July 11, 2019 / 7:05 AM / 8 days ago

Bang & Olufsen sees return to sales growth after bleak year

COPENHAGEN (Reuters) - TV and speaker maker Bang & Olufsen swung to a fourth-quarter operating loss but forecast a return to sales growth this year on new products and store openings in major cities aimed at enticing clients willing to pay for its luxury goods.

A Bang & Olufsen consumer electronics shop is seen at a shop in Vienna, Austria, July 7, 2016. REUTERS/Heinz-Peter Bader/File Photo

The Danish firm, whose televisions can sell for up to 96,000 Danish crowns ($14,480), is revamping its distribution network from a wholesale model to a more retail-driven focus in a bid to boost sales while keeping its edge as a luxury brand.

It has been closing poorly performing stores and focusing on new openings in major and trend-setting cities such as London, New York, Paris, Shanghai and Tokyo.

“We have had stores which have not necessarily been located in the right places,” Chief Executive Henrik Clausen told Reuters.

“It’s fine to be in France but if you aren’t in Paris and if you don’t have a location which is relevant to where your customers are, you don’t execute precisely on your brand or sales,” he added.

Sales for the financial year ending in May dropped almost 14%, hit by logistical problems associated with the closure of poorly performing stores and fewer new products. It had initially forecast 10% growth but slashed its outlook three times in six months.

Shares in B&O, which have slumped around 70% over the past year, rose around 5% after it said it now expected single-digit sales growth in the 2019-2020 year.

Subdued consumer spending has hit retailers across Europe and B&O’s German rival Loewe, owned by buyout group Stargate capital, shut down production on July 1 after failing to find investors to keep the firm afloat. It had filed for insolvency in May, following a similar move six years ago.

B&O is also pinning hopes for sales growth on new products such as its Harmony TV, co-developed with South Korea’s LG Electronics, which will be available from October.

Clausen added that the firm would also launch new products in its speakers range and will continue to work with partners like Google and Apple.

B&O reported a fourth-quarter operating loss of 66 million Danish crowns ($9.97 million), compared with a profit of 55 million crowns in the same period a year earlier.

($1 = 6.6229 Danish crowns)

Reporting by Stine Jacobsen; Editing by Mark Potter and Emelia Sithole-Matarise

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