Gear4music says sales grew by almost a third over a “transformational” year and it expects to report record profits following strong demand in lockdown. Now it is laying the foundations for future online and European growth.
The online musical equipment and instrument retailer says in a year-end trading update that its total sales reached £157.5m in the year to March 31, 31% ahead of the previous year. UK sales of £78.7m were up by 27%, while its European and rest of the world sales grew 35% to reach £78.8m – and just overtake its UK business in size.
The company, ranked Top350 in RXUK Top500 research, says it expects full-year pre-tax profits before interest and one-off costs to come in at at least £19m, well ahead of the £7.8m it reported in its last full-year, and ahead of market expectations.
Gear4music chief executive Andrew Wass says its results represent a “transformational” trading performance in a year that built on previous progress the previous year in scaling up its operations to manage fast growth in online sales.
That work meant the retailer was well-placed for very high levels of demand in lockdown, as demand for musical instruments and related equipment rose. Now it has put financing in place – in the form of a £35m three-year revolving credit facility with HSBC – to invest in its European distribution network and its website.
Wass says today: “Further improvements in gross margins have driven our profits to record levels, amplified by the previously reported exceptional sales growth and marketing efficiencies which were driven by Covid-19 lockdowns, particularly evident during Q1 FY21.
“As part of the group’s ongoing strategy, the new enlarged banking facility will help us to accelerate our longer-term ambitions. As w lay the foundations in FY22 for the next stage of our growth journey, in addition to establishing new sales verticals we will further strengthen our European distribution network, accelerate investment into our ecommerce pfatform and consider acquisition opportunities as they arise.
“Whilst it is very early in the new financial year, we are pleased with FY22 trading to date, relative to the exceptional period of trading during April FY21. We also remain mindful of the ongoing global pandemic and operational challenges posed by Brexit, but are confident that we have appropriate plans in place to mitigate their effects. Underpinned by our strong financial position, the board is confident that our online business model and specialist market knowledge, supported by our Europe-wide operational platform will continue to deliver long-term sustainable and profitable growth.”