REG - Gear4music - Year-End Trading Update

Gear4music (HOLDINGS)Announcement

06/04/2023 07:00

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RNS Number : 5594V  Gear4music (Holdings) PLC  06 April 2023

6 April 2023

 

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 2023.

 £m                                    12m to 31 Mar 2023  12m to 31 Mar 2022  % Change on FY22
 UK sales                              82.0                82.6                -1%
 European and Rest of the World sales  70.0                65.0                +8%
 Total sales                           152.0               147.6               +3%

 

FY23 Highlights

·     FY23 revenues and profits impacted by weaker consumer demand during
February and March

·     Gross margin expected to be 25.7% reflecting significant reduction
in inventory levels through a challenging period for discretionary retail
(FY22: 27.8%; FY20: 25.9%)

·     EBITDA now expected to be in the range of £7.3m - £7.7m (FY22:
£11.0m; FY20: £7.8m)

·     Net debt of £14.5m at 31 March 2023, reduced from £24.2m at 31
March 2022

·     Second-hand trade-in system launched in March 2023 with promising
initial results

·     Further reduction of net debt and a return to more profitable
growth expected during FY24

((1)) Note: Gear4music believes that consensus market expectations for the
year ending 31 March 2023 prior to release of this announcement were revenues
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

 

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

 

"Whilst challenging economic conditions meant we were not able to grow
revenues and profits as intended during FY23, we are pleased to have made good
progress with our objective of significantly reducing the Group's net debt
position, from £24.2m a year ago, to £14.5m as at 31 March 2023.

The further investment into our European distribution infrastructure during
FY22 underpinned our progress in Europe during FY23, although high rates of
inflation continue to squeeze consumer spending on discretionary items across
all of our markets. In the UK, as previously announced, courier disruption
impacted trading during our busiest period.

We are confident, however, of profitability recovering in FY24 as growth
initiatives such as AV.com gain traction and the benefits of our continued
focus on overhead cost efficiencies filter through.

In March 2023 we strengthened our position as the UK's leading retailer of
musical instruments and equipment by launching our latest growth initiative,
entry into the second-hand market. Our proprietary second-hand trade-in system
simplifies the process for consumers of selling their equipment, providing
instant trade-in prices across thousands of products*.

Customer trade-in take-up has been encouraging during the initial soft-launch
period and, as we scale-up the number of products available for trade-in and
launch the system across Europe, we are confident our second-hand platform
will help to support a return to stronger growth in the business.

Although the current economic challenges are reflected in our FY23 results, we
have taken decisive actions to ensure the Group continues to be appropriately
configured and well-funded. As FY24 progresses, we expect to make further
progress in reducing our net debt, and believe we are well positioned to
return to profitable growth."

*7,500 products as of 03 April 2023

 

- 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, 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 Yamaha, Roland 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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