LONDON (ShareCast) - (Sharecast News) - Shares in musical equipment retailer Gear4music tumbled on Thursday after it revealed full-year underlying earnings would be markedly lower in 2022 after total sales slipped as an uptick in the UK was offset by a decline in Europe and the rest of the world.

Gear4music posted a 6% year-on-year decrease in total sales to £147.6m in the three months ended 31 March, as UK sales grew 5% to £82.6m but European and rest of world sales slumped 18% to £65.0m.

As a result, the AIM-listed firm stated full-year underlying earnings were now expected to be approximately £11.0m, down from £19.8m in 2021 but up from £7.8m in 2020.

Gross margins remained "strong" at 27.8%, bang in the middle of 2021's 29.5% and 2020's 25.9%.

Chief executive Andrew Wass said: "Although FY22 financial performance has been impacted by weaker consumer demand during February and March, we retained a significant proportion of the exceptional gross margins that benefited from Covid lockdowns during FY21.

"Short term inflation-linked overhead cost pressures and weaker consumer confidence across the broader retail landscape will mean the best opportunities for stronger growth during FY23 are likely to be in H2. We are, accordingly, moderating our overall growth expectations for the new financial year, which we believe is the prudent approach in the current environment. During what may be a more challenging FY23 H1 retail environment, sales and margins will be supported with good levels of inventory across our distribution centres, continuing expansion of our European operations to drive European website conversion, and sufficient working capital to continue investing where appropriate."

As of 0925 BST, Gear4music shares had slumped 26.42% to 264.90p.

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