Gear4music cuts losses after jump in international revenue

(Sharecast News) - Gear4music on Tuesday reported a narrowed interim loss as revenue improved on the back of international growth, though fierce competition hampered UK sales.
The online musical equipment retailer recorded a loss before tax of £0.3m for the six months ended 30 September, compared with a loss of £0.5m for the half year period ended 31 August 2018.

Revenue increased by 16% to £49.4m as international revenue grew by 33% to £6.1m, while UK sales edged 3% higher to £24.8m as the AIM traded company said it faced a highly competitive domestic other-brand market.

The total number of visitors to Gear4music's website and mobile site increased by 33% and 66% respectively, with total customer numbers rising by 27% to 348,000.

However, average order value fell by 6% to £120.05 and conversion rates declined from 3.2% to 3.0%.

In the remaining months of the calendar year, the company will focus on improving profitability rather than driving growth in market share, particularly in the UK.

Chief executive Andrew Wass said: "Having appropriately reconfigured the business, we now expect gross margins to be higher and revenues to be lower than previous guidance, reflecting our focus this year on building a sustainable platform for growth in all areas."

Wass added that the business was well-positioned to trade in line with its full year earnings expectations.

Analysts from Peel Hunt said: "Gear4Music was thorough in its pre-close statement so there isn't masses here to get excited about in terms of new news. The strategy of pursuing only profitable sales as opposed to sales for their own sake is now set in stone, and whilst the headline growth in the UK isn't stellar as a consequence, profit delivery is steady."

Gear4music shares were down 7.22% at 225.00p at 1022 GMT.