Gear4Music suffers as UK costs crisis hits demand
Gear4music says its full-year sales and earnings are set to fall slightly short of market expectations as consumer confidence and international sales weaken.
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Shares of the York, northern-England based company fell as much as 28% after it said full-year revenue and Ebitda would be “slightly lower” than consensus expectations. The firm’s market value now stands at about £55 million pounds.
The business has previously said its sales were affected by Brexit-related challenges in 2021, a year in which the new Trade and Cooperation Agreement between the UK and the European Union introduced new bureaucracy including customs checks.
Today Gear4music said in a full-year trading update that it expected sales to come in at £147.6m in the year to March 31 2022 – 6% down on last year, but 23% ahead of two years ago.
While UK sales have continued to grow at a slower pace than during the pandemic, its sales in Europe are almost a fifth lower than the previous year.
In the UK, full-year sales stand at £82.6m – 5% higher than the previous year, and 34% ahead of two years ago.
Sales in Europe and the rest of the world are expected to come in at £65m – 18% lower than the year before but 11% higher than in 2020. EBITDA is expected to come in at £11m – down from £19.8m last year but ahead of the £7.8m it reported in 2020.
Looking ahead, Gear4music says it now has strong levels of inventory across its distribution centres – including in Europe – that should support sales in its current full year. It is also looking to sales from its new specialist audio-visual equipment business AV.com, and will invest in ecommerce platform upgrades.
Gear4music chief executive Andrew Wass, said: “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.”
