Half Year Pre-Close Trading Update

Musicmagpie

19/06/2023 07:00

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RNS Number : 0561D  musicMagpie plc  19 June 2023

19 June 2023

musicMagpie plc

("musicMagpie", or "the Group")

HALF YEAR PRE-CLOSE TRADING UPDATE

 

Adjusted H1 EBITDA up 7.7%; trading in line with Board expectations

 

musicMagpie, a circular economy pioneer specialising in refurbished consumer
technology, announces an unaudited pre-close trading update for the six months
ended 31 May 2023 ("H1 2023").

 

Following a challenging start to H1 2023, with postal strikes and low consumer
confidence impacting December and January, trading performance strengthened
from February onwards, driving a strong Q2 2023 that delivered EBITDA of
£2.0m, up 42% on Q2 2022.  Overall EBITDA for the traditionally quieter
first six months of the year was £2.8m, up 7.7% on H1 2022 and in line with
the Board's expectations.

 

During the period, the Group focussed on cost control and increasing gross
margins rather than growing revenues on lower margin products.  Consumer
Technology revenue for H1 2023 was £41.2m, comprising two thirds of total
revenue (H1 2022: £46.0m). Sales of Disc Media and Books continued their
anticipated decline, falling to £20.8m (H1 2022: £25.3m).

 

Gross margin increased strongly by around 3.1 percentage points year on year.
The improvement was driven by: a combination of a higher proportion of product
sourced directly from consumers; an increase in the proportion of sales made
through the musicMagpie store; and the increasing contribution from rental
subscriptions. These factors, combined with cost control measures delivering
lower overheads, contributed positively to the strong Q2 2023 performance.

 

Active customers to the rental service for Consumer Technology products
increased to c.39,000 (31 May 2022:  24,000, 30 Nov 2022: 30,500).  H2 2023
will see the launch of an enhanced Buy Now Pay Later option which will benefit
Consumer Technology sales and increase choice for consumers. It will sit
alongside the Group's evolving rental offer which will focus on more
profitable, higher credit quality customers.  This will help support long
term profit growth whilst managing working capital, and thus debt utilisation,
more effectively.

 

The Group is pleased to announce that it has extended its £30.0m Revolving
Credit Facility by one year to provide committed facilities through to July
2026. Net debt on 31 May 2023 was £13.7m.

 

As evidenced in previous years, the Group has a much stronger second half
weighting to its financial year, owing in part to seasonal peak trading around
the Black Friday weekend in November. This seasonality, combined with the
continued focus on own store sales and the strong performance achieved in Q2
2023, means that the Board is confident in the Group achieving its full year
expectations, whilst remaining cognisant of the current tough consumer market.

 

Steve Oliver, Chief Executive Officer & Co-Founder of musicMagpie, said:

"We are pleased with our performance in what is always the seasonally quieter
half of the year for musicMagpie. It is especially gratifying to see that our
profit improvement has been driven by an increased margin. This has been
achieved both by focusing on higher margin sales through our own musicMagpie
online store, as well as the continued strong growth of our rental offering.
While we remain very mindful of the current tough consumer environment, the
momentum in our business as we head into H2 means that we are confident of
achieving our full year expectations."

 

Notice of results

 

The Group will announce its interim results for the six months ended 31 May
2023 on Thursday 13 July 2023.

 

- Ends -

Enquiries

 musicMagpie plc                               Tel: +44 (0) 870 479 2705

 Steve Oliver, CEO

 Ian Storey, COO
 Matthew Fowler, CFO

 Shore Capital (Nominated Adviser and Broker)  Tel: +44 (0) 20 7408 4090
 Mark Percy
 Malachy McEntyre
 Daniel Bush
 John More

 Powerscourt (Financial Public Relations)      Tel: +44 (0) 20 7250 1446

 Rob Greening

 Genevieve Ryan

 Sam Austrums

 

About musicMagpie

Operating through two trusted brands - musicMagpie in the UK and decluttr in
the US - musicMagpie's core strategy is simple: to provide consumers with a
smart, sustainable and trusted way to buy, rent and sell refurbished consumer
technology and physical media products with sustainability running to the very
heart of its operations. Founded in 2007, the Group has an established
presence in the UK, with operations in Stockport, Greater Manchester, and
in the US in Atlanta, Georgia.

musicMagpie has a strong environmental and social focus, as demonstrated by
its trademarked 'smart for you, smart for the planet' ethos. Nearly 400,000
consumer technology products were resold in FY22. In addition, the Group
re-sells approximately 10m books and disc media each year that could have
ended up as waste. During 2022, musicMagpie's UK consumer tech and disc
media customers, along with its trade partners, helped to save over 43,000
tonnes of CO2 by buying, selling and renting with the Group - an amount
equivalent to providing heating for over 16,000 homes, or powering more than
50,000 flights from London to New York.  The Group has been given the London
Stock Exchange's Green Economy Mark in recognition of its contribution to the
global green economy.

When selling to musicMagpie, the customer is offered a fixed valuation via the
website, provided with free logistics to ship the products and (subject to it
being 'as described') receives payment for their product on the day of arrival
at the Group's warehouse. The Group also recently partnered with Asda to give
customers the option of using its SMARTDrop Kiosks in store for a fast and
easy way to recycle phones for instant cash. Customers purchasing from
musicMagpie receive branded refurbished product for a fraction of the price of
buying new.

The Group has the highest number of seller reviews on both Amazon and eBay and
has consistently achieved extremely positive feedback scores. The Group also
has a 4.4* rating on UK Trustpilot with over 259,000 reviews, and is
honoured to have won Best Refurbished in the Uswitch Telecoms Awards 2023 as
well as Best Online Retailer and Best Secondary Market Provider at the Mobile
News Awards 2023.

For further information please visit: www.musicmagpieplc.com
(https://url.avanan.click/v2/___http:/www.musicmagpieplc.com/___.YXAxZTpzaG9yZWNhcDphOm86MmVhMWEwZTkwZjZlZTI4YTYzMmVjYzNlYzA4ZjFiNmQ6Njo1OGU3OjllMDBiNjdkNjA1ZjI5ZDM3NGU2NzEwNzkzMDQxMTQ5NDZmNzVjOGUzMTVjZGE1YmY3ZGEzYjFkNzY4MjVmYzc6cDpG)

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