Musicmagpie share price soars after strong results on Black Friday tech sales
Musicmagpie shares soared as much as 24 per cent on Thursday morning after the second-hand smartphone seller said a record Black Friday helped it claw back some ground in the second half of the year.
In an update to markets, Musicmagpie said it expects its earnings before tax to be up by over 15 per cent, from £6.5m in 2022 to £7.5m for this full year, ending 30 November.
After a “record” Black Friday, consumer technology revenues in the second half were up 7.5 per cent from the previous year, landing at £95.4m for the full year compared to £96.6m in 2022.
The company’s rental service, which allows customers to pay a low fee for a device before renewing or upgrading a year later, saw a 57 per cent growth in revenue to £8.3m as it added 6,600 subscribers taking the total to over 37,000.
Musicmagpie chief executive and co-founder, Steve Oliver, said the company’s strategy of proactively managing the number of active Rental subscribers has also contributed to the second half growth.
Oliver said it “will support our short-term objectives on profits and cash into 2024, bolstered by an enhanced Buy Now Pay Later offering.”
Musicmagpie is currently seeking buyers and is in an “offer period” after potential suitors BT and Aurelius both changed their minds and walked away.
Retail partner at law firm Gowling WLG, John Coldham, said it is a “significant result” after Musicmagpie’s less impressive first half of the year.
It suggests that the phenomenon of Black Friday is “far from temporary”, Coldham said.
“Whilst some businesses have started to dilute or soften their activity around this date, others really are benefiting from the attention and sales it can create.
“It is interesting to see a split in the business between championing cash on the one hand with rentals for those consumers with stronger credit ratings (who are more likely to renew).
“This segmentation to offering different options to different groups of consumers is perhaps a sign of the adaptations businesses like this need to do to stay relevant to people in different financial situations,” he explained.