Gear4music shares drop as consumer confidence remains low

// Gear4music posts full-year sales of £82.6m
// The retailer said it now has strong levels of inventory across its distribution centres

Gear4music has seen its shares fall after revealing that its full-year revenue and EBITDA would be “slightly lower” than expectations.

Full-year sales and earnings are set to fall slightly short of market expectations as consumer confidence and international sales weaken.

Shares in the company fell as much as 28% and its market value now stands at about £55 million.

READ MORE: Gear4music UK sales grow while Brexit impacts EU sales

The business has previously said its sales were affected by Brexit-related challenges in 2021, a year in which the new Trade and Cooperation Agreement between the UK and the European Union introduced new bureaucracy including customs checks.

Gear4music said it expects sales to come in at £147.6 million in the year to March 31 2022 – 6% down on last year, but 23% ahead of two years ago.

While UK sales have continued to grow at a slower pace than during the pandemic, its sales in Europe are almost a fifth lower than the previous year.

In the UK, full-year sales stand at £82.6 million – 5% higher than the previous year, and 34% ahead of two years ago.

Sales in Europe and the rest of the world are expected to come in at £65 million – 18% lower than the year before but 11% higher than in 2020. EBITDA is expected to come in at £11 million – down from £19.8 million last year but ahead of the £7.8 million it reported in 2020.

Gear4music says it now has strong levels of inventory across its distribution centres – including in Europe – that should support sales in its current full year. It is also looking to sales from its new specialist audio-visual equipment business, and will invest in ecommerce platform upgrades.

Gear4music chief executive, Andrew Wass said: “We believe we have the right operating structure to continue accelerating our market share gains and remain confident in our medium and long-term profitable growth strategy. We look forward to providing further details of our progress when we publish our full FY22 results in June.”

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