Losses confirmed at listed music retailer

York-based musical instruments and equipment business Gear4Music has confirmed its pre-tax losses hit £609,000 during a “challenging” financial year.

The listed retailer Gear4music, which last year made pre-tax profits of £1.5m, has today published its financial results for the 13 months ending 31 March 2019.

While the firm’s revenues hit £118m – a rise from £80m achieved in the previous year – it today said it had made pre-tax losses of £609,000.

Its EBITDA – a measure of operational profitability – stood at £2.2m, down from the £3.5m reported last year.

It comes after the retailer issued a profit warning in January after reaching capacity at its York distribution centre over the Christmas period. It then issued a second profit warning  in April, which saw its share price plummet. The impact of capacity problems at the music retailer’s warehouse before Christmas have badly hit its profitability.

However, this morning the business said it was confident it could continue to grow strongly and improve its profits over the next financial year, adding it had seen its number of active customers increase by 53% to 727,000.

But it reported its gross margin of 22.8% was reduced due to the “highly competitive market.”

Andrew Wass, Chief Executive Officer, said: “Alongside delivering strong revenue growth in the period, we have worked hard to implement a number of commercial and operational initiatives to address the previously reported issues.

“Our FY20 H1 focus is on improving gross margins and ensuring a robust operational infrastructure is in place ahead of our peak H2 trading period. I am pleased to report these actions are already yielding positive results.

“We are confident we have the right strategy, customer proposition, financial resources and focus, to overcome the challenges of FY19, and achieve our objectives of maximising customer satisfaction and delivering value to shareholders.”

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