York-based online musical equipment retailer Gear4music said it swung to a loss in the first half of its financial year, amid inflationary pressure on costs and as revenue was hit by lower consumer confidence and hot weather during summer.
However, Gear4Music said it has seen “improved trading momentum” in the second half of financial 2023 so far.
The company’s shares rose about 4% — but are down more than 80% year to date.
The company reported a pretax loss of £1 million in the six months that ended September 30 compared to a profit of £1.9 million a year before.
Revenue increased 2.5% to £66.3 million in first half of 2021, which had benefited from the Covid-19 pandemic.
UK revenue — accounting for just over half of total revenue — declined 3%, though international revenue grew 10% due to new distribution centres in Europe.
Gear4Music’s cost of sales increased to £48.9 million from £46.6 million last year. Administrative costs rose to £17.7 million from £15.7 million as a result of increased costs for labour, marketing, and depreciation and amortisation.
Website user numbers decreased by 32% to £9.3 million, with UK users dropping by 26% and international visitor numbers down 36%. However, Gear4Music said this reflected visitors with low intent to purchase.
Gear4Music maintained its guidance for the rest of the financial year, with trading expected to return to pre-Covid levels in the second half of the year.
Revenue and pretax profit for the year ending on March 31 are expected to be £155.1 million and £1.1 million respectively.
In financial 2022, Gear4Music recorded revenue of £147.6 million and pretax profit of £5.0 million.
Gear4Music CEO Andrew Wass said: “I am pleased to report that we have seen a consistent improvement in trading momentum during the last two months, despite continuing macro volatility.
“We are also well-prepared for our peak seasonal trading period.
“The board therefore remains confident that results for the full financial year will be in-line with current consensus market expectations.”
Gear4Music pays no dividend.
Reporter: Jaskeet Briah
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