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(Sharecast News) - Gear4music reported a sharp jump in first-half revenue and a return to profit on Tuesday, as the online musical instrument retailer continued to benefit from stronger market conditions and the early success of its revised growth strategy.
The AIM-traded company, which upgraded its full-year outlook for the fourth time since June, said trading momentum had remained strong into the third quarter and that it now expected full-year EBITDA of at least 15m, ahead of recently raised market expectations.
Revenue for the six months ended 30 September rose 31% to 80.7m, with UK sales up 28% to 49.6m and European and rest-of-world revenue climbing 35% to 31.1m.
Gross profit increased 28% to 22.7m, lifting the gross margin to 28.2%, compared with 26.7% a year earlier.
EBITDA rose to 6.9m from 2.9m, while operating profit reached 3.4m, reversing a 0.4m loss in the same period last year.
Profit before tax came in at 2.7m, compared with a 1.2m loss previously.
The firm said the figures included 1.1m of gross profit from stock acquired out of the insolvencies of two UK competitors.
Gear4music said revenue growth accelerated from 27% in the first quarter to 34% in the second, supported by improving product margins, stronger multi-brand demand and better availability of key lines.
Net bank debt rose modestly to 16m, which the group said reflected tactical stock intake ahead of the peak Christmas trading period and inventory expansion to support higher sales volumes.
"We are delighted to report a strong operational and financial performance for the first half, with revenues increasing by 31%, margins improving, and profit before tax up by 3.9m during what is typically our quieter half of the year," said executive chair Andrew Wass.
"I am extremely proud of the work our teams continue to undertake in implementing the revised growth strategy we announced in June 2024.
"Their efforts have enabled us to capitalise on the significant market opportunities that have arisen during 2025 as we enter an exciting new phase of our profitable growth journey."
He added that the group was preparing for a capacity crunch in December, with its York distribution centre likely to operate "close to maximum capacity".
To address that, Gear4music said it was planning to open a new Yorkshire distribution site within the next 12 months, increasing UK distribution capacity by about 2.5 times and providing the efficiency required for the next phase of expansion.
Wass said the strength of year-to-date trading gave the board "further confidence to again raise its expectations", with EBITDA now expected to be not less than 15m.
The company said it would provide a further update after the Christmas trading period on 20 January.
At 0946 GMT, shares in Gear4music Holdings were up 0.5% at 324.61p.
Reporting by Josh White for Sharecast.com.