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TV and stereo maker Bang & Olufsen shares tumble after warning

TV and stereo maker Bang & Olufsen shares tumble after warning
FILE PHOTO: The logo of consumer electronics company Bang & Olufsen is seen at a shop in Vienna, Austria, July 7, 2016. REUTERS/Heinz-Peter Bader/File Photo   -   Copyright  Heinz-Peter Bader(Reuters)
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COPENHAGEN (Reuters) – Shares in Bang & Olufsen (B&O) <BO.CO> plummeted on Thursday after the luxury TV and stereo maker warned of lower sales this year as it reduces its distribution network, raising concerns that a broader slump in retail would hit future sales.

B&O said late on Wednesday it expected sales for the 2018/19 year at the same level as the year before, compared to previous guidance of 10 percent growth.

The gloomy statement was the latest in a string of warnings and negative outlooks from European retailers.

Shares in B&O fell more than 30 percent, poised for the worst day in 10 years.

“Is this just a timing effect or is this really a token of some bigger problems and a slump in the retail sector?,” said Sydbank analyst Morten Imsgard.

It raised doubts about whether B&O would be able to deliver on its targets set out in July for revenue to grow more than 10 percent on average over the next three years, Imsgard added.

The warning came after preliminary sales for the second quarter showed a 9 percent decline and a slower than expected start to the third quarter.

B&O is in the midst of a turnaround that aims to cut its distribution network, leaving it with fewer selling points.

It said sales had been hit by distribution and logistics issues related to the plan, while issues with a new logistics partner meant delays in fulfilling customer orders in November.

“We have the right strategy in place and are progressing well on our key strategic initiatives,” Chief Executive Henrik Clausen said in a statement, adding that sales were hit by the time lag between closing down some outlets and opening new ones.

B&O’s biggest shareholder is Chinese investor Qi Jianhong, who owns just under 20 percent in the company through his Sparkle Roll companies. In April 2016, Bang & Olufsen rejected a takeover bid by Sparkle Roll.

(Reporting by Stine Jacobsen; Editing by Edmund Blair)

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