Gear4music has reported a 30% lift in sales over the Christmas quarter of its financial and says that Brexit challenges have been met – but at a cost.
Gear4music chief executive Andrew Wass says that the retailer’s successful peak trading period reflected the “significant commercial and operational progress” of the last two years. Customers, he says in a trading update today, have bought products such as guitars and keyboards that they could play at home, but would be looking to buy live sound, drums and orchestral goods in the future.
Wass says that the end of the Brexit transition period and the UK’s departure from the EU customs period was “not without its challenges”, albeit ones that had been both planned for and managed. “New cross border processing costs have been introduced alongside the added complexity and cost of additional rules of origin duties contained within the Brexit trade deal,” he says.
Gear4Music sales today said that increased to £52.2m in the three months to December 31, 30% up on the same time last year. UK sales of £23m were 10% ahead of last time, while sales to Europe and the rest of the world came in at £29.2m, 51% up on last time. Gross profit, says the retailer, grew by 47% to £15.6m from £10.6m last time. The retailer now expects that full -year earnings will be ahead of expectations, and not less than £16.5m - more than double the £7.8m reported in 2019.
Gear4Music, a Top250 retailer in RXUK Top500 research, says that its logistics and infrastructure, which it previously overhauled to make the business more profitable, had performed well during peak trading.
Wass adds: “The planned scale-up of our European hub infrastructure has provided a solid operational platform to help overcome these challenges, and also helped to mitigate the impact of port closures in December 2020 as a result of Covid. Whilst there are further refinements for us to make, I am pleased that the planned reconfiguration of our delivery systems and transport network has performed well, and has supported stronger trading since 1 January 2021 than the board had initially expected.
“As a result of the very successful Christmas trading period, and early indications of positive trading post-Brexit, we expect to report results for the full financial year ahead of recently upgraded consensus market expectations. Notwithstanding what has been an exceptional period of trading since lockdowns began in March 2020, the board remains confident that the group is well resourced and positioned to deliver further growth.”