German producer of luxury televisions Loewe has gotten three months of protection against its creditors from the court. During that period the ailing company will have to find new investors and it will have to formulate a recovery plan. This should include expanding its products to include sets for the higher middle segment of the market.
Focus too narrow
That step is necessary because the company has made a loss in the past three years. Last year that loss even tripled to 29 million euro. There is also no improvement on the horizon, unless the company quickly undertakes some action.
Loewe suffered greatly from the pressure on the prices of its devices, but kept focusing on the higher segment of the market. The competition of Asian players such as Samsung and Panasonic proved too much though. Furthermore the company almost exclusively kept focusing on the European market, where the demand is far lower.
Sales of the company dropped from 374 million euro in 2008 to 250 million euro in 2012. In the first quarter of 2013 that downslide continued: compared to the previous year sales in that period dropped 35 percent to 43.5 million euro.
On the lookout for downstreaming and synergies
The management of Loewe wants to use these three months to better its strategy and to look for a new partner. This should allow the company to benefit from synergies when it comes to product development, purchasing, production and sales. About a year ago there was a strong rumour Apple wanted to buy the producer of luxury televisions, but this did not come into reality.
Loewe also wants to start bringing a wider range of products onto the market and it wants to start offering TVs of 800 euro through chains such as Media Markt and Saturn. It also wants to improve the positioning of the brand and emphasise “my perfect entertainment” more.
Management hopes to announce more news about potential investors during the shareholder’s meeting, which will take place on 31 July in Berlin.
The protection against creditors is only valid for Loewe AG and subsidiary Loewe Opta GmbH. Other parts of the company are not part of the decision of the court. Deutsche Bank and Commerzbank are two of the largest creditors of Loewe.