Still a lame duck, Bang & Olufsen is now betting on the ultra-premium segment

Will the Danish upmarket hi-fi maker come back from the dead?

In a sector that has by now become fully commoditized - a barbaric but apt Anglicism - Bang & Olufsen is struggling and has little choice but to play the ultra-premium card, a role that it unquestionably has the legitimacy to embody.

This has meant uninterrupted price increases - for now the only palliative found for eroding sales - which explain the rise in its gross margin. At the same time, Bang & Olufsen is taking back control of its distribution, with 3/4 of sales now generated through its network, compared with under a half a decade ago.

Rationalizing the group's geographic footprint supports this strategy, with 15 stores opened last year, nine modernized, seven relocated, as well as 51 closing. On the product range side, the shift towards more compact ‘on-the-go' items is continuing.

This is also the category posting the strongest growth, albeit very modestly, and, above all, very erratically. In substance, the commercial momentum remains sluggish everywhere, across product lines and across the geographies where the group operates.

These trends observed for several years are continuing in the first half of the current fiscal year, which has been marked by significant cash burn to fund the rollout of points of sale and the product range. This is likely the last attempt the group will be granted, as its resources are dwindling dangerously.

Last week, its share price plunged after the announcement of the dismissal of CEO Kristian Tear. He who previously worked at Sony Mobile and BlackBerry, will thus have led three limping companies, without actually managing to reinvigorate any of them.

Bang & Olufsen therefore remains mired in a critical situation. Revenue is below the level recorded a decade ago, and the group has posted losses year after year. The capital increases in 2021 and 2025 have more than tripled the number of shares outstanding, without the capital invested to try to restart the engine having, for now, borne fruit.

The only viable way out seems to be a takeover by the very discreet luxury magnate Qi Jian Hong. He, who already controls one-fifth of Bang & Olufsen's capital, and who recently doubled his stake via his investment vehicle New Sparkle Roll.