Gear4music Holdings (LON:G4M) was pitch perfect today after the online musical instruments retailer raised its full year profit guidance following a 58% increase in sales.
In a trading update for the year to 28 February 2017, the UK-based company said Total sales rose to £56.2mln from £35.5mln, which was “well ahead” of management’s expectations. Total revenue growth was boosted by a 49% increase in active customer numbers to 339,800.
"Whilst continuing to invest in the future growth of the business, we have closely managed our costs and the board is now confident of delivering profits for the year marginally ahead of our increased expectations signalled in January,” said chief executive Andrew Wass.
UK sales jumped 34% to £34.9mln from £26.1mln while sales in Europe and the rest of the world surged 124% to £21.2mln from £9.4mln.
The Europe business was supported by a 186% increase in Scandinavian sales growth following the opening of the Swedish distribution centre in November. A German distribution centre has started operations in the past few weeks and is expected to contribute to Europe sales.
"We remain fully focused on our long-term growth strategy of investing in our people, products, websites and operational capabilities, to continually improve the customer proposition and look forward to further progress in the year ahead,” Wass said.
Panmure Gordon & Co. said the company, which floated to AIM in 2015, delivered a "marginal but nevertheless pleasing positive profit surprise" relative to its pre-tax profit expectations. The broker maintained its 'buy' rating.
"This new positive profit surprise is driven principally by strong cost control despite significant ongoing investment into G4M’s infrastructure ahead of future growth, whilst G4M’s sales continued their strong growth in both the UK and Europe/rest of the world in the seasonally quiet January and February," said Panmure anlayst Peter Smedley.
Shares fell 1.33% to 666p in late morning trading after an initial gain.
-- Adds broker comment, updates share price --