1st Jul 2024 15:47
(Alliance News) - musicMagpie PLC's first half-results reflect strategic decisions made to improve profitability and cash generation, an analyst on Monday said.
On Friday, musicMagpie PLC said a weaker sales performance in the first half was somewhat mitigated by efforts to reduce costs.
The Stockport, England-based circular economy company specialises in refurbished consumer technology, books, and disc media.
In the six months that ended May 31, pretax loss narrowed to GBP3.0 million from GBP3.2 million a year prior.
Revenue declined 13% to GBP53.8 million from GBP61.9 million, meanwhile, total operating expenses fell 15% to GBP17.6 million from GBP20.8 million.
Cost reduction measures successfully reduced overheads by GBP2.4 million in the first half compared to the previous year.
Chief Executive Officer Steve Oliver said: "Amidst an increasingly competitive environment for second-use technology, and with consumers continuing to feel the squeeze on their wallets, the market has undoubtedly been challenging."
Looking ahead, management expects the macroeconomic challenges to continue into the second half. However, historically the latter half of the year has proved to be when the company earns the majority of its full year profit with the period including events such as Black Friday.
Milo Bussell at Edison said the results reflected several strategic decisions taken by the management team to improve profitability and cash generation.
The decision to make the US a sourcing-only geography to benefit margins had a notable impact on revenues, with US revenues declining by more than half.
Despite the double-digit decline in group revenue, the adjusted earnings before interest, tax, depreciation and amortisation margin remained relatively stable at 4.4% compared with 4,5% a year prior, reflecting the focus on profitability.
The outlook remains challenging, but management is encouraged by the progress made on right-sizing the cost base, the entry into new categories and the historical second half weighting of the business, Bussell noted.
He noted the company remains in offer period as numerous discussions with interested parties are ongoing.
Shares in musicmagpie fell 0.6% to 6.21 pence in London on Monday.
By Jeremy Cutler, Alliance News reporter
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