Gear4Music PLC on Thursday said overall interim revenue plunged on lower consumer demand but full-year outlook has been kept in line with market expectations.
The York, England-based musical instruments and equipment retailer said total revenue for the first half of the year ending March 31 fell 5.6% to £62.6 million from £66.3 million a year prior.
While UK revenue rose by 3.1% to £36.5 million from £35.5 million, European and rest of the world revenue were off by 15% to £26.1 million from £30.8 million, as the company has shifted its focus to ‘prioritising gross margins ahead of sales growth.’
Gear4Music added that it expects its gross margin for the half year to be 27%, 80 basis points higher than last year’s margin of around 26%.
Gross profit is forecast to be £17.0 million, around a 2.3% drop from £17.4 million in the first half of financial 2023.
Net debt at September 30 was £18.1 million, down 17% from £21.8 million, which Gear4Music said reflects ‘normal seasonal build of inventory.’
Looking ahead, Gear4Music said UK revenue continue to be stronger than European revenue, and expects a normal second-half weighted trading season, adding that it is well-prepared ahead of the peak seasonal trading period.
Its full-year outlook remains in line with market expectations of revenue of £161.7 million, earnings before interest, tax, depreciation and amortisation of £9.8 million and pretax profit of £1.2 million.
Chief Executive Officer Andrew Wass said: ‘We have continued to make good progress with our strategic objectives in what we anticipated would be challenging market conditions. We are pleased to have achieved growth in the UK, whilst our European markets have been impacted by lower consumer demand.
Mindful of the current trading environment, we have retained our pricing discipline and focused on improving gross margins. In addition, we have taken decisive action to drive further efficiencies and ensure our cost base is appropriately configured to deliver our profitable growth strategy.’
Gear4Music will report its interim results on November 14.
Shares in Gear4Music were down 6.4% at 126.34 pence each in London on Thursday afternoon.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
