Gear4music has reported flat UK sales but growth in its European business in the run up to Christmas.
The musical equipment retailer and brand has seen European sales rise by 11%, after opening new warehouses in Ireland and Spain. In the UK, by contrast, Royal Mail strikes and weaker consumer sentiment hit revenues, which remained flat on last year.
Group sales of £49.5m in the three months to December 31 2022 were 5% up on the same time last year. UK revenue was flat at £26m, while revenues in Europe and the rest of the world came in at £23.5m, 11% up on last time.
Targeted reductions of slower moving lines meant that lower gross margins (25.6%) than in previous quarters. Gross profits of £12.7m were 6% lower than a year earlier, but 20% higher than in the same period in 2019.
Andrew Wass, chief executive of Gear4music, says peak trading was in line with board expectations.
UK revenues during December were impacted by Royal Mail strikes and the knock-on disruption of other couriers, which led to longer delivery times and an earlier pre-Christmas cut-off date than we would expect under normal trading conditions,” says Wass.
“A continuing targeted reduction of both on-hand inventory and net debt, combined with a period of weaker consumer sentiment and lower own-brand sales led to subdued gross margins, although tight control over marketing and labour costs largely compensated for this and we expect margins to recover during FY24.
“As we continue to make good progress with new growth-orientated projects, we remain confident in our long-term profitable growth strategy, and that the group is appropriately resourced and well placed to make the most of opportunities as they arise.”
The retailer says expects its full-year figures to meet market expectations of £155.1m in revenues, and pre-tax profits of £1m.
York-based Gear4music is ranked Top150 in RXUK Top500 research. It sells online, through showrooms in York, Sweden and Germany, and has five distribution centres, of which four are in Europe.
