REG - Gear4music - Half Year Trading Update

Gear4music (HOLDINGS)Announcement

20/10/2022 07:01

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RNS Number : 4639D  Gear4music (Holdings) PLC  20 October 2022

20 October 2022

 

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 2022.

 

 £m                                    6m to 30 Sept 2022  6m to 30 Sept 2021  % Change on FY22 H1

                                       (FY23 H1)           (FY22 H1)
 UK sales                              35.5                36.7                -3%
 European and Rest of the World sales  30.8                28.0                +10%
 Total sales                           66.3                64.7                +2%

 

FY23 H1 Highlights

 

-     Total sales growth of 2% despite the challenges reported in our 9
September 2022 trading update

-     Stronger European growth of 10% reflects the successful rollout of
our Irish and Spanish distribution hubs last year

-     FY23 H1 gross margin expected to be 26.3% (FY22 H1: 28.0%),
reflecting targeted stock reductions

-     Gross profit expected to be £17.4m (FY22 H1: £18.1m)

-     Net debt of £21.8m at 30 September 2022, £2.4m lower than at 31
March 2022

Trading Outlook

 

-     Improved trading momentum during H2 to date

-     Maintaining expectation of a return to pre-Covid, H2 weighted
trading seasonality*

-     Strong levels of inventory going into peak trading period

-     Full-year outlook in-line with recently updated consensus market
expectations**

 

Gear4music's Chief Executive Officer, Andrew Wass, said:

"We are pleased to have delivered sales growth during FY23 H1, a period which
was impacted by the challenges reported in our 9 September 2022 trading
update, and by the mourning period for Queen Elizabeth II including the
additional UK bank holiday in mid-September.

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 £21.8 million at the end of
September, comfortably within our £35m facility. We expect net debt will
reduce further by the end of the current financial year following our 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 H2. The Board therefore remains confident that results for the full
financial year will be in-line with recently updated consensus market
expectations**."

The Group will report Interim results for the six months ended 30 September
2022 on 15 November 2022.

* H1 sales as % of full-year sales were 44% in FY22, 45% in FY21, 41% in FY20,
36% in FY19 and 39% in FY18.

** Gear4music believes that current consensus market expectations for the year
ending 31 March 2023 are revenue of £155.1 million, EBITDA of £8.9 million
and profit before tax of £1.1 million.

ENDS

Enquiries:

 

 Gear4music                                                   +44 (0)20 3405 0205

 Andrew Wass, Chief Executive Officer

 Chris Scott, Chief Financial Officer

 Singer Capital Markets - Nominated Adviser and Joint Broker  +44 (0)20 7496 3000

 Peter Steel/Amanda Gray, Corporate Finance

 Tom Salvesen, Corporate Broking

 Investec Bank plc - Joint Broker                             +44 (0)20 7597 5970

 David Flin

 Alex Wright

 Alice King

 Alma PR - Financial PR                                       +44 (0)20 3405 0205

 David Ison                                                   Gear4music@almapr.co.uk

 Lily Soares Smith

 Joe Pederzolli

 Josh Royston

 

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.

 

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