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(Sharecast News) - Musical instruments retailer Gear4music reported a drop in interim revenues on Thursday despite seeing modest growth in the UK.
Gear4music said overall revenues were down 6% at £62.6m, with UK revenues up 3% at £36.5m, while Europe and rest of world revenues were off 15% at £26.1m.
The AIM-listed group said its revenue performance principally reflected its focus on prioritising gross margins ahead of sales growth, in what it said continues to be "a challenging market".
Gear4music added that first-half gross margins were expected to be 27.1%, 80 basis points higher than last year, and gross profits were forecast to be £400,000 lower year-on-year at £17.0m.
Looking forward, UK revenues were guided to continue to be stronger than European revenues and the firm also expects to see a "normal" second-half weighting to trading.
Chief executive Andrew Wass said: "We have continued to make good progress with our strategic objectives in what we anticipated would be challenging market conditions. We are pleased to have achieved growth in the UK, whilst our European markets have been impacted by lower consumer demand.
"Mindful of the current trading environment, we have retained our pricing discipline and focused on improving gross margins. In addition, we have taken decisive action to drive further efficiencies and ensure our cost base is appropriately configured to deliver our profitable growth strategy."
As of 1200 BST, Gear4music shares were down 3.67% at 130.05p.
Reporting by Iain Gilbert at Sharecast.com
