Shares of York-based online musical equipment retailer Gear4music fell about 17% after it published a trading update for the three months to December 31, 2022.

Gear4Music said UK sales remained flat in the three months as its global operations saw growth.

The firm said revenue for its financial third quarter rose 5% to £49.5 million.

But UK revenue was £26 million, unchanged from a year ago, while Europe and rest of the world revenue was £23.5 million, up 11%.

Gear4Music said the increase in European sales was down to infrastructure investment in financial 2022, to improve customer proposition, while UK revenues were hurt by weak consumer sentiment and Royal Mail strikes in December.

Gross profit was £12.7 million in the third quarter, down 6% from the third quarter of financial 2021, but 20% above that of financial 2020.

Gear4Music CEO Andrew Wass said: “We are pleased to report that, despite several external challenges, financial performance during our FY23 peak seasonal trading period was in line with the board’s expectations.

“UK revenues during December were impacted by Royal Mail strikes and the knock-on disruption of other couriers, which led to longer delivery times and an earlier pre-Christmas cut-off date than we would expect under normal trading conditions.

“A continuing targeted reduction of both on-hand inventory and net debt, combined with a period of weaker consumer sentiment and lower own-brand sales led to subdued gross margins, although tight control over marketing and labour costs largely compensated for this and we expect margins to recover during FY24.

“As we continue to make good progress with new growth orientated projects, we remain confident in our long-term profitable growth strategy, and that the group is appropriately resourced and well placed to make the most of opportunities as they arise.”

Reporter: Harvey Dorset, Alliance News

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