Good morning!

Paul added further sections to yesterday 's report, which now includes:

It's available at this link.

Today, I'm going to start by covering £G4M (Gear4Music) and Crawshaw (LON:CRAW).

Regards,

Graham



£G4M (Gear4Music)

  • Share price: 740p (-4%)
  • No. of shares: 21 million
  • Market cap: £155 million

Trading update

This is a fast-growing online retailer of musical instruments, which is the UK's largest.

Not having purchased a musical instrument in many years, I've just been doing a little bit of googling to see who else is prominent when you search to buy musical instruments online.

It looks like the biggest player in Europe is Thomann (external link), a family-owned German business in Bavaria. It is several times larger than G4M, earning revenues of €525 million back in 2013, according to Wikipedia. By contrast, G4M is forecast to earn £81 million in revenue during the latest financial year.

It's a fragmented marketplace. According to an Edison research note, Thomann's market share in 2016 was 13%, making it by far the largest company in the sector.

So can G4M catch up? The growth rates are certainly encouraging. Today's trading update includes the following table:

5a4f5e8aa4095G4M_20180105.PNG

Christmas is a key buying period for G4M, making this an important update for the company's annual performance.

If I go back and compare this update versus the equivalent one from last year, growth rates last year were as follows: UK + 29%, International +129%, and total + 55%.

We can also compare against the growth rates in the interim results. In those results UK sales were +30%, International sales were +70%, and total sales were +44%. 

It's easier to grow from a smaller base, of course. But perhaps today's slight reduction in the share price reflects that…

Unlock the rest of this Article in 15 seconds

or Unlock with your email

Already have an account?
Login here