Changes to US business signal shift at Music Magpie
Music Magpie, the Stockport-based ecommerce trader has made a pre-tax loss for the year ending November 2023 of £6.8m and has a cost reduction programme underway in its US operation.
The stock market listed circular economy pioneer hopes that a strong Black Friday period which contributed to a 15.4% increase in EBITDA for FY23 will give a lift to future results.
First quarter trading in 2024 has been described as “a positive start to the new financial year” and changes to US operations, the group’s consumer technology buying strategy and cost reduction exercises in the UK give the board confidence in the medium-term prospects.
The results showed top line income dropped from £145.3m last year to £136.6m and an increase in pre-tax losses from £1.5m to £6.8m.
The results announcement emphasised adjusted EBITDA improvement up 15.4% to £7.5m (2022: £6.5m) driven by tight control of margins and costs, an increase in gross margin to 27.7% (2022: 26.3%) with continued focus on margin expansion and gross profit in the consumer technology division increasing 15.8% from £20.2m to £23.4m.
The company has also taken steps in the US to increase gross margins by reducing buying prices, which has reduced volumes, thus selling less product and reducing the headcount in the business, and may stop selling in the US altogether. The company operates in the US through the brand Decluttr.
“If these opportunities continue, we envisage there may become a point where the US Technology business acts purely as a sourcing avenue for the UK rather than a standalone trading business that sells in its own territory,” the company said.
In November 2023 TheBusinessDesk.com reported that Music Magpie was in possible takeover talks with BT and private equity investor Auerlius Group, owner of Footasylum.
The business is still technically in an ‘offer period’ and unable to comment further on the status of any possible bids.
Commenting on the results, Steve Oliver, Chief Executive Officer & Co-Founder of Music Magpie, said: “Following a successful end to FY23 we are pleased with FY24’s Q1 performance. Having recently made changes to our US Consumer Technology buying strategy and operations, and implemented further cost savings in the UK, we believe that musicMagpie is well positioned for the remainder of the year. We expect second-use markets to continue to grow which will complement our strategy of unlocking a ‘world of inventory’ from consumers homes and providing them with a solution that is ‘smart for you, smart for the planet’ across of our existing product categories and potential new product categories. As such we remain confident in musicMagpie’s future prospects.”
