Gear4Music PLC on Tuesday 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.
Gear4Music is an online retailer of music instruments and equipment, based in York, England.
The company reported a pretax loss of £1.0 million in the six months that ended September 30, swung from a profit of £1.9 million a year before.
Revenue by increased 2.5% to £66.3 million from £64.7 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 by 36%. However, Gear4Music said this reflected visitors with low-intent to purchase.
Gear4Music has seen ‘improved trading momentum’ in the second half of financial 2023 so far.
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, meaning revenue is expected to be up slightly but profit to be down.
Chief Executive 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.
Gear4Music shares were up 4.2% from 100.00 pence in London on Tuesday morning.
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