Gear4music (Holdings) plc


Gear4music (Holdings) plc

Investment Case

Investment case

Gear4music is well positioned to capitalise on the opportunities available within its markets, due to our unique competitive advantages and barriers to entry.

  • We are an agile, predominantly online retailer, and have an increasingly well-recognised brand
  • We are the UK’s largest retailer of musical instruments and music equipment
  • 'Gear4music' is the number one search term driving traffic in the category 'Music Shops' (source: Hitwise)
  • Our bespoke e-commerce platform provides a high degree of operational flexibility and scalability which the Directors believe cannot easily be replicated
  • A strong own-brand offering has been developed over 15 years, and has established a reputation for ‘good’ and ‘better’ quality products at affordable prices, whilst providing enhanced margin opportunities
  • We have developed long-term relationships with the major branded musical instrument and music equipment manufacturers, placing us in a strong position during a period of retailer consolidation
  • We have proven and scalable distribution capabilities, allowing economical next day delivery throughout the UK, Scandinavia and Northern Europe
  • The Directors and senior management have an intimate knowledge of the musical instrument and music equipment market

Track record of success – long term revenue and market share growth

  • Revenues have increased every year since launch in 2003
  • 43% revenue growth in FY18, building on 58% revenue growth in FY17, and 46% in FY16
  • Momentum stepped up following capital injections in 2012 and 2015
  • Strong European growth validates website roll-out strategy
  • Database of 1.9 million registered users, with active customers increasing by 39%

Bespoke and proprietary e-commerce platform delivers competitive advantage

  • Invested £5.9m to date
  • End-to-end solution encompassing all aspects of trading operations
  • Intellectual Property owned by Gear4music
  • Currently supports 20 websites in 15 languages and 9 currencies
  • Ability to rapidly respond to changing customer behaviours and expectations
  • Capability to expand into new markets
  • Capacity to handle significantly increased volumes and website traffic
  • Additional functionality in continuous development
  • Software development team brought in-house in FY17 to facilitate closer integration and cost effective future development

Specialist knowledge facilitates strong relationships with customers and suppliers

  • Strong, committed and experienced management team
  • Employees with in-depth specialist knowledge
  • Expertise means Gear4music is trusted by major musical instrument and music equipment brands
  • Offers a wide range of choice to customers and provides specialist advice during and after the sales process

Well-developed product ranges

  • Over 44,700 products from over 790 brands
  • Reputation for quality and value for money
  • Over 2,600 own-brand SKUs, developed over a 15-year period
  • Provide enhanced margin opportunities as volumes increase

Efficient logistics systems

  • Currently operates from three modern facilities with a combined 245,000 square feet footprint
  • Plans in place to increase Group capacity to c.£150m
  • The most appropriate courier delivery services are automatically selected from more than 4,200 permutations depending on the weight, size, value and destination of the goods being purchased.