Online music retailer Gear4music Holdings PLC (LON:G4M) achieved record annual profits as revenue growth exceeded the company’s expectations.
Shares gained 3.01% to 616.0p in morning trading.
The company, which sells musical instruments and equipment, posted pre-tax profit of £2.6mln in the year to 28 February, compared to just £6,000 a year earlier.
Revenue jumped 58% to £56.2mln from £35.5mln the prior year, ahead of management’s expectations for 37% growth, as the number of active customers increased 50% to 340,000.
The increase in revenue was driven by a 124% jump in international sales as the company expanded its capacity with two new distribution centres in Sweden and in Germany.
"Triple digit growth in international sales was underpinned by the capability to deliver a consistent enhanced proposition, following investment in distribution centres in both Sweden and Germany," said Shore Capital anlayst, George Mensah.
"This enabled a reduced cost to serve Northern European markets, where demand for musical instruments and music equipment continues to be strong. International now represents 38% of group revenue, up from 16.5% in fiscal year 2014."
Gear4Music upsizes its headquarters...
Gear4Music, which started trading on AIM in June 2015, is also moving to a bigger headquarters. It has agreed a deal to buy a 50,000 sq. ft. freehold property at Holgate Park in York for £5.3mln. Completion of the deal is scheduled for 30 June.
"This has been a transformational year for the business, with further expansion of the Gear4music brand driving record sales and profits,” said chief executive Andrew Wass.
"In particular we have seen significant expansion in our International business where sales have been very strong. We have therefore accelerated investment in our European infrastructure to improve our customer proposition and reach, most notably through the opening of two new distribution hubs in Sweden and Germany.”
CEO expects further growth for Gear4Music...
Wass said the company has started the current financial year with “good momentum” and is “well positioned” to deliver further growth.
The group plans to continue investing in operational facilities and systems, he added.
"The next 12 months will be exciting as we move into our new head office in York, scale up our European operations, and enhance our worldwide proposition, and we remain confident in the long-term growth prospects for the group."