Sales for the three months to 30 June were £37.3 million, an increase of 68% on last year, with UK sales alone up 80% to £21.2 million.
Chief executive Andrew Wass commented, ‘As previously reported, the COVID-19 lockdown created an exceptionally strong period of trading for the Group during April and May 2020, and further strong trading in June resulted in Q1 revenue growth of 68% compared with the same period last year.’
This momentum continued into July, with the company achieving higher gross margins and a lower marketing cost than usual alongside a controlled cost base.
‘As a result, and whilst still early in the current financial year, the board is confident that a significant improvement in profits will be achieved for the full financial year, which are now expected to be meaningfully ahead of our previous expectations’, said Wass.
Analyst Chris Wickham at Equity Development believes that despite the rally in the shares, the firm’s valuation on the basis of Enterprise Value (EV) to earnings before interest, taxes, depreciation and amortisation (EBITDA) ‘looks unusually low by the standards of successful online retailers.’
‘In our view, the shares are likely to enjoy further re-rating. We reiterate that Gear4music looks well placed as a company to thrive, both mid and post pandemic’ he adds.