To the horror of Bang & Olufsen’s shareholders, their shares plummeted yet again on Wednesday morning.
The rapid fall in value is due to Bang & Olufsen downgrading their expectations on Tuesday night, the fourth time within the space of a year.
As a result of the fall in prices, Bang & Olufsen has lost approximately 300 million Danish Kroner of its market value. The new market value is now placed at 1.4 billion Danish Kroner.
Bang & Olufsen therefore expects a decline in revenue in the 2019/20 financial year. A decline in revenue of between 13 and 18 percent, estimates the company.
The New Strategy
”The strategic direction is unchanged, but it is clear that there must be a fundamental change in sales and marketing efforts and a culture created where we are closer to customers and partners,” says CEO of Bang & Olufsen, Kristian Teär.
Teär further states that sales numbers from the partners selling Bang & Olufsen products to consumers have not been satisfactory.
The Actual Problem
The core of the problem for Bang & Olufsen according to Per Hansen, Investment Economist at Nordnet, is that the company's competitors have caught up with them.
Hansen believes that Bang & Olufsen no longer has the cutting-edge competencies that customers have been willing to pay extra for.
Hansen estimates that the company has two potential paths it can take.
Either Bang & Olufsen has to try to regain its place in the market independently and through a lot of hard work, or the company must rely on partnerships with other companies.
”At this point, I do not think that it is realistic that Bang & Olufsen can remain independent on their own.” Hansen said and added, “Bang & Olufsen must be part of something bigger.”
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