B&O Retail Business Expected to ‘Stabilize,’ Ending Wave of Store Closings
Bang and Olufsen’s (B&O) retail business will “stabilize” in the 2010-2011 fiscal year, ending two years of store closings as it moves to open new locations, CEO Kalle Hvidt Nielsen said in a conference call.
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The company shut 55 dealer-operated outlets and 85 store-within-a-store operations, ending its fiscal year May 31 with 1,005 stores, the company said. Having slimmed down, B&O will “intensify efforts” in fiscal 2010-2011 to open new stores, buoyed by a 36 percent gain in same-store sales at dealer locations in Q4, Nielsen said. B&O store-within-a-store locations posted a 29 percent Q4 gain and total same-store sales rose seven percent in the fiscal year.
While B&O is planning to add new locations, some dealer-operated stores could close, leaving the total flat at 1,005, Nielsen said. B&O had 705 dealer outlets on May 31, having closed 16 locations in the second half. It had 300 stores-within-a-store, having shut 28, the company said. In North America, B&O ended the fiscal year with 46 dealer locations, down from 51. North American 2009-2010 revenue fell 18.5 percent to $21.7 million. B&O had 73 stores in the U.K., where it shut 12 stores amid an 8.6 percent decline in sales to $41 million. In Denmark, B&O’s largest market, sales rose 11 percent to $50.9 million despite closing two stores, to end the year with 48. In Germany, sales slipped 1.8 percent to $46.6 million as the number of stores shrank to 68 from 74. The largest sales decline was in Japan, where revenue plunged 35.8 percent to $4 million.
Despite the decline at retail, B&O swung to a $4.8 million Q4 operating profit from a $18.2 million loss a year earlier as revenue jumped 26 percent to $132.6 million. The rise in revenue was driven by a sharp jump in automotive-related sales to $17.1 million. B&O’s automotive division benefitted from an extension of its agreement for deploying its 14-speaker advanced sound system in Audi A8, Audi A8 Long and Audi A7 cars. The system delivers 1,000 watts of power, placing two drivers in each door and a driver in the dash board, all designed around B&O ICEpower amplifier. B&O sound systems are also available for all Aston Martin cars and are standard in its DBS and Rapide vehicles, the company said. B&O also is an option with Mercedes-Benz S Class cars, the company said.
B&O’s branded business posted a 27 percent gain in Q4 sales to $129 million. B&O’s enterprise sales to hotel and construction projects fell to $7.8 million from $8.5 million a year ago as orders were postponed in the Middle East, the company said.
For the fiscal year, B&O revenue fell to $470.1 million. Video-related sales edged up to $220.7 million as B&O revamped its TV line to include 40-,46- and 55-inch LED-equipped LCD TVs. Speaker sales tumbled to $72.6 million, while audio revenue slipped to $66.2 million. B&O’s automotive revenue jumped to $45.6 million. Sales of B&O’s ICEpower amplifiers declined to $13.6 million. B&O is moving to expand its audio business, having introduced revamped versions of its BeoSound 8000 and 6000 series speakers. The BeoSound 8002 and 6002 speakers feature a new design and ICEpower amplifier. Specs on the new speakers weren’t immediately available. But BeoSound 8000 featured a four-inch driver and 0.75-inch tweeter in delivering 100 watts, while the 6000 shifted to a 3.5-inch driver and 40 watts.