Gear4music continued its recent run of positive news announcements yesterday with an upbeat AGM trading statement. Growth, following an exceptional first quarter in FY2021 (April to June), remained brisk in July and August. Moreover, the company’s strong sales momentum is more than matched by improvements on costs and margins.
There are clearly good reasons to remain optimistic about the company’s near and long term prospects. Gear4music already started the current financial year well. The July and August data suggest unusually healthy revenue growth across the whole of the first half of FY2021. Total sales in the three months to end-June 2020 increased by 68%.
Encouragingly, Gear4music’s FY2020 prioritisation of profitability remains on track. Yesterday’s statement cited margins which continued to improve alongside proportionately lower marketing costs as it appears that the group’s rapid sales growth is delivering significant scale benefits for profitability.
Board confidence in FY2021 full year profit guidance is sustained. The company states that it is confident that full year results will be at least in line with its recently upgraded expectations. We upgraded our own forecasts in a 23rd July 2020 report "Gear4music - Sustaining a positive run of good news."
Gear4music will next announce on 22nd October 2020, when it updates the market fully on its first half. Yesterday’s announcement further extends Gear4music’s ability to deliver positive newsflow. It is the sixth consecutive positive RNS since 18th March 2020 when the company highlighted minimal impact from Covid19.
Gear4music’s attractions as a company which can generate mature market sales volume growth remain in place. Even without a boost from Covid-19, its distribution model is arguably far more appropriate for an industry in which “hobbyist” customers wish to maximise available choice, than that of traditional retailing.