Gear4Music profit dips in FY22

Gear4Music has reported gross profits of £41.1m in FY22, 11% below its “exceptional”, Covid boosted results in FY21, but 32% ahead of its FY20 results. Its reported EBITDA was £11.2m during the period, 43% below FY21 yet 44% ahead of FY20, while active customers hit 0.92 million, 13% behind FY21 and 14% ahead of FY20. In April 2021, the group agreed a new £35m borrowing facility with HSBC which was partially utilised by making acquisitions totalling £11.4m to help drive its future growth. It also invested over £17m into additional short-term inventory, to “ensure continuing high levels of customer service and strong website conversion during what has been a prolonged period of supply chain disruption”. Andrew Wass, CEO, said: "During FY21, Gear4music was reportedly the world's fastest growing large online retailer of musical instruments and music equipment, being uniquely positioned to serve customers during Covid lockdowns. As previously reported, this meant our FY21 financial results were exceptional, and comparing FY22 against FY20 pre-pandemic levels provides a better indication of the progress the business has made. “I am pleased to be reporting FY22 full year results today that are slightly ahead of our previous expectations, with EBITDA of £11.2m and pre-tax profit of £5m. These results are a significant improvement on FY20 pre-pandemic levels, showing the continued growth and development of our business, and are a testament to the hard work and determination of our talented teams.” He added: “We have a strong pipeline of growth orientated projects due to be deployed during FY23, including the launch of AV.com into Europe and our second-hand platform, alongside multiple new product releases, including from the recently acquired Premier brand which celebrates its 100th anniversary. “As previously stated, weaker consumer confidence across the broader retail landscape is likely to continue impacting our progress during H1, although alongside careful overhead cost management we believe our growth initiatives will help offset these headwinds and provide opportunities for stronger growth during H2. We continue to trade in line with market expectations for FY23 and remain confident in our medium and long-term profitable growth strategy." Julie Palmer, partner at Begbies Traynor, said: “Bored consumers trying to get through lockdowns hit the right chord with Gear4Music, as they filled furloughed days by learning a musical instrument, delivering ‘exceptional’ results last year. “However, the online retailer of instruments and music equipment has hit an off-key note with this year’s round of figures as trading became tougher. Although they were ahead of pre-pandemic levels, sales were down considerably as we return to more normal working patterns – a decline only intensified by the cost of living crisis.” She added: “When it’s a choice of paying the electricity bill or playing a new electric guitar, Gear4Music’s numbers show that consumers are tightening their belts and focusing on necessities, not luxuries. “But Glastonbury starting this week – the first time the famed music festival has been staged since 2019 – could get sales humming as people get into the swing of venturing out to live events, providing a much-needed boost for the sector and all the businesses behind it.”