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The retailer is considering a fundraising to boost R&D

Shares in luxury stereo and television maker Bang & Olufsen plunged on Friday, after the Danish company reported a larger-than-expected quarterly loss and said it is looking at ways to raise capital and boost growth.

The electronics producer reported a Dkr28m ($5.2m) loss before interest and tax for the three months to the end of February, compared with a loss of Dkr114m a year earlier. Although this represented an improvement, the loss was still bigger than analysts’ median forecast of Dkr13.4m. Revenue increased 3 per cent to Dkr675m. Shares in the group closed down 13 per cent on Friday, at Dkr58.

Bang & Olufsen’s core European business is selling stylish but expensive audio equipment and televisions. While its European business turned around during the quarter, sales of its lower-cost B&O Play range, aimed at a younger market, decreased by 25 per cent.

Lars Topholm, head of research at Carnegie Investment Bank, said the quarterly performance was a cause for concern as B&O Play was intended to “recruit new customers who will subsequently trade up” and drive growth in sales of its more expensive products.

“It’s a target audience that just isn’t very loyal,” said Mr Topholm, who has a “sell” rating on the stock. He added that the evolution of new technologies was shortening product life cycles and pushing up the cost of keeping product offerings up to date.

Bang & Olufsen chief executive Tue Mantoni said that revenues for B&O Play had been hit by a lack of new product launches and dealers focusing on selling more expensive audiovisual equipment.

Performance in China, where Bang & Olufsen is trying to expand through a partnership with Sparkle Roll, a luxury goods company, also disappointed. In 2012, the Danish group entered into a deal with both Sparkle Roll and A Capital, a private equity group, to expand its presence in the Chinese market. But revenues from the country fell during the quarter, the company said.

Bang & Olufsen said it is looking at ways to raise capital to spend on distribution and marketing, as well as funding research and development for new products.

Friday’s share price reaction suggested that investors wanted the company to focus on fixing its current strategy before raising capital, argued Jesper Christensen, an equity analyst at Alm Brand Markets.

Bang & Olufsen also reported that it had been shutting down under-performing stores. Globally, store numbers have been cut from 582 at the end of November to 564 at the end of February, the company said.

Bang & Olufsen said it is looking at ways to raise capital to spend on distribution and marketing, as well as funding research and development for new products.

Friday’s share price reaction suggested that investors wanted the company to focus on fixing its current strategy before raising capital, argued Jesper Christensen, an equity analyst at Alm Brand Markets.

Bang & Olufsen also reported that it had been shutting down under-performing stores. Globally, store numbers have been cut from 582 at the end of November to 564 at the end of February, the company said.