Half Year Trading Update

RNS Number : 8679O

Gear4music (Holdings) PLC

13 October 2021

 

13 October 2021

Gear4music (Holdings) plc

Half Year Trading Update

Gear4music (Holdings) plc ("Gear4music" or "the Group"), the largest UK based online retailer of musical instruments and music equipment, today announces a trading update for the six months to 30 September 2021.

£m	6m to 30 Sept 2021 (FY22 H1)	6m to 30 Sept 2020 (FY21 H1)	6m to 30 Sept 2019 (FY20 H1)	% Change on FY21 H1	% Change on FY20 H1
UK sales	36.7	36.7	24.8	-	+48%
European and Rest of the World sales	28.0	33.5	24.6	-16%	+14%
Total sales	64.7	70.2	49.4	-8%	+31%

FY21 H1 Highlights

-  Total sales of £64.7m down 8% when compared to the exceptionally strong FY21 H1

-  Robust UK sales, in line with FY21 H1

-  European sales down 16% due to post-Brexit challenges

-  New European distribution centres became operational in September 2021 to address post-Brexit challenges

-  Gross margins remain strong at 28.0% (FY21 H1: 28.6%; FY20 H1: 25.2%)

-  Gross profit of £18.1m (FY21 H1: £20.1m; FY20 H1: £12.5m)

-  Acquisition of AV Distribution Ltd on track to complete by December 2021

-  Strong levels of inventory going into peak trading period

-  Trading for the full-year in-line with consensus market expectations*

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

"We are pleased to report that trading during FY22 H1 has been in line with the Board's expectations which, as previously reported, was not expected to meet the same level of trading as during the exceptional FY21 H1 period that was significantly enhanced by COVID lockdowns.

With a 280bps improvement in gross margin relative to FY20 H1, we are particularly pleased to have retained a large part of the gross margin upside achieved during FY21 H1, alongside strong two-year sales growth.

Our previously announced new Irish and Spanish distribution centres have now become operational, which following the challenges of Brexit, we expect will positively impact our European sales during FY22 H2 by largely eliminating cross border shipments, and increasing the breadth, strength and capacity of our delivery proposition within Europe.

The acquisition of AV Distribution Ltd, an online retailer of Home Cinema and HiFi equipment, is on track to complete by December 2021, which will significantly increase the Group's addressable market size. Preparatory work to integrate AV Distribution Ltd is progressing well, and we expect to launch AV.com in January 2022 following our peak Christmas trading period.

Whilst the musical instruments and equipment market is not immune to global supply chain issues and increased shipping costs, we are well placed to continue minimising the impact of this situation, having deliberately and significantly increased on-hand stock from £23.3 million at 30 September 2020, to £30.4 million at 30 September 2021**.  

As such, the Board is confident that results for the full financial year will be in-line with consensus market expectations*."

The Group will report Interim results for the six months ended 30 September 2021 on 16 November 2021.

* Gear4music believes that current consensus market expectations for the year ending 31 March 2022 are revenue of £156.6 million, EBITDA of £14 million and profit before tax of £7.3 million.

**On-hand stock excludes stock in transit

ENDS

Enquiries:

Gear4music Andrew Wass, Chief Executive Officer Chris Scott, Chief Financial Officer	[phone]
Singer Capital Markets - Nominated Adviser and Joint Broker Peter Steel/Amanda Gray, Corporate Finance Tom Salvesen, Corporate Broking	[phone]
Investec Bank plc - Joint Broker David Flin Alex Wright Harry Hargreaves	[phone]
Alma PR - Financial PR Harriet Jackson Josh Royston Faye Calow	[phone] [e-mail]

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 Regulation (EU) No 596/2014.

 

END

 

 

TSTBLLLFFBLEFBF