Gear4music rocks in first half trading

Gear4music, the AIM listed UK based online retailer of musical instruments and equipment, announced a successful first half especially in Europe, which represented 40% of its total sales.

Chief executive Andrew Wass said: "Accelerating sales growth into Europe, which represented 40% of our total sales during the last two months of the period, has reinforced our decision to expand our distribution capacity in Europe and further enhance our customer proposition.”

Group revenue increased 73% to £21.6m for the six months ending 31 August 2016 driven by rising flows to the company’s website and improved conversion rates.

European revenue rose 169% to £7.8m and revenue in the UK was up 44% to £13.8m.

The firm’s active customers increased by 45% with an email subscriber database of over 600,000.

Gross profit rose 74% to £5.8m and gross margin improved by 10 base points to 26.6%.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased to £1.4m from £216,000 in the first half of 2015 and made up 6.2% of revenue. Adjusted profit before tax went up to £966,000 from a loss of 217,000 in the previous period.

The group’s balance sheet was “strong” with net cash increasing to £0.9m from £0.6m at August 2015 and inventories of £9.3m rising from £8m in advance of the Christmas trading peak.

Post period, the firm is on track to have an operational Swedish distribution centre in November 2016. It also signed a property lease on a German distribution centre to support additional worldwide shipping destinations.

The firm plans to bring its software development team in-house.

"To underpin our strong growth and physical geographic expansion, we are pleased to announce that our software development team will be brought in-house and, with further recruitment planned, expanded even faster to ensure we continue to build a market leading e-commerce platform,” said Wass.

Looking ahead, Wass is confident the firm will perform above previous expectations. "Trading remains strong heading into our important Christmas period and the Board considers the Group well placed to deliver results for the full year that will be ahead of its previous expectations," said Wass.

The share price fell 1.90% to 310p to 1120 BST on Tuesday.