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(Sharecast News) - Musical instruments and equipment retailer Gear4music reported total first-half sales growth of 2% to £66.3m in a trading update on Thursday, despite the challenges it described in September.
The AIM-traded firm said stronger European growth of 10% to £30.8m reflected the successful rollout of its Ireland and Spain distribution hubs last year, while UK sales slipped 3% to £35.5m.
It said first-half gross margins were expected to have slipped to 26.3% for the six months ended 30 September, from 28% a year earlier, reflecting targeted stock reductions.
Gross profit was expected to come in at £17.4m, down from £18.1m, while the company narrowed its net debt to £21.8m, down £2.4m from 31 March.
Looking ahead, Gear4music reported "improved" second-half trading momentum to-date, as it maintained its expectations for a return to the pre-Covid, second-half-weighted trading seasonality.
It said it had "strong" levels of inventory going into the peak trading period, while its full-year outlook was in-line with the recently-updated consensus market expectations.
"We are pleased to have delivered sales growth during the first half - a period which was impacted by the challenges reported in our 9 September trading update, and by the mourning period for Queen Elizabeth II including the additional UK bank holiday in mid-September," said chief executive officer Andrew Wass.
"Whilst mindful of continued uncertainty and volatility across the consumer environment, we are also pleased to report that trading momentum in both our UK and European markets improved towards the end of September, and we have continued to perform well during October to date.
"Net debt reduced by £2.4m over the period to £21.8m at the end of September - comfortably within our £35m facility."
Wass said the company expected net debt would reduce further by the end of the current financial year, following its peak trading period.
"We have strong levels of inventory heading into our peak trading period, our infrastructure is performing well, and we are on track to deploy several new growth orientated website upgrades alongside further productivity enhancements during the second half.
"The board therefore remains confident that results for the full financial year will be in-line with recently updated consensus market expectations."
Gear4music said it would report its interim results for the six months ended 30 September on 15 November.
At the close on Thursday, shares in Gear4music Holdings were up 5.14% at 112.5p.
Reporting by Josh White at Sharecast.com.
