Gear4music buys AV Online as Brexit hits Euro sales

York-based Gear4music, the largest UK online retailer of musical equipment, said on Thursday its UK revenue returned to growth during July and August 2021 but it has suffered slower European sales due to “post-Brexit cross border shipping challenges.”

Gear4music also said it exchanged contracts for the acquisition of AV Distribution Ltd trading as AV Online and, separately, the acquisition of the website domain name

AV Online is an online retailer of Home Cinema and HiFi equipment based in Bacup, Lancashire.

Gear4music CEO Andrew Wass told the company’s AGM: “As previously announced, trading during Q1 FY22 was stronger than the board had expected although, as anticipated, behind the exceptional period of trading during FY21.

“UK sales have pleasingly returned to growth during July and August.

“European sales have remained behind last year, primarily as a result of post-Brexit cross border shipping challenges creating a less competitive delivery proposition in some of our European markets.

Our two new distribution centres in Ireland and Spain will be operational by H2 FY22 as planned, and should eliminate most of the remaining post-Brexit challenges, significantly improving our European delivery proposition to provide a platform for further growth in our European markets by Q4 FY22.

In-line with our stated growth strategy, we are very pleased to announce that the group has exchanged contracts for the acquisition of AV Distribution Ltd trading as AV Online, an online retailer of Home Cinema and HiFi equipment and, separately, the acquisition of the website domain name ‘’.

“AV Online increased revenues by 54% to £8.6m during the last financial year to 31 March 2021, generating adjusted EBITDA of £1.3m.

Operating in a £400m UK audio video market that is currently dominated by high-street based retailers, the board believes that AV Online will greatly benefit from being transferred onto the group’s highly scalable European e-commerce platform and being rebranded to ‘’.

Trading to date remains in-line with the board’s expectations, although we remain mindful of ongoing uncertainties around COVID-19 and the potential for supply chain disruption during H2 FY22.

“As a result of the operational and commercial actions we are taking, and the acquisitions we are making, the board retains a high level of confidence that the group is well positioned to deliver on its long-term growth strategy.”

On the acquisition, Gear4music said: “Founded in 2003 by Carl Pickles, AV Online operates from a 26,000 sq ft warehouse, offices and showroom in Bacup, Lancashire, and is an online retailer of audio-visual equipment, including home cinema systems, HiFi systems, speakers, cables, headphones and accessories.

AV Online has 21 members of staff, and generates sales principally from its main website, with further sales channels including Amazon, the showroom in Bacup, and several smaller websites operated by the business, including 

In the financial year ended 31 March 2021 (‘FY21’), AV Online reported unaudited revenues of £8.6m (FY20: £5.6m), adjusted EBITDA of £1.3m (FY20: £0.6m) and profit before tax of £1.2m (FY20: £0.4m). Net assets at 31 March 2021 were £4.2m (FY20: £3.3m).

The consideration of £6.2m for AV Online (on a cash free, debt free basis and assuming normalised levels of working capital), and £3.0m for the domain name will be settled in cash drawn from the group’s £35m Revolving Credit Facility with HSBC, and represents a combined adjusted EBITDA multiple of 7.1 times.

“The purchase of AV Online will include £2.5m of inventory, and a freehold warehouse property recently valued at £1.3m.

“The domain name was not owned by AV Online and was purchased by the Group separately.

The board notes that these acquisitions will significantly increase the group’s addressable market size and believes there are significant synergies between the market in which Gear4music operates, and the closely related but separate AV market, which is currently dominated by high-street based retailers such as Richer Sounds.

The board is confident that by moving the AV Online business onto Gear4music’s highly scalable bespoke e-commerce platform, rebranding the business to, developing its product ranges, and expanding into Europe, can quickly grow its revenues and profits.

“The board expects that the acquisitions will be earnings per share enhancing from FY23 onwards.”