MusicMagpie shares fall sharply as pandemic boom wanes

MusicMagpie shares have plummeted after the group posted a loss for its first year of trading after becoming a public company.

The Stockport-based group fell to a pre-tax loss of nearly £15million during its latest financial year, as turnover slipped below £150million, compared a profit of just under £7million in 2020.

On an adjusted basis, the company’s pre-tax profits fell from £9.2million to £7.9million. 

In charge: Steve Oliver is the boss and founder of MusicMagpie

MusicMagpie shares, which are listed on AIM, were down 47.62 per cent or 77.39p to 85.11p just before 11.45am.  

The group said the drop in turnover was ‘in line with management expectations as a result of business normalisation in FY21 following the first year of the pandemic in FY20’.

It said consumer technology turnover jumped by 3.1 per cent to £86.1million, with its UK arm increasing by 6.1 per cent to £71.2million. 

But MusicMagpie said entered the new financial year with confidence following a record Black Friday sales period in both the UK and US.

‘Our rental subscription service has continued to grow through Q1, however in line with current consumer trends, we have seen a moderation of outright sales and trade-in volumes in consumer tech,’ it added.

Boss Steve Oliver said that it had been a landmark year for the firm in its first on the AIM market. 

He added: ‘We have delivered strong operational and strategic progress in our first year as a listed company, and have done so while staying true to our clear environmental and social focus and our long-standing “smart for you, smart for the planet” ethos.

‘During the year, we gave a “second-life” to over 400,000 technology products, as well as 2,500 tonnes of disc media and books. This helped to save over 50,000 tonnes of CO2, which is the equivalent to providing heating for over 18,000 homes.’

Russell Pointon, a director at Edison Group, said: ‘With respect to current trading, management points to continued strong growth in rentals (to c 19k subs by end of February) and a moderation of outright sales in consumer technology with higher sales price and lower volumes, which leads to expectations that outright Technology FY22 gross margin will be c 4 percentage points lower than FY21. 

‘Elsewhere, Disk Media has performed in line with management expectations and Books is in line with H221, implying down versus the start of FY21 given the comparative benefitted from Covid.

‘The statement points to many recently launched initiatives that management believes will help stimulate future growth including corporate recycling and device rentals.’