Gear4music falls to £0.4m loss in FY23

Gear4music has reported a loss after tax of £0.4m for the full year ended 31 March 2023, despite its revenue increasing by 3% to £152m. The online musical instruments retailer also reported EBITDA of £7.4m which is 34% below FY22 and 5% below FY20. According to the CEO of Gear4music, Andrew Wass, the year ended 31 March 2023 was a difficult period due to high levels of inflation and increasing interest rates impacting consumer confidence and disposable income. Meanwhile, the group’s gross profit margin for the full year also dropped by 220 bps to 25.7%. Additionally, its UK revenue dropped by 1% to £82.1m compared with 82.6m in the previous year. However, it saw an increase in International revenue by 8% to £70m. Gear4music also saw a 8% and 6% drop in website visitors and active customers respectively. Looking ahead, Gear4music’s focus for FY24 will be to improve efficiency and product margins and leverage its operational infrastructure to launch its second-hand system across Europe, increasing the number of markets it trades in. Its short-term focus will be on overhead cost reduction, efficiency, and improving productivity by adopting the latest technologies. Wass said: “I am pleased to be reporting FY23 full year results that are in line with guidance provided in April, with the business generating revenues of £152m and EBITDA of £7.4m. Throughout what has been a challenging year, we continued to make good progress in building the technical and operational infrastructure required for our long-term success as the UKs leading retailer of musical instruments and equipment. “A particular recent highlight has been the launch of our second-hand system, which whilst still in ‘soft launch’ stage, has traded over 1,000 products within the first three months. We have continued to make good progress in reducing our bank debt and to provide certainty and headroom for the medium term, we have renewed our committed borrowing facility with HSBC at £30m for a further three-years.” He added: “Market conditions have continued to be challenging since our last update in April, and we are taking the appropriate and necessary actions to ensure our business is correctly configured, resourced and positioned strategically for long term success. To ensure the Group can return to profitability during FY24 H2, we will focus on product margins, efficiency and overhead cost reduction ahead of revenue growth, whilst we continue to develop new growth initiatives for the longer term.”