GuruFocus -
- Group Revenue: Declined by 1% year-on-year.
- Gross Margin: Increased to 53.7%, up 0.6 percentage points year-on-year.
- EBIT Margin Before Special Items: 1.7%, compared to 3% in Q2 last year.
- Free Cash Flow: Increased to DKK30 million, up DKK6 million from last year.
- Capital Increase: Raised DKK228 million through issuance of new shares.
- Store Network: Reduced monobrand stores in EMEA by 28 to 270 stores; reduced monobrand stores in Asia Pacific by 3.
- Win Cities Sell-Out Growth: 24% growth across channels.
- Branded Channels Sell-Out Growth: 5% growth.
- Revenue by Region: EMEA grew 3%, Americas increased 17%, APAC decreased 13% in local currencies.
- Product Category Performance: Staged category grew 9%, Flexible Living declined 10%, On-the-go declined 13%.
- Net Working Capital: Decreased by DKK32 million to DKK250 million.
- CapEx: DKK54 million for Q2, expected to increase in the second half of the financial year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Bang & Olufsen AS (BGOUF) reported a gross margin increase to 53.7%, showing progress in building a robust financial foundation.
- The company's 'Win cities' initiative generated a 24% sell-out growth, indicating successful strategic focus.
- The launch of the flagship headphone H100 exceeded demand expectations, reflecting strong market reception.
- Bang & Olufsen AS (BGOUF) completed a capital increase, raising DKK228 million to fund strategic execution and drive long-term growth.
- The Americas region saw a strong performance with a 17% revenue increase in local currencies, supported by double-digit growth across channels.
- Overall group revenue declined by 1% due to negative growth in China, impacting the company's financial performance.
- The APAC region experienced a 13% revenue decrease in local currencies, with China accounting for a significant portion of the decline.
- EBIT margin before special items decreased to 1.7% from 3% in the previous year, affected by increased development costs.
- The Flexible Living and On-the-go categories saw declines of 26% and 5% respectively, reflecting challenges in these segments.
- The gross margin in the APAC region declined from 51.6% to 47.4%, impacted by a change in product mix and lower revenue levels.
A: Kristian Tear, CEO: The centralization aims to enhance focus on strategic cities by allocating more resources locally. The successful EMEA operating model will be implemented globally, and a new partner distribution sales organization will be established to find new partners, particularly in North America. Additionally, more emphasis will be placed on hospitality, which has shown success.
Q: How should we look at the cost on distribution marketing in the second half? Will it ramp up this year or next?
A: Nikolaj Wendelboe, CFO: Costs will increase in the second half as we hire people for strategy execution. The impact will be more significant next financial year, but we expect extra costs in Q3 and Q4 for these resources.
Q: What is driving the strong performance in the US, and when should we expect revenue from California branded stores?
A: Kristian Tear, CEO: Growth is across all channels, with strong performance in New York. A new partner in California will help execute the retail strategy, with several flagship stores expected to open by the end of this calendar year.
Q: Should we expect a reduction in the number of multi-brand doors to continue, and what is the expected OpEx growth?
A: Kristian Tear, CEO: The multi-brand network is largely in place, with potential minor adjustments. Nicolaj Wendelboe, CFO: OpEx growth will pick up in Q3 and Q4, likely reaching high single digits.
Q: Can you provide an update on the supply and demand situation for the H100 headphones?
A: Nikolaj Wendelboe, CFO: We are sold out for Q3 from a sell-in perspective. Production is ramping up, and we expect supply and demand to align better next year as we adjust supplier plans.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.