* Cuts 2012/13 revenue outlook to 2.80 bln to 2.90 bln DKK
* Cuts EBIT guidance to a loss of 150 mln to 200 mln DKK
* European sales a lot worse than expected
* Shares drop as much as 18 pct
By Mette Fraende
COPENHAGEN, March 22 Bang & Olufsen
issued its second profit warning in two months on Friday as
European sales of luxury stereos and televisions took a
bigger-than-expected hit, casting doubt on its long-term
Shares fell as much as 18 percent after the Danish company
said it expected revenue for the 2012/13 financial year to be
between 2.80 billion and 2.90 billion Danish crowns ($502.97
million), down from its previous forecast of more than 3 billion
The European debt crisis and the resulting weakness in
consumer spending have hit the luxury good sector, and B&O said
strong sales in China and other emerging markets failed to
offset the drop in European sales in the last six months.
"There is something in the market which, particularly in the
last six months, has gone a lot worse," Chief Executive Tue
Mantoni told Reuters.
"We are talking primarily in Europe and in the market in
which we operate, television, electronics and luxury products,"
British luxury brand Mulberry also issued its second
profit warning in six months on Friday, partly blaming reduced
tourist spending in London stores and sending its shares
B&O shares have lost 22 percent since the start of this year
after the group issued its first profit warning January and its
second-quarter pretax profit landed well below analysts'
In January the company cuts its forecast of double digit
growth in 2012/13 sales and said revenue would exceed 3.0
On Friday it changed its outlook for earnings before
interest and tax (EBIT) to a loss of 150 million to 200 million
crowns, having previously forecast a positive EBIT. The cost of
store closures in Europe and openings in China also weighed on
profits, it said.
Mantoni said the group remained confident in its ability to
reach revenue of 8 billion to 10 billion Danish crowns in 2017
from 3.0 billion in 2011/2012.
Analysts were doubtful, however.
"If revenue should grow from 3 billion crowns to 9 billion
in four years, you have to grow by 30 percent per year," said
Sydbank analyst Soren Lontoft.
"I question that, as it is many years ago since they had
two-digit growth," Lontoft said.
Alm Brand analyst Jesper Christensen said the target was not
realistic: "There is nothing to indicate that (European sales)
will change, even if the closure of shops stabilises at some
NEW STORES IN CHINA
B&O signed a deal with a Chinese partner in January to open
more than 50 new stores in the country as it tries to focus on
growth markets such as Brazil and China and become less
dependent on Europe.
It also said in January it would close up to 125 stores in
Europe in the coming 12-18 months.
Mantoni said the group was accelerating the closures to
complete them within six months. It closed 80 shops in the third
quarter alone, he said.
"We must do what is right for the business in the long term,
even if this will hurt in the short term," Mantoni said.
The new EBIT guidance included an expected hit of more than
100 million crowns from higher amortisation and lower
capitalisation, B&O said.
The group would incur non-recurring costs of 40 million
crowns during the financial year, mainly relating to
organisational changes and network restructuring.
Shares in Bang & Olufsen were down 13.1 percent at 53 crowns
at 1137 GMT against a 1.1 percent fall in the Copenhagen stock
exchange's mid-cap index.