Trading Update
Q3 revenue down 6% but gross margin improved to 28.2%; full year in line with market expectations.
vs expectations: in line
- Total revenue £46.4m (prior £49.5m)
- UK revenue £26.2m (prior £26.0m)
- European and Rest of World revenue £20.2m (prior £23.5m)
- Gross margin 28.2% (prior 25.6%)
- Gross profit £13.1m (prior £12.7m)
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Peak season trading in-line with Board expectations, strong margin progress, trading in line with full year market expectations
Gear4music (Holdings) plc ("Gear4music" or "the Group"), the largest UK based online retailer of musical instruments and music equipment, today announces a trading update for the three months to 31 December 2023.
| £m | 3m to 31 Dec 2023 | 3m to 31 Dec 2022 | % change on FY23 Q3 |
|---|---|---|---|
| UK revenue | 26.2 | 26.0 | +1% |
| European and Rest of the World revenue | 20.2 | 23.5 | (14%) |
| Total revenue | 46.4 | 49.5 | (6%) |
FY24 Q3 Highlights
- Revenues reflect previously announced FY24 prioritisation of gross margins ahead of sales growth
- Strong gross margin of 28.2% (FY23 Q3: 25.6%) more than offsets lower revenues
- Gross profit of £13.1m (FY23 Q3: £12.7m) is £0.4m higher than FY23 Q3
- Delivery of cost reductions in line with the Board's expectations
- FY24 EBITDA and net debt reduction in-line with consensus market expectations*
Gear4music's Chief Executive Officer, Andrew Wass, said:
"We are pleased to report that financial performance during our FY24 peak seasonal trading period was in line with the Board's expectations, and we have continued to make good progress with our previously stated objective of prioritising profitability ahead of revenue growth.
As anticipated Christmas trading returned to 'historically normal' patterns, with a robust Black Friday period and peak revenues occurring the week before Christmas, following a relatively subdued period of trading in October and early November.
January trading to date continues to be in line with the Board's expectations. We are confident that the actions we have taken during FY24 to improve our gross margins and reduce our cost base and net debt ensure that the business is well positioned for profitable growth during FY25."
* Gear4music believes that current consensus market expectations for the year ending 31 March 2024 are revenue of £144.1 million, adjusted EBITDA of £9.8 million, adjusted profit before tax of £1.3 million, and pre-IFRS16 net debt of £11.6 million.
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