REG - Gear4music - Trading Update

Gear4music (HOLDINGS)Announcement

19/01/2023 07:00

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RNS Number : 1880N  Gear4music (Holdings) PLC  19 January 2023

19 January 2023

 

Gear4music (Holdings) plc

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 three months to 31 December 2022.

 

 £m                                        3m to 31 Dec 2022  3m to 31 Dec 2021  % change on FY22 Q3
 UK revenue                                26.0               26.0               -
 European and Rest of the World revenue    23.5               21.2               +11%
 Total revenue                             49.5               47.2               +5%

 

FY23 Q3 Highlights

 

-     +11% European sales growth reflects successful execution of
infrastructure investment during FY22 to improve European customer proposition

-     UK revenues affected by continued weak consumer sentiment and
consequences of the Royal Mail strikes through December

-     Gross margins of 25.6% (FY22 Q3: 28.4%, FY20 Q3*: 26.2%) reflecting
targeted stock reductions of slower moving product lines

-     Gross profit of £12.7m is 6% lower than FY22 Q3 and 20% higher than
FY20 Q3*

-     Improving labour efficiencies and lower marketing costs largely
offset lower gross margin

-     FY23 EBITDA and net debt reduction in-line with consensus market
expectations**

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

"We are pleased to report that, despite several external challenges, financial
performance during our FY23 peak seasonal trading period was in line with the
Board's expectations.

UK revenues during December were impacted by Royal Mail strikes and the
knock-on disruption of other couriers, which led to longer delivery times and
an earlier pre-Christmas cut-off date than we would expect under normal
trading conditions.

A continuing targeted reduction of both on-hand inventory and net debt,
combined with a period of weaker consumer sentiment and lower own-brand sales
led to subdued gross margins, although tight control over marketing and labour
costs largely compensated for this and we expect margins to recover during
FY24.

As we continue to make good progress with new growth orientated projects, we
remain confident in our long-term profitable growth strategy, and that the
Group is appropriately resourced and well placed to make the most of
opportunities as they arise."

* Last pre-Covid comparator

** 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,
profit before tax of £1.0 million, and pre-IFRS16 net debt of £17.5 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/Sam Butcher, 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

 Joe Pederzolli

 Josh Royston

 

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.

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