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Music Magpie has posted a first half loss of £0.7m, down from profits of £4m, in the six months to 21 May 2022 as its revenues declined amid a post-pandemic drop in trading.
During the period, its group revenues declined marginally to £71.3m (H1 2021: £72.8m) with Music Magpie adding that growth in Consumer Technology largely offset the “expected post-pandemic reduction in Disc Media and Books”.
Consumer Technology revenues made up 65% of total group revenues, including subscriptions and was up 15.9% to £46.0m. Disc Media and Books revenue fell 23.6% to £25.3m, with the prior year H1 benefitting from pandemic lockdowns.
It added that gross profits fell to £19m down from £23.7m, with gross margin reducing to 26.6% as a result of the change in overall product mix towards Consumer Technology, with an increased proportion of these products being sourced from intermediary wholesale partners.
Steve Oliver, CEO of musicMagpie, said: “I am pleased that the business has delivered a strong performance in our strategically important Consumer Technology division, which now represents two-thirds of our total revenue. I am also delighted with the progress being made in our device rental subscription service.
“In light of the continuing squeeze on consumer spending, we believe that this will become an increasingly attractive option to a wider range of consumers seeking to replace their non-discretionary technology products in a cost-effective way. Whilst the successful growth of this offering has a short-term compression on the financial performance of the business relative to a one-off sale, it will deliver higher revenue and EBITDA over the life of the device.”
He added: It therefore remains our overriding growth strategy for the medium term, and we are delighted to announce HSBC UK and NatWest’s support in the form of a new £30m three-year revolving credit facility to further support our investment in this area.
“Notwithstanding the challenges presented by the current macroeconomic uncertainty, we expect consumers will continue to seek ways to raise cash and save money and as a result, we are confident that the business is well positioned for future growth in H2 2022 and beyond.”
