Revenue dips for musicMagpie as book sales slump
Seller of refurbished products musicMagpie posted a solid performance for its half year results this morning, despite economic headwinds battering the industry.
Revenue was up 16 per cent for the core tech division, despite intentionally tempering growth via its disciplined approach to its margin-enhancing rental model.
However, the Manchester-based firm posted an overall revenue of £71.3m for the six months to May 31, down two per cent from the previous year.
Revenue from its higher-margin media and books business also shrank more than expected, down 23.6 per cent to £25.3m.
The downturn for books can be contrasted to publishing titan Bloomsbury’s results yesterday, which showed an increasingly resilient performance in sales, with Bloomsbury chief Nigel Newton stating: “The question on all of our minds was: would the pandemic surge in reading continue? We now know the answer: reading has become a reacquired habit and continues to thrive”.
The company wrote: “Whilst acknowledging the current uncertain economic environment facing all consumer businesses, the board is confident of achieving its full-year expectations with a much stronger H2 profit performance from increased contribution from the growing rental subscribers alongside continued anticipated sales revenue growth from the recent expansion of ‘marketplace’ sales channels, including Back Market, on which the group has recently successfully launched”.
While the board is confident of achieving full year guidance, brokers at Peel Hunt said it would “bake in some caution”, and said: “Given the uncertainty in front of us, along with the success of rental (a beneficiary of this uncertainty), we trim our EBITDA estimates slightly (-4.9%) for FY22E and increase FY23E by an offsetting amount (+4.2%)”.
As the largest reseller of consumer technology items in the UK, Peel Hunt maintained musicMagpie’s ‘buy’ rating, and target price of 190p.