Gear4music FY earnings slip against Covid-fuelled outperformance

Musical equipment retailer Gear4music said on Tuesday that revenues and profits had slipped in the twelve months ended 31 March as Covid-fuelled comparatives proved too tough to match.

Gear4music reported a 6% year-on-year drop in revenues to £147.6m, an 11% fall in gross profits to £41.1m, and a 150 basis point contraction in gross margins to 27.9%. Underlying earnings were down 43% at £11.2m and pre-tax profits were 66% weaker at £5.0m.

However, Gear4music also managed to deliver a 23% rise in revenues, a 32% increase in gross profits, and a 200 basis point improvement in its gross margin when compared to the 2020 trading year's pre-Covid performance.

Net debt at year-end was £24.2m, a marked difference when compared to the £2.7m net cash balance reported at the same time a year earlier, with G4M partially using its new £35.0m revolving credit facility for M&A and an increase in stock as part of an effort to protect itself from supply chain issues and price inflation.

Chief executive Andrew Wass said: "During FY21, Gear4music was reportedly the world's fastest-growing large online retailer of musical instruments and music equipment, being uniquely positioned to serve customers during Covid lockdowns. As previously reported, this meant our FY21 financial results were exceptional, and comparing FY22 against FY20 pre-pandemic levels provides a better indication of the progress the business has made.

"I am pleased to be reporting FY22 full-year results today that are slightly ahead of our previous expectations, with EBITDA of £11.2m and pre-tax profit of £5.0m. These results are a significant improvement on FY20 pre-pandemic levels, showing the continued growth and development of our business, and are a testament to the hard work and determination of our talented teams."

As of 1010 BST, Gear4music shares were up 4.29% at 182.50p.

Reporting by Iain Gilbert at Sharecast.com