Profitability, not market share, for Gear4music

Musical instruments retailer Gear4music said its focus will be on improving profits rather than driving market share as it approaches the all-important Christmas trading period.

Gear4music's chief executive Andrew Wass

The York-based firm, which is the UK’s biggest online retailer of musical instruments and music equipment, said revenue rose 16 per cent to £49m in the six months to September 30.

International revenues rose 33 per cent, which was considerably stronger than the 3 per cent growth in the UK, which reflected the “highly competitive” domestic market.

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The firm’s chief executive Andrew Wass said: “This has been an important period of balancing sales growth with our primary objective of improving gross margins and profitability and I am pleased to report tangible evidence that we are making good progress in achieving that objective.

“Having grown our revenues by more than 350 per cent over the last four years, our recent focus has been on ensuring that our operational infrastructure is able to keep pace with our increased scale, and I am very pleased with the progress we have made during the period in further developing our back-end systems and logistics platform.”

Operating profit increased by £500,000 from a loss of £300,000 to a profit of £200,000 and EBITDA rose 206 per cent to £2.0m.

Mr Wass said that after making improvements, the group expects to shift its development resources back towards growth orientated projects from next year, which alongside further systems improvements, should deliver long term growth in profits and revenues.

”As we approach the Christmas trading period, we will remain focused on improving profitability rather than driving growth in market share, particularly in the UK where the market remains highly competitive,” he added.

“Having appropriately reconfigured the business, we now expect gross margins to be higher and revenues to be lower than previous guidance, reflecting our focus this year on building a sustainable platform for growth in all areas.

“We believe that this is the right strategy for the delivery of long-term shareholder value and we remain confident that the business is well-positioned to trade in line with our full year EBITDA expectations.”

Gear4music sells own-brand musical instruments and music equipment alongside premium third-party brands such as Fender, Yamaha, Gibson, Roland, Casio, Ibanez, Alesis and Behringer & Gibson.

Its customers range from beginners to musical enthusiasts and professionals, in the UK, Europe and, more recently, the rest of the world.

Instruments range from orchestral instruments to rock ‘n’ roll, including guitars, drum kits, digital pianos, saxophones and cellos, plus leading recording and studio equipment.