Gear4music posts drop in half year revenue and profit
Online musical instrument retailer Gear4music has said a year-on-year drop in half year revenue and profits is in line with expectations.
In the six months to 30 September, revenue declined by 8% to £64.7 million while EBITDA came in at £4.8 million compared to £8.5 million in the same period in the prior year.
The company said EBITDA was lower than an exceptional period at the same time last year, but £2.8 million higher than the more comparable period two years ago before the Covid-19 pandemic struck. Revenue was up 31% on the same period in 2019.
Meanwhile operating profit was down £4 million compared to last year but up £2.2 million on two years ago.
Andrew Wass (pictured), Gear4music chief executive, said: “I am pleased to report that following the exceptional period of trading during FY21, group financial performance during FY22 H1 was in-line with the board’s expectations, retaining strong margins and achieving significantly improved profitability compared with the more comparable FY20 H1 trading period.
“FY22 Q1 sales were stronger than expected, which provided the basis for the board to upgrade its expectations on 22 June 2021. However, Brexit related supply chain challenges are persisting for longer than we had previously anticipated, and European Q3 sales to date have been slower than previously expected.”
As a result, the company is trading below its full year consensus market expectations and the board now expects full year EBITDA to come in at not less than £12 million.
Gear4music invested £2 million in its ecommerce platform in the half year and launched additional hubs in Spain and Ireland to build upon its existing European infrastructure. The company said it is confident that the remaining Brexit related challenges will be resolved by the fourth quarter and that its European customer proposition will be significantly strengthened.
Wass added: “With the acquisition of AV Distribution Ltd due to complete in December 2021 followed by the launch of AV.com in January 2022, which will significantly increase our addressable market size, alongside multiple planned upgrades to our ecommerce platform during FY23, we remain confident in our profitable growth strategy.”