Gear4music says the musical instrument and equipment market is continuing to shift online but has moved beyond the peaks of the Covid-19 lockdowns. It has built up extra stock to combat supply chain issues and opened European distribution centres to ease international sales post-Brexit and now expects to take market share from “less agile competitors” who are struggling in the wake of the pandemic.
The update comes as Gear4music today reports revenues of £147.6m in the year to March 31 2022. That’s 6% down on last year, but 23% ahead of two years earlier. International sales fell by £13.8m (18%) on last time year and grew by £6.5m (11%) on the year before. Own-brand sales accounted for 26% of revenue, although sales of own-brand products were 16% down on an “exceptional” 2021 financial year in which there was high demand for beginner-level products and limited availability of third-party branded goods. They were also 8% up on the 2020 financial year.
Pre-tax profits of £5.0m were 66% down on the £14.6m it reported last year last year, but 61% ahead of the £3.1m reported the previous year.
The company had 0.92m active customers during the year. That’s 13% less than last year and 14% more than the previous year. Gear4music says trading is in line with market expectations for its current financial year.
Supply chain strategies
Net debt now stands at £24.2m, with a £35m facility partially used to finance acquisitions (£11.2m) including of the Premier drum brand and AV Distribution – relaunched as AV.com – and to build up extra stock (£17.1m) in order to protect the company against supply chain issues and rising prices. The retailer expects debt to reduce as stock is sold, and says that it is now seeing strong conversion on its website at a time of prolonged supply chain disruption.
The retailer, ranked Top150 in RXUK Top500 research, says it has dealt with post-Brexit distribution challenges by opening two new distribution centres in Europe and that the resulting extra capacity has now put it in a better position in its current financial year. It had previously seen European sales fall as it took longer – and cost more – to ship from the UK to Europe. Now, however, it is able to buy goods in euros and Swedish kroner and store them in Europe.
Gear4music chief executive Andrew Wass says that full-year results are slightly ahead of expectations, and follow on from an exceptional performance during the pandemic.
He says: “We have a strong pipeline of growth orientated projects due to be deployed during FY23 including the launch of AV.com into Europe and our second-hand platform, alongside multiple new product releases, including from the recently-acquired Premier brand which celebrates its 100th anniversary.
“As previously stated, weaker consumer confidence across the broader retail landscape is likely to continue impacting our progress during H1, although alongside careful overhead cost management we believe our growth initiative swill help offset these headwinds and provide opportunities for stronger growth during H2. We continue to trade in line with market expectations for FY23 and remain confident in our medium and long-term profitable growth strategy.”