Gear4music revenue slips 6% to £147m

York-based online musical equipment retailer Gear4music said its revenue fell 6% to £147.6 million in the year to March 31, 2022, when measured against an “exceptional FY21 period that had benefited from unusually high demand.”

Gear4music said demand had soared in the prior year “as physical stores closed during COVID lockdowns and the benefits of playing musical instruments and equipment on mental health and wellbeing were recognised.”

The company said revenue increased 23% relative to a “more normal trading period in FY20, equating to compound growth of 10.8% per annum.”

Profit before tax fell to £5 million from £14.6 million in the year to March 31, 2022.

Gear4music shares rose as much as 6%, but the company’s stock is down about 80% for the past 12 months.

Gear4music CEO Andrew Wass said: “During FY21, Gear4music was reportedly the world’s fastest growing large online retailer of musical instruments and music equipment, being uniquely positioned to serve customers during Covid lockdowns.

“As previously reported, this meant our FY21 financial results were exceptional, and comparing FY22 against FY20 pre-pandemic levels provides a better indication of the progress the business has made.

“I am pleased to be reporting FY22 full year results today that are slightly ahead of our previous expectations, with EBITDA of £11.2m and pre-tax profit of £5m.

“These results are a significant improvement on FY20 pre-pandemic levels, showing the continued growth and development of our business, and are a testament to the hard work and determination of our talented teams.

“In April 2021, we agreed a new £35m borrowing facility with HSBC which, as planned, was partially utilised by making acquisitions totalling £11.4m to help drive future growth.

“We also deliberately invested over £17m into additional short-term inventory, to ensure continuing high levels of customer service and strong website conversion during what has been a prolonged period of supply chain disruption.

“We continue to have a significant amount of headroom within our banking facilities and covenants, and during FY23 we expect the additional inventory will reduce, and our year-end net debt position will decrease accordingly.

“We have a strong pipeline of growth orientated projects due to be deployed during FY23, including the launch of into Europe and our second-hand platform, alongside multiple new product releases, including from the recently acquired Premier brand which celebrates its 100th anniversary.

“As previously stated, weaker consumer confidence across the broader retail landscape is likely to continue impacting our progress during H1, although alongside careful overhead cost management we believe our growth initiatives will help offset these headwinds and provide opportunities for stronger growth during H2.

“We continue to trade in line with market expectations for FY23 and remain confident in our medium and long-term profitable growth strategy.”