Gear4Music downgrades expectations for 2023

Gear4music downgraded its full-year expectations on Friday, pointing to the cost-of-living crisis and a lack of visibility over when consumer sentiment might improve, sending shares in the musical instruments retailer tumbling.

The company now expects FY23 revenue to grow to around £155m, with earnings before interest, tax, depreciation and amortisation of £9m. This compares to consensus market expectations for revenues of £163.9m and EBITDA of £11.9m.

In an update ahead of its annual general meeting, Gear4music said: "As previously reported, we were expecting inflationary pressures to restrict operating margins during FY23, and despite the weaker consumer environment we are pleased to have achieved sales growth during Q1. Trading during July and August has, however, been further impacted by the widely reported cost of living crisis and unusually hot weather across Europe.”

The company said it had expected a return to a more normalised seasonal trading pattern in FY23, with less demand in summer months than winter months, and early indications are that trading has improved in September.

"However, given the lack of visibility over the timing of any improvement in consumer sentiment and wider macroeconomic conditions as we approach H2, we believe it is now prudent to moderate our full year expectations accordingly."

At 0808 BST, the shares were down 23% at102p.