Consumer tech group back on course after recovering from tough first quarter
MusicMagpie, the Stockport-based circular economy pioneer specialising in refurbished consumer technology in the UK and US, saw interim sales fall and pre-tax losses increase following a tough first quarter.
In the six months to May 31, 2023, it reported turnover of £61.929m, down from £71.288m, while a pre-tax loss of £3.176m compared with a pre-tax loss of £1.002m the previous year.
The business blamed a challenging start to its first half, with postal strikes and low consumer confidence impacting December and January.
However, it said its trading performance strengthened from February onwards, driving a strong quarter two EBITDA which was up 42% on the same period in 2022.
The business had a net debt of £13.6m, up from £7.8m at November 30, 2022, consistent with board expectations, with £4.5m invested into Consumer Technology rental assets during the period.
Post period end, musicMagpie extended its committed £30m Revolving Credit Facility by 12 months to July 2026.
The group reported strong progress from its device rental subscription service, increasing to around 39,000 active subscriptions as at May 31, 2023, compared with 24,000 a year ago.
Its near-term corporate customer pipeline is building and there are 2,200 devices currently under rental to businesses.
It has entered the second half with approximately £4m contractually committed forward revenue, before renewals or growth in new subscriptions.
Its SMARTDrop Kiosks now account for 45% of musicMagpie’s Consumer Technology sourcing in the UK, and the group said its cost reduction measures reduced overheads by £800,000 in the first half of 2023 versus the same period in 2022.
Looking ahead, the group said, as usual, the majority of its full year profits are expected in the seasonally important second half.
Current trading conditions remain challenging due to the prevailing macro-economic factors in the market, but the strong momentum seen in the second quarter has, thus far, been carried into the early part of quarter three and this, combined with the focus on gross margin by continuing to buy for less and sell for more, and cost savings introduced, mean the board is confident of the group meeting its full year expectations.
Chief executive, Steve Oliver, said: “After a challenging first quarter, I am pleased with the performance of the business during Q2 and the momentum that has been carried over into H2, which is traditionally the seasonally more important half for musicMagpie.
“By focusing on ‘buying and selling for more margin’, which includes sourcing more products directly from consumers and increasing the proportion of sales made through the musicMagpie store, we have delivered a strong improvement in Consumer Technology gross profit.”
He added: “Looking ahead, we have a clear plan for our rental business and for our enhanced Buy Now Pay Later offering, which should drive sales and make our offering even more attractive to consumers looking to save cash.
“Despite the tough consumer environment, we expect consumers to increasingly look to the refurbished tech market and are confident that the business has the right strategy in place for future profit growth.”
