Gear4music (G4M) , the AIM listed online musical equipment and instrument retailer, rallied Tuesday morning on the back of strong sales and improved margins.
Total sales were £49.4 million, a 16% increase, and gross profits were £12.4 million, a 29% increase, for the six months to 30 September 2019.
Sales from its European and Rest of World markets were £24.6 million, a 33% increase from £18.5 million, while UK sales were fairly flat, ticking up 3% to £24.8 million.
Commenting on the results, Gear4music CEO said: “International sales growth continues to be strong, and whilst the UK market remains highly competitive, we have returned to a more profitable margin structure and believe that this is the right strategy from which to grow our revenues going forward.”
Shares in Gear4music were trading 6.17% higher at 215p on Tuesday on the back of the results
In a research note, Chris Wickham, analyst at research house Equity Development said “Investors should focus on a 250 basis point rise in gross margins”
Gear4music’s gross margins improved by 250 basis points to 25.2%, up from 22.7%, by cutting out less profitable sales and focusing on higher margin products.
The company said that they have a “robust logistics operation in place” ahead of the second half of 2020, their peak trading period.
Gear4music sells its own branded musical instruments and equipment, alongside premium third-party brands including Fender, Yamaha and Roland.
The company maintained its full year EBITDA expectations, and will publish its interims on 12 November 2019.
Follow News & Updates from Gear4music here: