Gear4music has reported an uplift in first-half sales as it feels the benefit of opening two European warehouses to combat post-Brexit shipping challenges.
Gear4music opened its warehouses in Ireland and Spain last year in response to cross-border shipping challenges that it said were holding back its European business. Last year it said that Brexit had hit harder than expected as it reported a 16% fall in first-half sales in the European single market. Now it is feeling the positive effects of its warehouse investment on sales.
The retailer this week reported sales of £66.3m in the six months to September 30. That’s 2% up on the same time last year. UK sales of £35.5m were 3% down on last year, while sales in Europe and the rest of the world rose by 10% to £30.8m from £28m last time.
However, gross profits in the half-year are expected to come in at £17.4m, down by 3.9% from £18.1m a year earlier. That comes as gross margins are expected to come in at 26.3% – down from 28% a year earlier – reflecting “targeted stock reductions”. Net debt has reduced to £21.8m as of September 30, £2.4m lower than at March 31.
The figures come a month after the retailer scaled back sales and profit expectations for its current financial year as a result of the cost-of-living crisis and uncertainty about consumer confidence.
Gear4music’s chief executive Andrew Wass, says: “We are pleased to have delivered sales growth during FY23 H1, a period which was impacted by the challenges reported in our September 9 2022 trading update, and by the mourning period for Queen Elizabeth II including the additional UK bank holiday in mid-September.
“Whilst mindful of continued uncertainty and volatility across the consumer environment, we are also pleased to report that trading momentum in both our UK and European markets improved towards the end of September, and we have continued to perform well during October to date. Net debt reduced by £2.4m over the period to £21.8 million at the end of September, comfortably within our £35m facility. We expect net debt will reduce further by the end of the current financial year following our peak trading period.”
Looking ahead
Wass says the retailer is well stocked for peak trading, and that it is planning further digital investment.
“We have strong levels of inventory heading into our peak trading period, our infrastructure is performing well, and we are on track to deploy several new growth orientated website upgrades alongside further productivity enhancements during H2. The board therefore remains confident that results for the full financial year will be in-line with recently updated consensus market expectations.”
Gear4music is ranked Top150 in RXUK Top500 research.
