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Investing.com -- Bang & Olufsen (CSE:BO) on Thursday reported a 5% decline in first quarter revenue as the luxury audio company’s shares fell 7.2% following the results, despite achieving a record-high gross margin.
The Danish audio equipment maker saw revenue drop to DKK 517 million from DKK 544 million in the same quarter last year, with a 4% decline in local currencies. The revenue decrease primarily reflected lower sell-in as monobrand partners reduced inventories, though like-for-like sell-out increased by 1%.
Despite the revenue decline, Bang & Olufsen achieved a record gross margin of 58.7%, up 3.5 percentage points from 55.2% in the year-ago quarter. However, EBIT before special items worsened to -DKK 27 million compared to -DKK 17 million in the first quarter of the previous year.
"We continued our strategy execution in Q1 by investing in future profitable growth. Although revenue declined by 4%, we are pleased that we once again achieved a record-high gross margin and our win cities experienced strong demand, leading to double-digit growth in line with our strategy," said CEO Kristian Teär.
The company’s company-owned stores and e-commerce posted double-digit growth, while revenue from branded channels declined by 12%, or 10% in local currencies. Free cash flow deteriorated to -DKK 135 million from -DKK 36 million a year earlier.
Bang & Olufsen maintained its full-year outlook, projecting revenue growth of 1% to 8% in local currencies, an EBIT margin before special items between -3% and 1%, and free cash flow between -DKK 100 million and 0.
The company also announced the upcoming launch of its new Beo Grace earpieces in September, marking the start of celebrations for Bang & Olufsen’s 100th anniversary.