Is it possible to sell a tuba online? Intuitively you might wonder whether you would be able to hawk musical instruments via the internet; surely it's a case of play-before-you-buy. Well, full-year figures for Gear4music (G4M) belie that notion, with revenues growing strongly on a marked step-up in customer numbers.
Domestic sales were up by around a third, while the top-line contribution from its foreign markets more than doubled. Gross profits were up two-thirds to £15.1m, underpinned by a 110 basis point lift in the margin, due in part to the continued strength in own-brand products.
The retailer's ability to serve its customer base on the continent has been enhanced by the opening of new distribution centres in Sweden and Germany. The ease with which punters can access the musical equipment they require, together with efficient delivery systems, are strategic priorities for the company, so online capabilities were bolstered by the addition of a dedicated software development team in January. This rapid expansion left the cash pile lower year on year and increased Gear4music's working capital commitments and trade payables, though this is to be expected.
Panmure Gordon analysts expect adjusted pre-tax profits of £3.3m for the year ending February 2018, with EPS lowered from 11.5p to 10.8p (from £3.2m and 11.4p in FY2017).
| GEAR4MUSIC (G4M) | ||||
|---|---|---|---|---|
| ORD PRICE: | 626p | MARKET VALUE: | £126m | |
| TOUCH: | 623-628p | 12-MONTH HIGH: | 723p | LOW: 99p |
| DIVIDEND YIELD: | Nil | PE RATIO: | 54 | |
| NET ASSET VALUE: | 58p | NET DEBT: | 3% | |
| Year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013* | 12.3 | -0.6 | na | na |
| 2014* | 17.7 | -0.4 | na | na |
| 2015 | 24.2 | -0.8 | -5.4 | nil |
| 2016 | 35.5 | neg | -0.2 | nil |
| 2017 | 56.1 | 2.6 | 11.5 | nil |
| % change | +58 | - | - | - |
Ex-div: na Payment: na *Pre-IPO figures | ||||
