Gear4Music on global march as price is right
Profits and customer numbers soar
MUSICAL INSTRUMENTS retailer Gear4music reported a “transformational” year with record profits and sales following strong international growth.
The York-based firm said it is well positioned as operating profits rose 192 per cent in the year to February 28 thanks to strong sales in Europe.
The group said international sales rose 124 per cent as the market shifts from high street sales to online, an area where Europe lags the UK.
The firm’s chief executive Andrew Wass said: “Our own brand sales have grown really well and sales are up 58 per cent.
“We have really good products at the right price point. One of our best sellers is a digital piano at below £300. We are pushing the boundaries in price points.”
The number of active customers rose 50 per cent to 340,000 and the group has opened distribution centres in Sweden and Germany to boost sales to Europe.
“We’ve started buying locally and we are well positioned post Brexit,” said Mr Wass.
As part of its expansion plans the group is opening a new head office in York, less than two miles away from its current headquarters.
The firm has exchanged contracts to acquire a 50,000 sq ft freehold property at Holgate Park in York for £5.3m with completion scheduled for June 30.
“We have outgrown our current headquarters and need more space,” said Mr Wass.
“We wanted a long-term solution. We have a really great team in York and it was important to find somewhere local.” Analysts hailed the results. George Mensah, at Shore Capital, said: “Gear4music achieved significant financial progress.
“Revenue during the year increased by 58 per cent to £56.1m as the international trade continued to blossom.
“The company generated EBITDA of £3.6m.
“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.
“This enabled a reduced cost to serve Northern European markets, where demand for musical instruments and music equipment continues to be strong.”
Analyst Peter Smedley at Panmure Gordon added: “Gear4music’s very strong results are well ahead of our expectations.
“Management commentary highlights that the new financial year has started with good momentum.
“Trading updates are unlikely to disappoint and the medium term outlook is increasingly encouraging. The business is well invested for its current one to two-year growth projections and is now laying down the strategic cost investment foundations in preparation for its three to fiveyear plans.”
Gear4music said it has seen a boost from its bespoke e-commerce platform and it is improving its systems and websites, both in the UK and overseas.
“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,” said Mr Wass.