Trading Update

RNS Number : 5360A

musicMagpie plc

26 September 2022

 

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018.

 26 September 2022

musicMagpie plc

("musicMagpie", or "the Group")

TRADING UPDATE

musicMagpie, a circular economy pioneer specialising in refurbished consumer technology in both the UK and US, announces an update on current trading and outlook.

In the Group's Interim Results announced on 27 July 2022 it noted that, despite the current challenging macroeconomic environment, it expected an improved trading performance in the second half of the financial year.  Whilst it still expects that second half profitability will be a substantial improvement on the first half, the performance of Consumer Technology (which represents around two thirds of Group revenue) has been weaker than anticipated and margin pressures have persisted.

Cautious consumer behaviour in August and September to date has seen slower growth of outright sales on the musicMagpie store, which the expansion of other sales channels, including the positive launch on Back Market in May 2022, has not been able to fully offset. 

The Group's successful and growing device rental service is also reducing outright sales as customers choose to rent instead of making outright purchases.  Whilst tempering results for the current financial year, rentals are significantly more profitable to the Group over the life of the device and have strategic importance given they provide recurring revenue and profitability growth in future years.

Historically, October and November have been material contributors to overall Group performance, with heightened activity and consumer interest around the Black Friday sales period, in particular.  Whilst the Group continues to expect that Black Friday will prove to be a peak trading period, it now believes it is prudent to reduce its expectations for contribution from this period due to the worsening economic outlook and increasing cost of living pressures on the UK consumer.

Accordingly, the Group now expects that revenue generated in the second half will show lower growth over the first half than previously expected and that profitability for the year to 30 November 2022 will be below its previous expectations and those of the market.

The Group continues to have a strong balance sheet and had net debt of £7.5m at close of business on 31 August 2022. A new £30m committed revolving credit facility was entered into on 26 July 2022 to allow the Group to continue to invest in the rental offering and the SMARTdrop kiosk roll-out with ASDA, which remains on track to complete by the end of the financial year.

Looking further ahead, the Board remains confident in the Group's strategy and in its medium-term growth prospects, underpinned by the growing and differentiated rental proposition.

Enquiries

musicMagpie plc Steve Oliver, CEO Ian Storey, COO Matthew Fowler, CFO	Tel: [phone]
Peel Hunt (Nominated Adviser and Joint Broker) Paul Gillam Tom Ballard James Smith	Tel: [phone]
Shore Capital (Joint Broker) Malachy McEntyre Mark Percy Daniel Bush John More	Tel: [phone]
Powerscourt (Financial Public Relations) Rob Greening Genevieve Ryan Sam Austrums	Tel: [phone]

The person responsible for arranging for the release of this announcement on behalf of the Company is Steve Oliver, CEO.

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. Over 400,000 consumer technology products were resold in FY21. In addition, the Group re-sells approximately 2,500 tonnes of books and disc media each year that could have ended up as waste. During 2021, musicMagpie's UK consumer tech and disc media customers, along with its trade partners, helped to save over 50,000 tonnes of CO2 by buying, selling and renting with the Group - an amount equivalent to providing heating for over 18,000 homes. 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 4.5* rating on UK Trustpilot with over 240,000 reviews. 

For further information please visit: www.musicmagpieplc.com

 

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