Gear4music today showed how a strategy of European expansion had paid dividends in a half-year in which international sales soared following the EU referendum and the subsequent weakening of sterling.
The York-based retailer now has plans for investment: a distribution centre is set to open in Sweden while it has signed a lease for a further centre in Germany, set to open in the current financial year. It will now bring its software development in-house – following a £1.5m acquisition of its development team from its previous partner Venditan Ltd – and also has plans to ship beyond Europe. Currently it sells via its own ecommerce platform that covers 19 countries – the UK and 18 European markets – through country-specific local language, local currency responsive design websites.
It said in first-half results today that the move to open distribution centres in Europe would mean it could handle sales volumes of more than £100m a year. That would remove “a potential longer-term barrier to sales growth, whilst reducing customer delivery times, opening up local buying opportunities and derisking some of the potential Brexit scenarios.”
The music equipment and accessories company, a Top150 company in IRUK Top500 research, today reported revenue of £21.6m in the six months to August 31. That’s 73% up on the same time last year. Within that, UK revenue of £13.8m was 44% up on last time, while European revenue of £7.8m was ahead by 169%. Pre-tax profits of £0.97m were £2m up from a loss of £1.1m at the same time last year.
Sales via mobile devices grew by 42% during the year.
Overall, European sales made up 40% of Gear4Music’s sales in the latter part of the period, said chief executive Andrew Wass.
But the company said that the initial lift in European sales predated the weakening of sterling.
Wass said: “I am extremely pleased that during the last six months we have combined strong trading with significant strategic progress, as we continue on our journey to be one of Europe’s leading online retailers of musical instruments and equipment.
“Accelerating sales growth into Europe, which represented 40% of our total sales during the last two months of the period, has reinforced our decision to expand our distribution capacity in Europe and further enhance our customer proposition.
“To underpin our strong growth and physical geographic expansion, we are pleased to announce that our software development team will be brought in-house and, with further recruitment planned, expanded even faster to ensure we continue to build a market leading ecommerce platform.
“Whilst we continue to invest to grow the business it is pleasing to have generated significant profits during the last six months, when historically we’ve produced the majority of our profits during the second half of the year.”
He said that trading remained strong in the run-up to Christmas.
Gear4music sells online through Gear4music.com and through a York showroom.
