Shares in York-based on-line musical instruments retailer Gear4music (G4M:AIM) sounded a sweet tune today, pitching 13% higher at 283p after the company released a positive year-end update for the 12 months to 31 March 2020.
Founder and chief executive Andree Wass commented, ‘I am very pleased to report that we have achieved our primary FY20 objectives of improving our operational strength and driving efficiencies in order to restore gross margins, resulting in record profits for the Group.’
HITTING THE RIGHT NOTES
Today’s update follows management’s 2 April upgrade to profit expectations and the guidance for EBITDA (earnings before interest, tax, depreciation and amortisation) of 'not less than £7m' is particularly positive.
The consensus of analysts' forecasts was for EBITDA of £4.8m for 2020 according to data from Refinitiv. Revenues were 9% higher at £120m, around 8% shy of consensus expectations, with the UK growing 5% to £62m and Europe and the rest of the world 15% ahead at £58.5m.
The company ended the financial year with at least £7m in cash and no debts.
INCREASED DEMAND
Lock-down has been successfully navigated with call-centre and administrative teams working from home while social distancing measures have been implemented in the warehouses and distribution centres, resulting in no interruption to trading.
Since late March the business has experienced ‘high demand’ as an increasing number of people recognise the benefits of playing musical instruments.
Wass said ‘learning a new instrument or improving musical skills can bring enormous mental well-being benefits to people of all ages, particularly in challenging times like these.’
The company appears to have re-established its credentials by improving operational efficiencies and reigniting the top-line in the UK, while the current virus pandemic may be providing added momentum to an already well positioned business.
