28, which
was launched in Q4 of last year and continued to
see strong demand.
Revenue from TVs was slightly lower than Q3 of last
year. However, last year, the company sourced and
sold TV screens supporting the launch of Beovision
Contour 48’’. This accounted for around 6% of
revenue within the Staged category last year and if
this is excluded, TV sales delivered high single-digit
growth.
Cash flows from investing activities were an outflow
of DKK 75m (Q3 20/21: outflow of DKK 55m).
Investments were primarily related to the product
roadmap and continued development of product
platforms. Investments in tangible assets increased
following investments in retail development and the
company’s aluminium factory.
n Q2 2021/22, the building “the Farm” was
reclassified to land and buildings under tangible
assets because it will be used for own purposes.
Model for scale
Another critical part of creating business robustness
is to build a scalable business model. This means
essentially creating a systemic mix of attractive
propositions, sold through the right marketing and
distribution channel mix, so that the business can
grow organically.
The company’s Recreated Classics initiative was
further expanded with the launch of BeoSystem 72-
22. This system was created exclusively for the US
and Canada and only 30 units were made of this
limited-edition system which were all sold within the
first day
Another product programme is the Bespoke
programme launched in Q2. Throughout Q3, the
company experienced a consistent inflow of
product requests without significant marketing
activation. The vast majority of bespoke requests
year-to-date (95%) were customisations, where
customers mix and match existing colours, materials
or finishes for a specific product. The remaining 5%
were bespoke orders, where products are tailored
exclusively to the individual customer. The
programme is a deliberate effort to increase
relevancy and attractiveness towards specific
subsegments of the company’s target audience in
the Very High Net Worth Individuals and WellEstablished customer segments
In Q3, the company launched a limited-edition
Beosound A1 speaker in partnership with the
streetwear label and lifestyle brand CLOT. The
collaboration was designed to tap into CLOT’s
creative movement in bridging Eastern and Western
cultures in order to drive awareness and affinity
with a younger segment of, particularly, Chinese
consumers.
The company’s strategic decision to win in London
continued to yield strong results. UK performance in
the quarter was testament to the positive impact of
this approach, with year-on-year revenue growing
11% and sell-out growth reaching 31%. For London
specifically, sell-out growth in company owned
stores reached 80%, outperforming both the rest of
the UK and the EMEA region. In addition, brand
awareness, customer base and repurchase increased
significantly compared to last year.
Brand Partnering activity remains a critical
component of the business model as it drives
awareness and new customer acquisition.
Performance in the quarter grew by 9%, primarily as
a result of aluminium sales related to Harman’s
addition of the Genesis car brand.
The launch of 1+ product innovation in Q4.