GrussGott

Bang & Olufsen Ousts CEO
Lionel Laurent, 01.10.08, 11:30 AM ET

LONDON -

The chief executive of Danish consumer electronics firm Bang & Olufsen became 2008's first casualty of the European retail slowdown on Thursday, only one day after poor results sent investors into panic mode.

Bang & Olufsen (other-otc: BGOUF - news - people ) chairman Jorgen Worning said that Torben Ballegaard Sorensen, who has helmed the company as president and chief executive officer since 2001, was fired "with immediate effect." Expressing the board of directors' desire to concentrate on Bang & Olufsen's "core business" of audio and video, Worning also blamed "disappointing" sales in recent years for the management shake-up.

Shares in Bang & Olufsen slipped 10.50 Danish kronor ($2.07), or 3.3%, to 312.50 kronor ($61.68), during afternoon trading in Copenhagen. The stock fell 28.5% on Wednesday after the electronics manufacturer reported a 61.3% drop in second-quarter profits, down to 49.3 million Danish kronor ($9.8 million), and cut its full-year pre-tax profit guidance to 360-400 million kronor ($71.0-$78.9 million) from 540-570 million kronor ($106.6 million-$112.5 million).

"This is very surprising to me, actually," said Kenneth Winther, analyst with Capinordic. "The bad result which they announced yesterday was mostly a macroeconomic problem, in a global downturn for consumer electronics in general."

Winther said the next chief executive of Bang & Olufsen would have to limit the impact of a "difficult" environment for retailers, largely by cutting costs and increased outsourcing. European consumers are struggling to cope with food and energy inflation, and the wider macroeconomic slowdown is also contributing to retail worries. (See "Inflation Up, Growth Down In Europe")

The comments from Bang & Olufsen's Worning also suggest that the company may choose to exit fields such as automotive appliances, which the firm has offered since 1997.

British electronics retailer DSG International (other-otc: DSITY - news - people ) and food and clothing chain Marks & Spencer (other-otc: MAKSY - news - people ) are two high-profile companies that have frightened investors with disappointing results over the Christmas period. And given the challenges ahead as consumers rein in spending and costs continue to climb, it is not surprising that many retailers are forecasting little improvement for the rest of 2008.

nirad

IMHO, they can make more money on licensing their class D amp technology than their core business

Roswell

I suggest hearing their $20K set of home audio speakers. the store in Boston sells a pair a week.