The company posted an operating loss before special items for the third quarter of 43 million Danish crowns ($6.14 million) between December to February.
The company also said it now expects EBIT margin before special items for the full financial year ending May 31 in the range of -4% to -1%. It had previusly guided it would end at the lower end of -2% to 3% range.
"Sales in China did not progress as expected after the reopening because of all the challenges with COVID-19," Chief Executive Kristian Teär said in a statement.
"When the country suddenly abandoned most of the restrictions in December, we did not expect this negative development in consumer behaviour," he said.
Sales in China declined by 65% in the third quarter, the company said.
B&O said it expects better market conditions in China in the fourth quarter, but still at a slower pace than initially expected.
Shares in B&O were trading 11% lower by 1513 GMT, headed for their biggest daily decline since December 2019.
($1 = 7.0022 Danish crowns)
(Reporting by Anna Ringstrom, Editing by Jacob Gronholt-Pedersen)