Last checked at 21 Apr 2022 07:00
21 April 2022
Gear4music (Holdings) plc
Year-End Trading Update
Gear4music (Holdings) plc ("Gear4music" or "the Group"), the largest UK based online retailer of musical instruments and music equipment, today announces a year-end trading update covering the 12 months to 31 March 2022.
£m | 12m to 31 Mar 2022 | 12m to 31 Mar 2021 | 12m to 31 Mar 2020 | % Change on FY21 | % Change on FY20(1) |
UK sales | 82.6 | 78.7 | 61.8 | +5% | +34% |
European and Rest of the World sales | 65.0 | 78.8 | 58.5 | -18% | +11% |
Total sales | 147.6 | 157.5 | 120.3 | -6% | +23% |
FY22 Highlights (1)
· Strong financial and operational progress compared with FY20 pre-Covid trading
· Gross margins remained strong at 27.8% (FY21: 29.5%; FY20: 25.9%)
· EBITDA now expected to be £11.0m(2) (FY21: £19.8m; FY20: £7.8m)
· Revenues and EBITDA slightly lower than FY22 consensus market expectations(3) due to weaker than expected consumer demand during February and March 2022
· Strong levels of inventory across all distribution centres to support conversion in FY23
· AV.com now fully operational, with accelerated progress expected during FY23
(1) FY20 shown for comparison as FY21 was exceptional due to the positive impact of COVID-19 lockdowns
(2) Subject to audit. Includes £0.2m of one-off M&A costs and £0.3m share option costs. Final results to be announced in June 2022.
(3)Gear4music believes that consensus market expectations for the year ending 31 March 2022 prior to release of this announcement were revenues of £149.2 million and EBITDA of £12 million
Gear4music's Chief Executive Officer, Andrew Wass, said:
"I am pleased to report strong revenue and profitability growth during FY22 compared against pre-pandemic levels. Although FY22 financial performance has been impacted by weaker consumer demand during February and March, we retained a significant proportion of the exceptional gross margins that benefited from Covid lockdowns during FY21. We also achieved a 41% improvement in EBITDA compared with FY20 despite the impact of Brexit. This clearly demonstrates our long-term strategy, focusing on profitable growth, is on track and working well.
We look forward to building on these accomplishments during FY23, supported by a pipeline of new growth orientated initiatives, e-commerce platform upgrades, and our recently launched AV.com website.
Short term inflation-linked overhead cost pressures and weaker consumer confidence across the broader retail landscape will mean the best opportunities for stronger growth during FY23 are likely to be in H2. We are, accordingly, moderating our overall growth expectations for the new financial year, which we believe is the prudent approach in the current environment. During what may be a more challenging FY23 H1 retail environment, sales and margins will be supported with good levels of inventory across our distribution centres, continuing expansion of our European operations to drive European website conversion, and sufficient working capital to continue investing where appropriate.
We believe we have the right operating structure to continue accelerating our market share gains and remain confident in our medium and long-term profitable growth strategy. We look forward to providing further details of our progress when we publish our full FY22 results in June."
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Enquiries:
Gear4music Andrew Wass, Chief Executive Officer Chris Scott, Chief Financial Officer | +44 (0)20 3405 0205 |
Singer Capital Markets - Nominated Adviser and Joint Broker Peter Steel/Amanda Gray, Corporate Finance Tom Salvesen, Corporate Broking | +44 (0)20 7496 3000
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Investec Bank plc - Joint Broker David Flin Alex Wright Harry Hargreaves | +44 (0)20 7597 5970
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Alma PR - Financial PR Rebecca Sanders-Hewett David Ison Josh Royston | +44 (0)20 3405 0205 Gear4music@almapr.co.uk
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About Gear4music (Holdings) plc
Operating from a Head Office in York, Distribution Centres in York, Sweden, Germany, Ireland & Spain, and showrooms in York, 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.
This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"). Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.