Gear4music earnings soar as people turn to music amid new lockdown restrictions

The York-based firm is benefiting as people turn to music to keep themselves occupied and mentally healthy amid new lockdown restrictions.

The group, which is the UK’s biggest online retailer of musical instruments and music equipment, now expects its annual results will be ahead of recently upgraded market expectations.

Gear4music’s chief executive, Andrew Wass, said best sellers include guitars, keyboards, pianos, studio equipment, home recording equipment and podcasting equipment. However, the pandemic has hit sales of orchestral instruments and live sound systems.

“Guitars, and everything to do with guitars, have grown by 74 per cent,” said Mr Wass.

“Keyboards and pianos again were really strong, with growth of 47 per cent.

“Orchestral instruments grew by 18 per cent, so nowhere near the level of the guitar market. People tend to play them in orchestras and brass bands and that has been a lot more challenging in the current circumstances.

“Studio equipment, home recording equipment and podcasting equipment have done phenomenally well. We saw 84 per cent growth in that product category. It did exceptionally well as opposed to live sound systems, which didn’t do very well at all because no-one is doing gigs so they actually shrank 19 per cent.”

The firm’s operating profit increased by £6.2m and earnings leapt 325 per cent to £8.5m in the six months to September 30. It attracted 403,000 new customers over the period, a 52 per cent increase.

The firm said Covid restrictions across Europe are boosting its sales growth, resulting in record profitability.

Mr Wass said more people are appreciating the benefits that playing and creating music can bring during these difficult times.

“People have got more time on their hands,” he said.

“There is a lack of other things people are able to do, so it’s a combination of parents encouraging their children to do something that they feel is more productive with their time - learning a new skill.

“Also, people who have played in the past think: ‘I’ve got more time to do that while I’m going to be staying indoors. I’m going to go back to that and try and improve the skills that I’ve got’.”

The group is keeping a close eye on the impact that Brexit may have on the musical instruments market.

Mr Wass said: “Alongside the challenges of Covid, Brexit will also bring new challenges to our industry.

He said that whilst it is difficult to predict every outcome of Brexit, the firm is well prepared.

“We started building systems and changing systems about two years ago,” he said.

“Now we are as well prepared as we possibly could be for it. We’ve done a lot of work to make sure we can continue to get our products across the borders.

“Around half of our sales go into Europe. We are very much a European business and it’s really helped us that we have two European hubs - a place in Sweden and a place in Germany and they are a big part of how we’ve been able to mitigate the risk for us.”

Analyst Jonathan Pritchard at Peel Hunt said: “We knew first half sales were strong, but today’s update told us the margin they achieved was very healthy and trading since half end has stayed stellar.

“Momentum will persist, but what pleases us most is that the strategic shift is working well. Gone are the local spats on price, and the profit/sanity interplay is at the heart of thinking.

“Management alluded to a good start to the second half at the AGM and that has continued into November with the return of stellar conditions with the lockdown. It is likely that there has been some draw forward of Christmas, but it’s hard to discern how much, and with the competition closed in many territories, market share is being won. We are upgrading our second half assumption for sales growth, up from 5 per cent to 10 per cent, but that doesn’t feel at all aggressive.”