Online musical instruments retailer Gear4music (G4M:AIM) managed to get full value from seasonal Christmas trading after upgrading its infrastructure and operating efficiencies.

Revenues grew 7% in the two months to 29 December which pleasingly translated into an 18% improvement in gross profits. The shares rocked 12% higher on the news to 272p.

SEASONAL SIGH OF RELIEF

The positive trading update came as some relief to investors, given last years’ disastrous seasonal trading where the company just couldn’t cope with the demand for its products and led to the company dramatically cutting its profit guidance.

Chief executive and founder Andrew Wass said, ‘our upgraded infrastructure demonstrated its resilience and capacity over the Black Friday to Cyber Monday weekend, and we comfortably dispatched over 26,000 consignments, which was 34% more than last year's Black Friday weekend.'

CHRISTMAS IS HUGE FOR COMPANY

To emphasise how important the Christmas period is for the group, gross profits for the two months to 31 December were £8m which compares with the half year to 30 September period where it made £12m.

This puts the company on a sound footing to deliver profitable growth in the UK and continental Europe. Management said that full-year profits will be ‘at least’ in line with the board’s expectations.

A key metric for investors  is the proportion of ‘own label’ products sold as this demonstrates the value of the brand as well as improving margins and profits.

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Issue Date: 23 Jan 2020