Online retailer lowers its expectations amidst difficult trading environment
York-based online musical equipment retailer, Gear4music, has downgraded its full year revenue expectations with tough trading conditions taking a toll on its performance.
The business says it already expected inflationary pressures to restrict its operating margins during FY23, and despite the weaker consumer environment it managed to achieve sales growth in quarter one.
However, chief executive officer Andrew Wass today warned that trading during July and August was further hit by the cost of living crisis and unusually hot weather across Europe.
“Given the lack of visibility over the timing of any improvement in consumer sentiment and wider macroeconomic conditions as we approach H2, we believe it is now prudent to moderate our full year expectations accordingly,” he said.
“We now expect FY23 revenue to grow to approximately £155m with EBITDA of £9m.”
His latest forecast compares with Gear4music’s previous market expectations for the year ending 31 March 2023 of revenues of £163.9m and EBITDA of £11.9m.
Wass said: “We expected a return to a more normalised seasonal trading pattern during FY23 with less demand during summer months than winter months, and early indications are that trading has improved in September.
“In line with our stated strategy the Group will continue to focus on delivering profitable growth as its first priority.
“Our pipeline of growth orientated projects, including AV.com, continues to make good progress, and we are seeing strong results following last year’s investment into our new European distribution hubs.
“We remain well funded and profitable and the Board retains its confidence in our medium and longer-term profitable growth strategy.”
The Group intends to release a more detailed trading update for the six-month period ending 30 September 2022 on 20 October 2022, followed by half-year results for this period on 15 November 2022.
Gear4music will hold its Annual General Meeting at 10.30am today.