* 2012/13 revenue, EBIT margin forecasts cut
* Announces plans to close 125 stores
* Says turnaround will take longer
* Shares drop as much as 13 percent
(Adds CEO, investor comments)
By Shida Chayesteh and Mia Shanley
COPENHAGEN, Jan 9 Danish luxury stereo and
television maker Bang & Olufsen (B&O) cut its outlook
for the year and said it will close up to 125 stores mainly in
Europe due to weak sales in the region.
Pretax profit in Bang & Olufsen's September to November
quarter was 23 million Danish crowns ($4.03 million), well below
an average 65.5 million crown forecast in a Reuters poll of
analysts and down from 40.8 million crowns the previous year,
sending the shares down as much as 13 percent.
The luxury goods sector has been struggling with Europe's
long-running debt crisis in recent quarters though strong demand
from emerging markets has offset some of the pain.
B&O though, has also been hit by a revamp of its
distribution network in Brazil and China, two of its most
"Now we are going in and taking over all the stores
ourselves in China, so we are really doing as much as we can,"
Chief Executive Tue Mantoni told Reuters. "The short-term
negative impact is the result of all that we are doing."
Having previously said it expected double-digit sales growth
in its 2012/13 year, on Wednesday the firm said it expected
revenue to exceed the 3.0 billion crowns it made in the previous
year, without giving further detail.
"We would have liked to see higher sales in Europe," Mantoni
told analysts on a call.
B&O shares were down 9.8 percent at 64.50 crowns at 1154 GMT
compared with a marginal fall in the local mid-cap index
"It's disappointing. It was in this quarter we should have
started to see that they really were back on the growth track
with the double-digit (revenue) growth, and it is far from that
at 5.5 percent," said Soren Lontoft Hansen, analyst at Sydbank.
Reuters data shows that B&O stock trades on a forward
12-month price-to-earnings ratio of 27, more than twice a sector
average of 13 for consumer electronic peers in Europe.
The company's biggest investor, Delta Lloyd Asset
Management, said the market environment was tough but that it
remained convinced Mantoni, who took the reins in 2011, could
turn the company around.
"It is not a dead brand," Angus Steel, senior portfolio
manager at Delta told Reuters, pointing to healthy growth in
demand for sound systems for the automotive sector.
"In the medium term context, margins should stabilise at a
high level... Growth markets such as the U.S. are very
underestimated. It is not just about China," Steel said.
Delta has a roughly 15 percent stake in the company.
B&O expects its EBIT margin to remain positive compared to
its previous forecast of an improvement over 2011/12's operating
margin of 4.1 percent.
It expects its turnaround plan would now one year longer
than originally anticipated.
($1 = 5.7097 Danish crowns)
(Additional reporting by Simon Johnson; Editing by Elaine