Music instrument retailer misses profit targets
UK leading musical instrument retailer Gear4music missed profit targets as weaker consumer demand in February and March impacted revenues, the firm said in a trading update to the London Stock Exchange this morning.
The York-based firm’s EBITDA profit is now expected to be between £7.3m and £7.7m – below last year’s £11m, and slightly below its 2020 figures. UK sales dropped by 1% in the 12 months to the end of March from the same period last year, though improved European sales saw overall sales up by 3%.
The firm has reduced its net debt from £24.2m last March t0 £14.5m this year, and says it expected a further reduction in debt and a return to more profitable growth in the coming year. It recently launched a second-hand trade-in system which it said had promising initial results.
Chief executive Andrew Wass said, “Whilst challenging economic conditions meant we were not able to grow revenues and profits as intended during FY23, we are pleased to have made good progress with our objective of significantly reducing the Group’s net debt position, from £24.2m a year ago, to £14.5m as at 31 March 2023.
“The further investment into our European distribution infrastructure during FY22 underpinned our progress in Europe during FY23, although high rates of inflation continue to squeeze consumer spending on discretionary items across all of our markets. In the UK, as previously announced, courier disruption impacted trading during our busiest period.
“We are confident, however, of profitability recovering in FY24 as growth initiatives such as AV.com gain traction and the benefits of our continued focus on overhead cost efficiencies filter through.”
He added, “Although the current economic challenges are reflected in our FY23 results, we have taken decisive actions to ensure the Group continues to be appropriately configured and well-funded. As FY24 progresses, we expect to make further progress in reducing our net debt, and believe we are well positioned to return to profitable growth.”
