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(Sharecast News) - Music instruments retailer Gear4music said on Wednesday that its full-year performance was in line with market expectations, having delivered both gross margin and profitability improvements.
Gear4music said annual revenues would come in slightly ahead of current expectations of £144.1m at £144.4m, while FY adjusted underlying earnings and pre-tax profits would also beat expectations of £9.8m and £1.3m, respectively, reflecting the group's prioritisation of gross margins, profitability, and net debt reduction ahead of sales growth.
UK sales were up 1% at £83.1m, while Europe and RoW sales dropped 12% to £61.3m.
Gross margins were expected to be 27.3%, up from 25.7% a year earlier, while net debt was reduced significantly to £7.3m from £14.5m at the same time twelve months prior, ahead of market expectations for a pre-IFRRS16 net debt position of £11.6mm.
The AIM-listed group added that planned cost reductions delivered during the second half of 2024 would also support further net debt reduction and profitability improvements.
Chief executive Andrew Wass said: "As a direct result of the affirmative actions taken to prioritise cash generation and reduce costs, we have almost halved the group's net debt since 31 March 2023, down to £7.3m at 31 March 2024, being a reduction of £16.9m in two years.
"We continued to invest into and develop our bespoke e-commerce platform during FY24, improving key areas of our proposition to drive further efficiencies and future profitable growth. The board is confident that the positive impact of the cost reductions made during FY24 will deliver full-year benefits in FY25."
Separately, Gear4music revealed that chairman Ken Ford will step down from the board later in 2024, with Wass to take over his job and current chief operating officer Gareth Bevan to fill the vacant CEO role.
As of 1040 BST, Gear4music shares rallied 6.24% to 145.56p.
Reporting by Iain Gilbert at Sharecast.com
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