Gear4music earnings surge as it expands international offer

Online musical instruments and music equipment retailer Gear4music announced its unaudited financial results for the 12 months to 28 February on Tuesday, with revenue rising 58% during the year to £56.13m.

The AIM-traded firm said gross profit improved 65% to £15.15m, while underlying EBITDA was 115% higher at £3.62m.

Its underlying operating profit was up 192% at £2.62m, while pre-tax profit surged to £2.64m from just £6k in the 2016 financial year.

The company said its record profits were driven by improved margin performance, whilst active customers increased by 50% to 340,000.

It opened distribution centred in Sweden and Germany during the year, which it said was to “enhance” its European customer proposition, as it also acquired a software development team to accelerate the development of its e-commerce platform.

Since the period ended, Gear4music said it has exchanged contracts to acquire a 50,000 square foot property at Holgate Park in York for £5.3m.

Completion of that transaction was due on 30 June, with the property set to become the group’s long-term head office, providing it with enough capacity to expand as required.

The purchase would be entirely debt funded, the Gear4music board reported.

“This has been a transformational year for the business, with further expansion of the Gear4music brand driving record sales and profits,” said chief executive officer Andrew Wass.

“In particular we have seen significant expansion in our international business where sales have been very strong.

“We have therefore accelerated investment in our European infrastructure to improve our customer proposition and reach, most notably through the opening of two new distribution hubs in Sweden and Germany.”

Wass said the company’s growth was underpinned by the “quality” of its bespoke e-commerce platform, adding that the company continued to drive innovation in the area to further improve its systems and websites, both in the UK and overseas.

“We begin our current financial year with good momentum and continued appetite from customers around the world for our market leading service and product offering.

“We are well positioned to deliver further growth and have plans in place to continue investing in our operational facilities and systems to support our growth plans,” Wass said.

“The next 12 months will be exciting as we move into our new head office in York, scale up our European operations, and enhance our worldwide proposition, and we remain confident in the long-term growth prospects for the group.”