Gear4Music reports strong demand for musical instruments during pandemic

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Gear4music Holdings PLC (LON:G4M) said full-year results are likely to be ahead of expectations as trading only slowed slightly from the ‘allegro’ start to the year.

Sales rose 42% to £70.2mln in the six months to September 30 for the online music retailer.

UK sales were up 48% to £36.7mln and overseas sales by 36% to £35.5mln, compared to 80% and 55% growth seen in the first quarter.

Gross profit increased 60% to £20mln as gross profit margins improved to 28.5% from 25.2% in the same period a year ago.

Trading momentum was said to have remained “strong” into October ahead of the traditional Christmas peak season.

Chief executive 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.

He added that the company was mindful of the uncertainties posed by Brexit and COVID-19, but said the board “is confident that results for the full financial year will be ahead of previous consensus market expectations”.

Broker Peel Hunt said the crucial period is Christmas “so we obviously won’t get carried away with forecasts” but was edging up this year’s underlying profit (EBITDA) estimate by 6% to £12.5m.

“The shares have done extremely well and will be a long-term winner: we take our price target up to 700p.”

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