Last checked at 19 Oct 2023 07:00
19 October 2023
Gear4music (Holdings) plc
Half Year Trading Update
Gear4music (Holdings) plc ("Gear4music" or "the Group"), the largest UK based online retailer of musical instruments and music equipment, today announces a trading update for the six months to 30 September 2023.
£m | 6m to 30 Sept 2023 (FY24 H1) | 6m to 30 Sept 2022 (FY23 H1) | % Change on FY23 H1 |
UK revenues | 36.5 | 35.5 | +3% |
European and Rest of the World revenues | 26.1 | 30.8 | -15% |
Total revenues | 62.6 | 66.3 | -6% |
FY24 H1 Highlights:
- Revenues reflect the previously announced focus on prioritising gross margins ahead of sales growth, in what continues to be a challenging market
- FY24 H1 gross margin expected to be 27.1%, 80bps higher than last year (FY23 H1: 26.3%)
- Gross profit expected to be £17.0m (FY23 H1: £17.4m)
- Net debt reduced by £3.7m to £18.1m at 30 September 2023 (FY23 H1: £21.8m, FY22 H1: £24.2m), reflecting normal seasonal build of inventory ahead of peak
Cost saving initiatives:
- £4.0m annualised cash savings implemented during FY24 H1 that will benefit FY24 H2 onwards:
o Team size reduced by 20% compared with September 2022:
§ £2.5m reduction in software development team annual salaries
§ £1.0m reduction in other annual wages and salaries
§ One-off non-recurring cost of £0.5m
o £0.5m annualised reduction in other Administrative expenses
Trading Outlook:
- UK revenues continue to be stronger than European revenues
- Expectation of a 'normal' H2 weighted trading seasonality
- Well prepared ahead of peak seasonal trading period
- Second-hand continues to perform well and show signs of being a long-term growth driver
- Full-year outlook remains in-line with consensus market expectations*
Gear4music's Chief Executive Officer, 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 we look to leverage the potential of AI driven technologies and further reconfigure the business into a lower cost operation, we will continue to invest into future growth projects such as our second-hand system, ensuring the Group is well positioned to quickly and profitably scale further as economic conditions improve."
The Group will report Interim results for the six months ended 30 September 2023 on 14 November 2023.
* Gear4music believes that current consensus market expectations for the year ending 31 March 2024 are revenue of £161.7 million, EBITDA of £9.8 million and profit before tax of £1.2 million.
ENDS
Enquiries:
Gear4music Andrew Wass, Chief Executive Officer Chris Scott, Chief Financial Officer | +44 (0)20 3405 0205 |
Singer Capital Markets - Nominated Adviser and Sole Broker Peter Steel/Sam Butcher, Corporate Finance Tom Salvesen, Corporate Broking | +44 (0)20 7496 3000
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Alma - Financial PR Rebecca Sanders-Hewett Joe Pederzolli David Ison | +44 (0)20 3405 0205 Gear4music@almastrategic.co.uk
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About Gear4music (Holdings) plc
Operating from a Head Office in York, Distribution Centres in York, Bacup, Sweden, Germany, Ireland & Spain, and showrooms in York, Bacup, Sweden & Germany, the Group sells own-brand musical instruments and music equipment alongside premium third-party brands including Fender, Yamaha and Roland, to customers ranging from beginners to musical enthusiasts and professionals, in the UK, Europe and the Rest of the World.
Having developed its own e-commerce platform, with multilingual, multicurrency websites delivering to over 190 countries, the Group continues to build its overseas presence.