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Musical instrument retailer Gear4music has slipped to a half year loss despite reporting a 2% increase in revenues.
For the trading period ending 30 September 2022, the company posted a net loss of £1.1m which is a 2.2% decrease compared with the previous year. It said the loss comes as a result of targeted stock reductions and “difficult market conditions” in July and August.
Gear4music posted revenues of £66.3m during the period, up from £64.7m the previous year. The increase includes a 3% decrease in UK sales due to a strong FY22 H1 comparative and a more normalised trading environment post Covid. However, this was offset by stronger European growth of 10% which it added reflects an “improving localised customer proposition”.
The net debt of the company is up to £21.8m from £13.4m this time last year. However, the company also has £13.2m cash headroom at a point in the year where cashflow is often low.
Gear4music confirmed the outlook for the company is looking brighter as it revealed improved trading momentum at the start of this financial half year has continued into November.
In addition, net debt is expected to be reduced by March next year and the full-year outlook is expected to be in line with market expectations.
CEO Andrew Wass said: “Our FY23 H1 trading results reflect previously reported challenges, including inflationary pressures on our cost base, the cost-of-living crisis affecting consumer confidence, unusually hot weather during the summer months, and comparison to the last of the Covid-enhanced figures in FY22 Q1.
“Whilst we have adapted to the challenges of the last six months, we have also remained focused on our longer-term growth strategy, delivering a wide range of customer centric improvements throughout the business.”
He added: “Progress has included several website upgrades, such as the ability for customers to create their own customised audio packages and cables, extending evening cut-off times for next day delivery, improving our consumer finance proposition, and upgrading our digital downloads sales platform.
“I am pleased to report that we have seen a consistent improvement in trading momentum during the last two months, despite continuing macro volatility. We are also well prepared for our peak seasonal trading period. The board therefore remains confident that results for the full financial year will be in-line with current consensus market expectations.”
