What's going on?

Late on Monday, Danish luxury electronics company Bang & Olufsen (B&O) reported lackluster results. Investors didn�t like what they heard and sent the stock down 17% on Tuesday.

What does this mean?

B&O�s preliminary annual update showed sales fell almost 14% compared to the year before � more than the 10% decline it forecasted after cutting its forecast twice last year � and was accompanied by a profit margin that also shrank more than expected. Lower-than-expected sales to European customers in B&O�s latest quarter were primarily to blame.


Demand for B&O�s high-end speakers and $20,000 televisions seems to be stalling. The company�s in the midst of a turnaround, so far with limited success � but it does expect this year to improve, although it had originally forecast 10% sales growth last year. That�s partly why the luxury company�s stock has fallen into poverty, down 70% in the last year.

Why should I care?

For markets: Buyers, speak up.

B&O�s share price decline could spark takeover bids, according to some analysts: it might be a desirable discounted target for a buyer able to reignite customer demand and lower costs. Alternatively, some of B&O�s existing shareholders might prefer to rewire the company in private � although B&O rejected a takeover attempt from its largest shareholder in 2016. And it�s not just European luxury companies losing their luster: US jeweler Tiffany & Co missed quarterly sales growth expectations on Tuesday and lowered its annual earnings forecast.

The bigger picture: Where there�s smoke…

This slowdown in high-end spending might be symptomatic of a weaker global economic environment � especially in Europe. Fresh data on Tuesday showed that inflation in May rose more slowly than expected. And as a result, on Thursday the European Central Bank may announce a further delay to its plan to raise eurozone interest rates next year.