Losses shrink at musicMagpie helped by record Black Friday trading
Annual pre-tax losses at musicMagpie have shrunk, in the year to November 30, 2022, the Stockport-based business said today, helped by a record Black Friday week’s trading.
The circular economy pioneer specialising in refurbished consumer technology in the UK and US announced stable revenues for the year of £145.3m, while the previous year’s £14.8m pre-tax loss was reduced to £1.5m this year.
Active subscribers to device rental service increased to 30,500 at fiscal year end, and 36,000 at February 28, 2023.
The group said its rental book provides recurring revenues, with year-end active renters providing around £3.1m of committed revenue into financial year 2023. Post reporting period end, 24-month rental contracts have been launched.
The Magpie Circular offering was extended in October 2022, with the launch of corporate renting, and transport group Stagecoach as the first customer.
Also, the SMARTDrop kiosk programme was completed with kiosks installed across around 290 Asda stores in the UK with more than £10m paid out to date and with further plans to install in other high footfall areas during 2023.
And musicMagpie expanded its third party platforms to four with Back Market added in May 2022 and Walmart post year end – adding to long-standing relationships with Amazon and eBay.
The group reported its consumer technology revenue was up 12.2% to £96.6m representing 66% of group revenue.
Net cash from operations was £6.2m, compared with £2.6m in 2021, and the group has a committed three-year £30m revolving credit facility with HSBC UK and Natwest entered in July 2022 to help drive future rental growth.
Net debt at year end stood at £7.9m, up from £1.8m in cash the previous year, following key investment in rental assets.
The board said it remains confident in the group’s strategy in the current financial year, and its medium term growth prospects, underpinned by the growing and differentiated rental position.
This is after having to navigate the challenges of the well-publicised postal strikes in the first quarter of trading for 2023, as well as the tough consumer environment and continuing macroeconomic uncertainty.
However, the first quarter period traditonally has a low contribution to the full year performance.
Chief executive Steve Oliver, who is speaking at TheBusinessDesk.com’s Leadership Awards at Manchester’s Midland Hotel on March 30, said: “In common with many consumer-facing businesses, this has been a tough year for musicMagpie in the face of a rapidly changing macroeconomic environment.
“However, against this backdrop I am delighted with the performance of our core consumer technology business, which grew by over 12% and now accounts for nearly 70% of our total revenue.
“We achieved a huge amount in the year, from completing the roll-out of our SMARTDrop kiosks with Asda, significantly growing our consumer rental subscriber base, to adding our products to both Back Market and Walmart and launching our consumer tech rental service for corporates.”
He added: “Our rental subscription service for phones, tablets and other products has continued to grow strongly as both consumers and businesses alike have started to recognise the outstanding value and flexibility that it offers.
“As of 28 February, we had 36,000 active renters on our books, and recently launched a 24-month rental contact which we believe will be even more attractive to customers in the current economic climate.
“While the short term outlook continues to be challenging, we believe our ability to help consumers raise cash and save money positions us well for resilient trading. In the longer term, we remain very confident in musicMagpie’s future prospects – and especially those of our rental business.”
