Shares of York-based online musical equipment retailer Gear4music fell as much as 8% after it published results for the six months ended September 30, 2023.
Gear4music said it is moderating its revenue expectation for the year to £144 million from £161.7 million.
The company reported a 6% decline in revenue to £62.6 million for the six months resulting from a planned focus on prioritising gross margins.
The firm said: “Cost reduction initiatives to achieve £4.0m of annualised cash savings were delivered in FY24 H1, with the benefit from FY24 H2 onwards – associated one-off exceptional cost of £0.5m.”
In its trading outlook, Gear4music said: “Whilst profit expectations remain the same, we are moderating our revenue expectation for the year to £144m, to reflect sales run rates and the actions taken to prioritise profits over growth.
“This has been offset by an increase in gross margins and lower costs contributing to higher overall profit margins.
“As such, full-year adjusted/underlying profit outlook remains in-line with current consensus market expectations.”
Gear4music CEO Andrew Wass said: “We are pleased to have made good progress during the period against our strategic objectives of increasing gross margins, reducing our cost base, and further enhancing our customer proposition with the launch of our Second-Hand system in Europe.
“Although consumer demand has remained subdued this year due to the weaker environment, our FY24 H1 revenues were 27% higher than our pre-Covid FY20 H1 revenues, and we remain confident in our long-term growth strategy.
“The decisive actions we have taken will ensure the business can return to stronger profitable growth by the next financial year, as we leverage efficiencies driven by AI, build upon our platform for growth, and diversify our channels to market.
“We are well prepared for our seasonal peak trading period with a range of recently developed great value music products, and we look forward to providing a further trading update after Christmas on the 18 January 2024.”