Refurbished goods seller musicMagpie posted a solid performance for its half-year results this morning, despite the economic headwinds hitting the industry.
Revenue grew 16% for the core technology division, despite intentionally moderate growth thanks to its disciplined approach to its margin-enhancing leasing model.
However, the Manchester-based company recorded aggregate revenue of £71.3million for the six months to May 31, down 2% from a year earlier.
Revenue from its higher-margin media and books business also fell more than expected, down 23.6% to £25.3m.
The slowdown in books can be contrasted with the release of earnings from titan Bloomsbury yesterday, which showed an increasingly resilient performance in sales, with Bloomsbury chief Nigel Newton saying: “The question on all of us was: the will the pandemic surge in reading continue? We now know the answer: reading has become a newfound habit and continues to thrive.”
The company wrote: “While acknowledging the current uncertain economic environment facing all consumer businesses, the Board of Directors is confident of delivering on its full year expectations with a much stronger second half earnings performance. strong thanks to an increased contribution from growing rental subscribers alongside the expected continued growth in sales revenue from the recent expansion of marketplace sales channels, including Back Market, which the group recently successfully launched “.
While the board is confident of meeting its full year targets, brokers at Peel Hunt said it will “exercise caution” and said: “Given the uncertainty ahead of us , as well as the success of leasing (a beneficiary of this uncertainty), we are reducing our EBITDA estimates slightly (-4.9%) for FY22E and increasing FY23E by an offsetting amount (+4.2%)”.
As the UK’s largest retailer of consumer technology items, Peel Hunt has maintained musicMagpie’s buy rating and target price of 190p.