LONDON (ShareCast) - (Sharecast News) - Online musical instrument and equipment retailer Gear4music reported final results in line with market forecasts on Tuesday, with revenue down 5% year-on-year to £144.4m, reflecting a strategic focus on enhancing gross margins and reducing costs to prioritise profitability over revenue growth.
The AIM-traded firm said gross profit for the 12 months ended 31 March were ahead 1% at £39.4m, with a gross margin improvement of 160 basis points to 27.3%.

EBITDA was ahead 29% to £9.4m, while adjusted EBITDA grew 34% to £9.9m, aligning with market expectations.

Gear4music achieved a profit before tax of £0.6m - a significant turnaround from the prior year's loss of £0.4m, with adjusted profit before tax reaching £1.1 million.

The company made notable progress in reducing its net debt, which decreased to £7.3 by year-end, down from £14.5m a year earlier and £24.2m in 2022, surpassing market expectations.

Additionally, Gear4music's venture into the second-hand market showed strong growth potential in its first full year.

Looking ahead, Gear4music said it had implemented a refreshed growth strategy aimed at driving profitable growth in the 2025 financial year, through an enhanced product offering and improved operational efficiency.

The company also announced several board changes effective 5 July.

Ken Ford and Dean Murray were set to step down from their roles as non-executive chair and non-executive director, respectively.

Chief executive officer Andrew Wass would transition to executive chair, with current chief commercial officer Gareth Bevan taking over as CEO.

Neil Catto would join the board as senior independent director and audit committee chair, while Sharon Daly would become a non-executive director.

"We are pleased to be reporting 2024 financial results in line with market expectations, with adjusted EBITDA of £9.9m representing a 34% increase on £7.4 in 2023, highlighting the successful execution of our strategy to prioritise and protect margins," said chief executive officer Andrew Wass.

"The group has also delivered on another strategy priority with net debt reducing to £7.3m as of 31 March, almost halving since 31 March 2023 and being 0.7x 2024 adjusted EBITDA.

"In addition, we improved gross margins by 160 basis points to 27.3% during 2024, whilst at the same time reducing overhead costs, delivering a £1.5m improvement in adjusted profit before tax."

Wass said that, having delivered the key objectives set at the beginning of the 2024 financial year, the group was now well-positioned to relaunch its profitable growth strategy for 2025.

"This will focus on expanding sales verticals and channels to market whilst further enhancing and leveraging our unique bespoke e-commerce platform and product offering.

"International revenue growth faced some localised challenges in 2024; however, the board is confident that, through our ongoing actions and new initiatives, such as our second-hand proposition, European sales are set to start recovering in 2025."

The cost reductions implemented through the 2024 financial year were now delivering full-year benefits as the company entered 2025, Wass added.

"Alongside this, based on trading performance since our last update in April, the board remains confident in delivering further improvements in financial performance during 2025 in line with market expectations."

At 0823 BST, shares in Gear4music Holdings were up 7.16% at 143.6p.

Reporting by Josh White for Sharecast.com.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE