Subdued demand hits results at musical instruments retailer
Online musical equipment retailer, Gear4music, says it has contended with a continuing tough retail environment, particularly in its European markets, as it releases its interim results for the six months ended 30 September 2023.
The York-headquartered business recorded a 6% decline in revenue to £62.6m (2022: £66.3m) and a pre-tax loss of £1.9m (2022: £1m pre-tax loss).
Andrew Wass, chief executive officer, said: “We are pleased to have made good progress during the period against our strategic objectives of increasing gross margins, reducing our cost base, and further enhancing our customer proposition with the launch of our Second-Hand system in Europe.
“Although consumer demand has remained subdued this year due to the weaker environment, our FY24 H1 revenues were 27% higher than our pre-Covid FY20 H1 revenues, and we remain confident in our long-term growth strategy.
“The decisive actions we have taken will ensure the business can return to stronger profitable growth by the next financial year, as we leverage efficiencies driven by AI, build upon our platform for growth, and diversify our channels to market.”
The company said it made good progress against the objective of reducing its net debt to £18.1m, £3.7m lower than last year (30 September 2022: £21.8m).
Before publishing its interim results today, the business said it had been expecting revenues of £161.7m, adjusted EBITDA of £9.8m and adjusted profit before tax of £1.2m for the year ending 31 March 2024.
While its profit expectations remain the same, Gear4music notes it is “moderating” its revenue expectation for the year to £144m to reflect sales run rates and actions taken to prioritise profits over growth.
The business adds it remains confident in consumer demand for its products, and is well-placed to benefit once the consumer discretionary spend environment improves.
