Gear4music's revenue boosted by success of international expansion

Gear4music remains on track to meet expectations after it reported a strong increase in first-half revenue on Tuesday as UK and international business both expanded.

Revenue at the musical instrument retailer jumped by 36% to £42.5m, compared to the same period last year, while gross profit increased by 23% to £9.6m, though the company’s EBITDA reduced by 9% £0.7m.

UK revenue growth was up 34% to £24m as British-based web traffic increased by 26%.

Meanwhile, International business was strengthened after the company scaled up its German distribution centre, which saw a 230% increase in orders fulfilled out of this centre.

Consequently, international revenue jumped by 39% to £5.2m, though the company has committed to increasing European stock levels in order to increase revenue further in the near future.

The AIM-traded company’s current strategy is to increase its market share of branded products as growth in higher margin own-brand sales falling behind growth in other-brand sales, dropping from 24% in the period last year to 22% in H1.

Chief executive Andrew Wass said: "As the market for musical instruments and music equipment continues to transform and consolidate, we have strengthened our position as the UK's leading retailer within the market, having invested into our customer proposition, market leading e-commerce platform, and scalable infrastructure."

The company’s online presence has been developed to include multilingual, multicurrency and fully responsive design websites that deliver to over 190 countries, as the York-based outfit continues to build its overseas presence.

Gear4music’s net debt stood at £7.6m at 31 August, up from £3.7m at the same point the year before, while cash and cash equivalents stood at £2.7m, down from £4.1m.

"As we continue to invest and focus on gaining market share, I am pleased to report that we have seen particularly strong revenue growth since 1 September 2018 alongside notable gross margin improvements on the H1 period. As such, we remain confident of delivering another year of strong revenue growth and EBITDA in line with our full year expectations," said Wass.

Gear4music’s shares were up 3.63% at 500.00p at 0837 BST.