The York-based firm, the largest UK-based online retailer of musical instruments and music equipment, saw a sales boom during the pandemic lockdowns as more people turned to music to keep themselves occupied and mentally healthy.
Gear4music’s chief executive, Andrew Wass, will tell shareholders at the groups AGM today: "As previously announced, first quarter trading was stronger than the board had expected although, as anticipated, behind the exceptional period of trading during the 2021 financial year.
"UK sales have pleasingly returned to growth during July and August. European sales have remained behind last year, primarily as a result of post-Brexit cross border shipping challenges creating a less competitive delivery proposition in some of our European markets."
The group said that its two new distribution centres in Ireland and Spain will be operational by the end of this month, as planned, and should eliminate most of the remaining post-Brexit challenges, significantly improving its European deliveries to provide a platform for further growth in its European markets by the fourth quarter of the 2022 financial year.
Mr Wass will tell shareholders: "In line with our stated growth strategy, we are very pleased to announce that the group has exchanged contracts for the acquisition of AV Online, an online retailer of home cinema and HiFi equipment and, separately, the acquisition of the website domain name ‘AV.com’.
"AV Online increased revenues by 54 per cent to £8.6m during the last financial year to March 31, generating adjusted EBITDA of £1.3m.
"Operating in a £400m UK audio video market that is currently dominated by high street based retailers, the board believes that AV Online will greatly benefit from being transferred onto the group’s highly scalable European e-commerce platform and being rebranded to ‘AV.com’."
Mr Wass will say that trading to date remains in line with the board’s expectations, although it remains mindful of ongoing uncertainties around Covid-19 and the potential for supply chain disruption during the second half.
"As a result of the operational and commercial actions we are taking, and the acquisitions we are making, the board retains a high level of confidence that the group is well positioned to deliver on its long term growth strategy," he will tell investors.
Rickitt Mitchell (Neil Mitchell and Charlotte Potts) provided corporate finance advice to Carl Pickles (founder and owner of AV Online) on the disposal of his shareholding. Pannone Corporate (Mark Winthorpe and Andrew Walsh) provided legal advice to Carl Pickles.
Neil Mitchell, partner at Rickitt Mitchell, said: “Working with Carl has been a pleasure. He has created a specialist and high quality business that has been on an exciting journey to date. The acquisition of AV Online and subsequent acquisition of the AV.com domain gives Gear4Music a real opportunity to further develop its reach in the AV market across key European territories.