REG - Gear4music - Year-End Trading Update

Gear4music (HOLDINGS)Announcement

21/04/2022 07:00

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RNS Number : 8225I  Gear4music (Holdings) PLC  21 April 2022

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."

 

 

- 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

 Harry Hargreaves

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

 Rebecca Sanders-Hewett                                       Gear4music@almapr.co.uk

 David Ison

 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.

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.

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