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Music Magpie has announced that its Q2 trading has been broadly in line with management’s expectations and has benefitted from cost control and lower overheads amid takeover talks.
Ahead of its AGM today (22 May 2024), the group has stated that its FY23 financial results on 13 March 2024, started positively following a “record” Black Friday period in November 2023.
The recent changes made to its US Consumer Technology operation, to make the business a sourcing function for the UK, where devices can be sold more profitably, are now fully embedded and the US is providing a regular supply of devices for sale.
According to Music Magpie, the strategy change, combined with a competitive UK market, is delivering lower Group revenues, but a “strong focus” on profitability is helping to support performance and gives the board “confidence in the group’s medium-term prospects”.
Meanwhile, the rental offering is being managed to balance the opportunity cost of immediate profits from an outright sale and the cash investment required in rented devices, and rental income for the current year to date is slightly ahead of the same period in 2023.
Sales of disk media and books have declined modestly at their predicted rates and the company continues to manage this segment for cash. However, gross margins for the segment remain robust.
Additionally, the company recently introduced the strategy of unlocking a ‘world of inventory’ from people’s homes and is expected to launch certain new product categories shortly.
Music Magpie has been in an offer period since 27 November 2023 during which time various conversations have taken place with interested parties. However, there can be no certainty that any offer for the company will be made, nor as to the terms of any such offer.
Music Magpie said: “The board is focused on improving profitability and as second-use markets continue to grow, remains confident that the ongoing work across the business and the strategy to unlock inventory in people’s homes, positions Music Magpie well for the future.”
