Hit the high notes: Gear4Music gains 371% as the British make music and use “sound therapy” instruments to beat the lockdown blues
- Pre-tax profit rose by £ 11.5m to £ 14.6m through the end of March
- Guitars, digital keyboards and pianos flew off the virtual shelves
- Lockdown saw the growth of new niches, such as instruments for sound therapy
- Trade over the past three months has been stronger than expected
Online instrument retailer Gear4Music has grown into a massive lockdown winner after more people decided to learn music or improve their skills to overcome the lockdown blues.
The York-based company said its pre-tax profit rose a whopping 371 percent to £ 14.6 million for the year ended March – or an increase of £ 11.5 million from £ 3.1 million in 2019 .
Guitars, digital keyboards and pianos flew off the virtual shelves, with Gear4Music’s own-branded instruments selling particularly well as first-time instrument players preferred their “intermediate and entry-level” products.
Music to the ears: Gear4Music saw sales increase 31% and profit 371% over the past year
The company said the lockdown also saw new product niches develop, such as instruments for sound therapy.
Revenue rose 31 percent to £ 157.5 million, with strong growth of 42 percent in the first half of the year when the first locks were rolled out across Europe and giving way to weaker growth of 23 percent in the second half.
This is because the company increased the number of active customers by 32 percent to over 1 million over the past year.
CEO Andrew Wass said that while the company won’t see the same sales and earnings growth this year, trading so far has been stronger than expected – and that this year’s numbers will likely be above expectations.
Shares in AIM-listed Gear4Music rose 1.4 percent to £ 9.41 in afternoon trading on Tuesday.
The subdued reaction of investors to the spectacular numbers shows how they have already observed Gear4Music in recent years after the excellent growth.
The shares have jumped from £ 1.39 in the summer of 2015 to £ 7 last December and to £ 9.45 today.
With lockdowns easing across Europe and live gigs and performances starting again, the company expects demand for products such as PA systems and stage lighting, which has slowed during the pandemic, to pick up again.
“We assume that these factors, in addition to the accelerated conversion to e-commerce, will ensure a continued favorable trading environment for the group,” said Wass.
“The outlook and general demand for musical instruments and equipment remains positive and with the strategies and actions we are taking we remain confident of achieving sustainable and profitable growth over the long term,” he added.
During the year the company made two acquisitions including Premier, a drum kit and percussion brand from 1922, and Eden, a bass guitar amplifier brand previously owned by Marshall.
And said it will look to make additional acquisitions this year, including existing brands already sold by Gear4music or “profitable retailers operating in compatible parallel markets.”
Due to Brexit, two new distribution centers will be opened, one in Dublin and one in Barcelona, with the latter “significantly” reducing cross-border costs between the UK and the EU and the timing of deliveries throughout southern Europe.
Both should be fully operational by the end of this year, it said.
Gear4Music already has showrooms in York, Sweden and Germany. It sells musical instruments of its own brands as well as well-known brands like Fender, Yamaha and Roland.
Ger4Music shares rose from £ 1.39 in the summer of 2015 to over £ 9 today