Gear4music Holdings PLC (AIM:G4M) said revenues and earnings will be less than expected as rising inflation and weaker demand hit and warned the first half of 2023 "may be more challenging".
The largest UK-based online retailer of musical instruments and music equipment said EBITDA for the year to March 31, 2022 will be £11mln compared with consensus market expectations of £12mln.
Total sales are now expected to come in at £147.6mln, short of a consensus of £149.2mln, a trading update said.
"Although FY22 financial performance has been impacted by weaker consumer demand during February and March, we retained a significant proportion of the exceptional gross margins that benefited from Covid lockdowns during FY21," said Andrew Wass, Gear4music's chief executive."We also achieved a 41% improvement in EBITDA compared with FY20 despite the impact of Brexit.
"Short term inflation-linked overhead cost pressures and weaker consumer confidence across the broader retail landscape will mean the best opportunities for stronger growth during FY23 are likely to be in H2. We are, accordingly, moderating our overall growth expectations for the new financial year, which we believe is the prudent approach in the current environment."
UK sales for the year to March were 5% higher at £82.6mln compared to £78.7mln in the prior period, but European and Rest of the World sales crashed 18% to £65.0mln.
Total sales were down 6% to £147.6mln, with the company saying weak consumer confidence and overhead cost pressures will further limit opportunities in the second half of financial year 2023.
Results to be announced in June 2022 will include £0.2mln as a one-off M&A cost and £0.3mln as share option costs.
The stock was 23.78% down at 274.40p in early morning trades.