- Sales up 27% in Q1
- ‘Traction’ continues in Q2
- Capacity withdrawal boost
Shares in Gear4music (G4M:AIM) rocked up 11% to a two-year high of 294p after the online musical instruments retailer delivered another full-year profit upgrade on the back of positive trading momentum and the demise of several weak competitors.
In an AGM (annual general meeting) update, the York-headquartered company confirmed the ‘strong sales momentum’ highlighted in its previous update had persisted into the first quarter to June.
In fact, revenues were up 27% year-on-year in Q1, Gear4music’s best growth rate since Covid lockdowns triggered a boom in spending on hobbies including music. Encouragingly, the company said this ‘traction’ had also persisted into the second quarter to date.
UPBEAT TEMPO
Having upgraded earnings guidance as recently as June, the guitar, keyboard and drum seller now expects results for the year ending 31 March 2026 to top consensus estimates for sales of £155.8 million, EBITDA (earnings before interest, tax, depreciation and amortisation) of £11.3 million and pre-tax profit of £3 million.
Admittedly, the critical Christmas period is still to come, but management is drawing confidence from strong year-to-date trading under a refreshed growth strategy which executive chair Andrew Wass says is delivering ‘tangible results’.
Gear4music, whose exciting recovery potential Shares highlighted in May, is also profiting from ‘a more favourable competitive landscape across both our UK and European markets’ which is allowing the group to ‘successfully capture additional market share’.
This comment refers to the recent insolvency of two price discounters operating in Gear4muisc’s key markets, which has reduced competitive pressures on the business.
ALL TO PLAY FOR
‘We raise our full-year 2026 forecasts in a prudent manner, which sees a 7% increase in EBITDA to £12 million from £11.2 million previously,’ wrote Progressive Equity Research analyst David Jeary.
‘This reflects both the absence of formal company guidance, along with the fact the full-year outurn depends on the peak Christmas trading period.’
Jeary added: ‘Our full-year 2026 turnover assumption has been increased by 4% to £161.4 million, which equates to 10% growth over full-year 2025. This is both prudent and potentially conservative compared with the 27% sales growth delivered in Q1, with traction continuing into Q2-to-date.’
