Online musical equipment company Gear4music (G4M:AIM) said strong trading momentum over the summer had continued into this month with full-year results now likely to be ahead of expectations. The shares blew 4.4% higher to a new 12-month high of 720p.
Reporting on the six months to 30 September, the company said sales grew 42% to £70.2 million while the gross margin also improved by 3.3% to 28.5% boosting gross profits by a whopping 60% to £20 million.
The gross margin is calculated by deducting all the direct costs of making or supplying goods from the sales generated and dividing by the sales figure.
UK revenues grew 48% to £36.7 million while Europe and the rest of the world grew 36% to £33.5 million, marking a deceleratio from the exceptional first-quarter growth of 80% and 55% respectively.
Commenting on the first-half, chief executive and founder Andrew Wass said 'our customers are continuing to appreciate the benefits that playing and creating music can bring during these difficult times, as well as the continued convenience of ordering our products online.’
The company’s efforts to control costs and improve gross margin through proportionately lowering marketing costs seem to be paying off without any negative effects on growth.
This bodes well for the all-important Christmas trading period. Given the exceptional performance in the first quarter during lockdown, which continued through the first-half, the company said ‘the outcome will be financial results for the first half of financial year 2021 that are materially ahead of last year.’
In addition the board is confident that full-year results to 31 March 2021 will be ahead of previous market expectations. Currently analysts are forecasting revenues up 22% to £146.3 million and gross profits of £38.4 million or a margin of 26.6%, implying upgrades to estimates over the coming weeks.
