Gear4music : Trading Update

RNS Number : 6213Q

Gear4music (Holdings) PLC

22 October 2019

22 October 2019

Gear4music (Holdings) plc

Trading Update

Gear4music (Holdings) plc ("Gear4music" or "the Group"), the largest UK based online retailer of musical instruments and music equipment, today announces a trading update for the six months to 30 September 2019.

Highlights

• Total sales growth of 16% to £49.4m (FY19 H1: £42.5m)
• Gross margin improved by 250bps to 25.2% (FY19 H1: 22.7%)
• Gross profit increased by 29% from £9.6m to £12.4m

Gear4music's Chief Executive Officer, Andrew Wass, said:

"I am very pleased to report that we have achieved our primary objective for the period of materially improving our gross margins. By cutting out less profitable sales and focusing on higher margin products, we have delivered an FY20 H1 gross margin of 25.2% and a 29% increase in gross profit.

We have restored our gross margins to FY18 levels whilst at the same time continuing to grow our revenues and taking market share. International sales growth continues to be strong, and whilst the UK market remains highly competitive, we have returned to a more profitable margin structure and believe that this is the right strategy from which to grow our revenues going forward.

Our warehousing and infrastructure teams have worked tirelessly during the year to ensure we have a robust logistics operation in place ahead of our peak FY20 H2 trading period, and we are confident that we now have the capacity and efficiency required to make the most of the opportunities available to us.

Our re-focused growth strategy is now in place and we are confident that the business is effectively configured to achieve a sustainable level of profitable growth. As such, we continue to trade in line with our full year EBITDA expectations as we head towards our seasonal peak."

The Group will report interim results for the six months ending 30 September 2019 on 12 November 2019.

Note: references to FY20 H1 repres ent the period 1 April 2019 to 30 September 2019, following the cha nge to the a ccoun ng reference da te a nd fina ncia l yea r end from 28 Februa ry to 31 Ma rch, with FY19 H1 repres enting the period 1 Ma rch 2018 to 31 Augus t 2018.

About Gear4music.com

Opera ng from a Head Office in York, and Distribu on Centres and showrooms in York, Sweden and Germany, the Group sells own-brand musical instruments and music equipment alongside premium third-party brands including Fender, Yamaha and Roland, to customers ranging from beginners to musical enthusiasts and professionals, in the UK, Europe and, more recently, into the Rest of the World.

Having developed its own e-commerce pla orm, with mul lingual, mul currency websites delivering to over 190 countries, the Group has rapidly expanded its database and continues to build its overseas presence.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

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