musicMagpie shares fall 50% as trade ‘moderates’

musicMagpie CEO Steve Oliver

Shares of Stockport-based musicMagpie — which allows consumers to buy, rent and sell refurbished consumer technology — fell almost 50% on Wednesday after it published results for the year ended November 2021.

The company reported revenue fell 5.1% to £145.5 million “as a result of business normalisation in FY21 following the first year of the pandemic in FY20 but up 10.7% on an FY19 comparative …”

Adjusted profit before tax fell 14.4% to £7.9 million.

On current trading and outlook, musicMagpie said:FY21 ended strongly with record sales in the UK and US during the Black Friday period across the business.

“This sales momentum continued as we entered the current year, however, as the first quarter of FY22 has progressed, volumes and trade-in activity levels have moderated in line with consumer trends …

Consumer Tech revenues for the first quarter of the year have been in line with management expectations, but a trend towards lower sales volume at a higher average selling price and an increase in the proportion of products sourced from intermediary wholesale partners, is currently expected to compress the gross margin on outright sales in the category in the current year by c.4.0 percentage points compared to FY21 …

The rental subscription service is continuing to grow, with c.19,000 active subscribers at the end of Q1, with a forward contracted order book of £2.2m (2021: £0.4m). 15 per cent. of outbound Consumer Tech volumes on musicMagpie store are now rental sales versus 4 per cent. in 2021 …

“The introduction and success of rentals to our business model is expected to have a short-term compression on the Group’s headline revenue growth as we move from upfront to monthly revenue recognition …

“This area of the business is expected to earn higher revenue and EBITDA over the life of a device, as opposed to a one-off sale, underpinned by a contracted recurring income and cash flow stream and will become more visible in the Group’s performance in the medium-term …

Books and Disc Media continue to perform in line with management expectations

“The strength of our circular economy model and Rental offering, as well as the increasing awareness of the rising problem of e-waste, means that the Board remains highly confident in its growth strategies and in the prospects of musicMagpie  …”

musicMagpie CEO Steve Oliver said: “This has been a landmark year in the history of musicMagpie, and I am hugely proud of everything that the business has achieved.

“We have delivered strong operational and strategic progress in our first year as a listed company, and have done so while staying true to our clear environmental and social focus and our long-standing ‘smart for you, smart for the planet’ ethos.

“During the year, we gave a ‘second-life’ to over 400,000 technology products, as well as 2,500 tonnes of disc media and books. This helped to save over 50,000 tonnes of CO2, which is the equivalent to providing heating for over 18,000 homes.

“In the current uncertain climate for consumers, the benefits of buying and renting refurbished consumer technology products, whilst helping the environment, has never been more compelling.

“We are particularly pleased with the progress being made by our rental subscription service, which provides customers with a more affordable and flexible option than an outright purchase or a pay-monthly contract. We are extremely excited about its future growth prospects, and scaling this area of the business further will be a major point of focus for us in the coming year.

“I would like to thank each and every one of our colleagues for their unswerving loyalty, dedication and professionalism. It is their hard work, creativity and innovation that drives our business, and it has been humbling to witness their resilience and adaptability in changing their ways of working during the pandemic.”