Gear4music Holdings PLC said trading has improved so far in the second half and predicted that its full-year results will meet market expectations, which were tuned down after the company’s profit warning last month.
Current analyst consensus forecasts for the financial year 2023 are for revenue of £155.1mln, EBITDA of £8.9mln and profit before tax of £1.1mln, the online retailer of musical instruments said in a trading statement.
In its previous update on 9 September, the company had revised down its full-year expectations after it felt the impact of the cost-of-living crisis and the hot summer weather.
The first six months to 30 September 2022 showed total sales growing by 2% despite these challenges, Gear4music said today.
"We are pleased to have delivered sales growth during FY23 H1, a period which was impacted by the challenges reported in our 9 September 2022 trading update, and by the mourning period for Queen Elizabeth II including the additional UK bank holiday in mid-September,” commented Gear4music's CEO Andrew Wass.
UK sales dropped 3% in the period, while European sales jumped 10%, reflecting the successful rollout of its Irish and Spanish distribution hubs last year, the company said.
“Whilst mindful of continued uncertainty and volatility across the consumer environment, we are also pleased to report that trading momentum in both our UK and European markets improved towards the end of September, and we have continued to perform well during October to date,” Wass added.
“We have strong levels of inventory heading into our peak trading period, our infrastructure is performing well, and we are on track to deploy several new growth orientated website upgrades alongside further productivity enhancements during H2.
“The board therefore remains confident that results for the full financial year will be in-line with recently updated consensus market expectations."
The company said the gross margin for the first half to end-September is expected to be 26.3%, down from 28.0% last year, reflecting targeted stock reductions.
Net debt stood at £21.8mln as at 30 September, £2.4m lower than at 31 March.
“We expect net debt will reduce further by the end of the current financial year following our peak trading period,” said the CEO.
Gear4music is reporting results for the six months ended 30 September 2022 on 15 November 2022.
Shares climbed 4.67% to 112.00p.