musicMagpie sales fall, shares slide 20%

Stockport-based musicMagpie reported sharply lower sales and a slightly smaller loss before tax for the first half of the year, as it stopped selling items in the United States and continued to grapple with what it called “challenging” conditions as consumers pare spending.

Its shares fell 20% on the London Stock Exchange.

The company, which refurbishes and sells second-hand phones, CDs and books, reported first half revenue of £53.8 million, down from £61.9 million in the previous year, largely due stopping sales in the US, where it now only sources items to sell in the UK, where the company says it can make a better profit.

Adjusted EBITDA for the period was £2.4 million, down from £2.8 million a year ago. Its loss before tax was £3 million, compared with a loss of £3.2 million a year ago.

“Due to the prevailing macroeconomic headwinds in the market, current trading conditions remain challenging,” the company said.

“However, the second half of the Group’s financial year includes the Black Friday period and this is historically when the majority of full year profits are earned. While current wider market conditions lead the Board to be cautious on the medium-term outlook, by focusing on improving profitability, combined with the cost savings introduced, the Board remains confident in the strategy of unlocking inventory in people’s homes to further capitalise on the growth in second-use markets.”

Steve Oliver, Chief Executive Officer of musicMagpie, said: “Amidst an increasingly competitive environment for second-use technology, and with consumers continuing to feel the squeeze on their wallets, the market has undoubtedly been challenging. However, our turnover remained robust in the UK, where Consumer Technology sales held firm, and Disc Media and Books showed welcome signs of stabilisation.”

“We have been proactive in delivering savings to our cost base and right sizing our business. Combined with our efforts to refine and improve the way in which we buy, sell, and rent, our business is now in a stronger position and better able to capitalise on the continued growth of second-use markets. We have recently launched the buying of branded fashion items on the musicMagpie platform and intend to continue broadening our offering and further unlock the ‘world of inventory’ that sits in consumers’ households.”