Hargreaves Lansdown

Gear4music improves gross margins in first half

Tue 22 October 2019 15:52 | A A A

No recommendation

No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.

(Sharecast News) - Musical instruments and equipment retailer Gear4music Holdings updated the market on its trading for the six months ended 30 September on Tuesday, reporting total sales growth of 16% year-on-year to £49.4m.

The AIM-traded firm said its United Kingdom sales for the period were up 3% at £24.8m, while the Europe and rest-of-world geographies rose 33% to £24.6m.

It said its gross margin improved by 250 basis points to 25.2%, while its gross profit increased 29% to £12.4m, from £9.6m.

"I am very pleased to report that we have achieved our primary objective for the period of materially improving our gross margins," said chief executive officer Andrew Wass.

"By cutting out less profitable sales and focusing on higher margin products, we have delivered a first half gross margin of 25.2% and a 29% increase in gross profit.

"We have restored our gross margins to 2018 financial year levels whilst at the same time continuing to grow our revenues and taking market share."

Wass said the company's international sales growth was still strong, adding that while the UK market remained "highly competitive", Gear4Music had returned to a more profitable margin structure.

He said the board believed it was the right strategy, from which to grow revenues going forward.

"Our warehousing and infrastructure teams have worked tirelessly during the year to ensure we have a robust logistics operation in place ahead of our peak second half trading period, and we are confident that we now have the capacity and efficiency required to make the most of the opportunities available to us.

"Our re-focused growth strategy is now in place and we are confident that the business is effectively configured to achieve a sustainable level of profitable growth.

"As such, we continue to trade in line with our full year EBITDA expectations as we head towards our seasonal peak."

Gear4music said it would report interim results for the six months ended 30 September on 12 November.

    The value of investments can go down in value as well as up, so you could get back less than you invest. It is therefore important that you understand the risks and commitments. This website is not personal advice based on your circumstances. So you can make informed decisions for yourself we aim to provide you with the best information, best service and best prices. If you are unsure about the suitability of an investment please contact us for advice.

    More AIM news from ShareCast

    No results were found