MusicMagpie’s turnover hit by Royal Mail strikes

MusicMagpie shrugs off revenue from strikes at Royal Mail and a weaker consumer background

  • MusicMagpie revealed that sales fell to £62 million in the six months ending May
  • Total underlying profit of the AIM listed company still grew 7.7% to £2.8m
  • CEO Steve Oliver: ‘We are confident that we will deliver on our expectations for the full year’

MusicMagpie’s revenues in the first half year were depressed by trading over the Christmas and New Year period due to labor union action and weak consumer confidence.

The second-hand electronics reseller revealed that total sales in the six months ended May fell to £62m, from £71m in the same period last year, although performance improved significantly from February.

Long-term demand for disc media and books continued to decline, contracting by £4.5m to £20.8m, and consumer technology sales fell from £46m to £41.2m.

Failing to deliver: MusicMagpie blames the half-year result on Royal Mail workers who went on strike again over pay and conditions, including on the last two days before Christmas Day.

MusicMagpie, quoted on the AIM, noted that business was hit in December and January by UK customers cutting spending amid a tougher economic situation.

It further blamed the result on Royal Mail workers striking again over pay and conditions, including during the last two days before Christmas.

But the company’s total underlying revenue rose 7.7 per cent to £2.8 million amid a stronger focus on cost containment and increasing profitability at the expense of chasing revenue from lower-margin products.

The e-commerce group said its margins benefited from sourcing more goods directly from consumers, increases in rental subscriptions and the growing percentage of sales through the musicMagpie store.

A better performance is expected in the traditionally stronger second half of the fiscal year, when trading peaks during Black Friday in late November.

Steve Oliver, Co-Founder and CEO of MusicMagpie, said: “While we remain very aware of the current difficult consumer environment, the momentum in our business as we enter H2 means we are confident that we will deliver on our full year expectations. will come true. ‘

Music Magpie shares rose 5.2 percent to 18.7 pence late Monday afternoon, though they’re still down about 90 percent from their initial public offering price.

Sales at the Stockport-based company have declined due to the easing of Covid-19 restrictions, inflationary pressures and weaker sales of books and physical media products such as DVDs and CDs.

In the year it became a public company, MusicMagpie fell to a £14.8 million pre-tax loss after handing out millions in share-based payments.

Despite the deterioration in margins due to the increasing use of third-party platforms such as Amazon and eBay, and the cost increases of purchased products, losses improved to £1.5 million in the following 12 months.

In March, Oliver acknowledged that MusicMagpie had experienced a “difficult year … in light of a rapidly changing macroeconomic environment.”

The former general manager of the collapsed Music Zone retail chain founded the company in 2007 with Walter Gleeson. Initially, he focused on buying used books, CDs and DVDs before switching to technology products, which accounted for two-thirds of sales last year.