Half Year Pre-Close Trading Update

Half Year Pre-Close Trading Update

Released : 19 June 2023 07:00

19 June 2023

musicMagpie plc

("musicMagpie", or "the Group")

HALF YEAR PRE-CLOSE TRADING UPDATE

Adjusted H1 EBITDA up 7.7%; trading in line with Board expectations

musicMagpie, a circular economy pioneer specialising in refurbished consumer technology, announces an unaudited pre-close trading update for the six months ended 31 May 2023 ("H1 2023").

Following a challenging start to H1 2023, with postal strikes and low consumer confidence impacting December and January, trading performance strengthened from February onwards, driving a strong Q2 2023 that delivered EBITDA of £2.0m, up 42% on Q2 2022.  Overall EBITDA for the traditionally quieter first six months of the year was £2.8m, up 7.7% on H1 2022 and in line with the Board's expectations.

During the period, the Group focussed on cost control and increasing gross margins rather than growing revenues on lower margin products.  Consumer Technology revenue for H1 2023 was £41.2m, comprising two thirds of total revenue (H1 2022: £46.0m). Sales of Disc Media and Books continued their anticipated decline, falling to £20.8m (H1 2022: £25.3m). 

Gross margin increased strongly by around 3.1 percentage points year on year. The improvement was driven by: a combination of a higher proportion of product sourced directly from consumers; an increase in the proportion of sales made through the musicMagpie store; and the increasing contribution from rental subscriptions. These factors, combined with cost control measures delivering lower overheads, contributed positively to the strong Q2 2023 performance.

Active customers to the rental service for Consumer Technology products increased to c.39,000 (31 May 2022:  24,000, 30 Nov 2022: 30,500).  H2 2023 will see the launch of an enhanced Buy Now Pay Later option which will benefit Consumer Technology sales and increase choice for consumers. It will sit alongside the Group's evolving rental offer which will focus on more profitable, higher credit quality customers.  This will help support long term profit growth whilst managing working capital, and thus debt utilisation, more effectively.   

The Group is pleased to announce that it has extended its £30.0m Revolving Credit Facility by one year to provide committed facilities through to July 2026. Net debt on 31 May 2023 was £13.7m.

As evidenced in previous years, the Group has a much stronger second half weighting to its financial year, owing in part to seasonal peak trading around the Black Friday weekend in November. This seasonality, combined with the continued focus on own store sales and the strong performance achieved in Q2 2023, means that the Board is confident in the Group achieving its full year expectations, whilst remaining cognisant of the current tough consumer market.

Steve Oliver, Chief Executive Officer & Co-Founder of musicMagpie, said:

"We are pleased with our performance in what is always the seasonally quieter half of the year for musicMagpie. It is especially gratifying to see that our profit improvement has been driven by an increased margin. This has been achieved both by focusing on higher margin sales through our own musicMagpie online store, as well as the continued strong growth of our rental offering. While we remain very mindful of the current tough consumer environment, the momentum in our business as we head into H2 means that we are confident of achieving our full year expectations."

Notice of results

The Group will announce its interim results for the six months ended 31 May 2023 on Thursday 13 July 2023.

- Ends -

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About musicMagpie

Operating through two trusted brands - musicMagpie in the UK and decluttr in the US - musicMagpie's core strategy is simple: to provide consumers with a smart, sustainable and trusted way to buy, rent and sell refurbished consumer technology and physical media products with sustainability running to the very heart of its operations. Founded in 2007, the Group has an established presence in the UK, with operations in Stockport, Greater Manchester, and in the US in Atlanta, Georgia.

musicMagpie has a strong environmental and social focus, as demonstrated by its trademarked 'smart for you, smart for the planet' ethos. Nearly 400,000 consumer technology products were resold in FY22. In addition, the Group re-sells approximately 10m books and disc media each year that could have ended up as waste. During 2022, musicMagpie's UK consumer tech and disc media customers, along with its trade partners, helped to save over 43,000 tonnes of CO2 by buying, selling and renting with the Group - an amount equivalent to providing heating for over 16,000 homes, or powering more than 50,000 flights from London to New York. The Group has been given the London Stock Exchange's Green Economy Mark in recognition of its contribution to the global green economy.

When selling to musicMagpie, the customer is offered a fixed valuation via the website, provided with free logistics to ship the products and (subject to it being 'as described') receives payment for their product on the day of arrival at the Group's warehouse. The Group also recently partnered with Asda to give customers the option of using its SMARTDrop Kiosks in store for a fast and easy way to recycle phones for instant cash. Customers purchasing from musicMagpie receive branded refurbished product for a fraction of the price of buying new.

The Group has the highest number of seller reviews on both Amazon and eBay and has consistently achieved extremely positive feedback scores. The Group also has a 4.4* rating on UK Trustpilot with over 259,000 reviews, and is honoured to have won Best Refurbished in the Uswitch Telecoms Awards 2023 as well as Best Online Retailer and Best Secondary Market Provider at the Mobile News Awards 2023.

For further information please visit:www.musicmagpieplc.com