Online musical instruments and equipment retailer Gear4music (G4M:AIM) drummed up a forecast-beating 154% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) to £19.8 million for the year to March 2021 thanks to margin and efficiency improvements and ‘exceptional’ demand during lockdown.

While the York-headquartered firm still sees profitability below last year’s record level, trading in the first quarter of the new financial year has been stronger than expected so the retailer raised its earnings guidance, sending the shares up 3.5% to 960p.


Gear4music’s sales grew 31% to £157.5 million last year as the pandemic changed the way people worked, shopped and used their leisure time. Non-essential physical shops were shuttered for substantial periods in many countries, meaning the share of consumer spending online grew substantially.

And with many people working from home, there was more time available to pursue hobbies including music.

‘We had an exceptional period of trading during full year 2021, particularly during the initial Covid-19 lockdown in the first quarter,’ explained chief executive Andrew Wass.

‘The number of potential customers in our market significantly increased, as traditional high street retailers were unable to operate as normal and people sought activities in which to participate whilst spending more time at home.’

Given that the company’s exceptional performance was driven by the initial lockdowns during the first half, management doesn’t currently expect to achieve the same level of full year profitability this year as last.

However, Gear4music said first quarter trading has been stronger than the board previously expected, and ‘having retained a good proportion of the gross margin gain achieved during FY21, financial results for FY22 are likely to be ahead of the board’s previous expectations.’


Following today’s update, Progressive Equity Research analyst David Jeary upgraded his EBITDA estimates for the years to March 2022 and 2023 by 20% to £13.9 million and 34% to £17.5 million respectively.

‘Smoothing the impact of this annus mirabilis, looking at the longer-term, underlying growth trends over our forecast horizon, shows a company in fine fettle and in strong growth mode,’ said Jeary.

‘Management has clearly signalled its intent to deliver further growth and increased shareholder value for its investors, with acquisitions and new initiatives complementing the organic growth of its existing business.’

Gear4music assured general demand for musical instruments and equipment remains positive and also announced plans to open two new European distribution centres, in Dublin and Barcelona, as well as the strategic acquisition of two music brands to support its own brand offer.

These are heritage drums and percussion brand, Premier, and Eden, a bass guitar amplification brand.

Also upgrading estimates was N+1 Singer, which noted Gear4Music’s market share increased to almost 9% in the UK and sees ‘scope for continued share gains as the leader in its domestic market continues to invest in the customer proposition and as the channel shift has been accelerated by the pandemic.

‘While sales increased in Europe increased strongly, we estimate market share across its key markets is still below 2% - presenting a substantial opportunity for future growth.’


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Issue Date: 22 Jun 2021