9th Jan 2023 18:16
(Alliance News) - musicMagpie shares finished sharply higher on Monday evening after it said its products will launch on US retailer Walmart's e-commerce platform.
However, analysts said that the used-technology reseller's partnership remained a "nascent strategy" despite being presented as a "great opportunity" for the group, and thus left their outlooks for the firm unchanged.
The stock finished 11% higher at 31.60 pence in London on Monday. In the year-to-date, the shares are up 30%.
musicMagpie said decluttr's refurbished disc media is now available to buy on Walmart's online marketplace, Walmart.com, a US-based e-commerce platform.
musicMagpie said decluttr will bring preowned CDs, DVDs and video games to Walmart customers at competitive prices, under the new agreement.
"The Walmart collaboration adds an additional sales channel for decluttr's products, allowing access to Walmart's 120 million monthly website visitors. This will supplement existing sales through decluttr's own website as well as on other marketplaces," the company explained.
Further, musicMagpie noted that Walmart recently announced the launch of Walmart Restored, a programme created to help customers discover refurbished electronic products on Walmart.com.
Analysts at Peel Hunt said it was still "very early days" for the Restored initiative, and added that decluttr will be "one of many" sellers on Walmart.com.
"Overall," Peel Hunt said, "we are pleased for this new deal but it isn't known what impact it will have, hence we make no changes to estimates today."
For financial 2023, Peel Hunt expects musicMagpie's sales to total GBP152.9 million, adjusted earnings before interest, taxation, depreciation and amortisation to total GBP8.9 million, and the company to report a pretax loss of GBP1.2 million.
In financial 2021, its most recent full-year results - the year ended November 30, 2021 - musicMagpie reported sales of GBP145.5 million, adjusted Ebitda at GBP12.2 million, and a pretax loss of GBP14.8 million.
Shore Capital expressed a similar sentiment in regard to the newly announced partnership with Walmart.
"The Walmart.com development builds upon the existing relationship that musicMagpie has with Asda, which provides consumers with efficient and easy ways to buy and sell and so recycle refurbished goods through both its outlets and online," it said.
In addition, Shore Capital continued, the new ducluttr partnership adds another "leading name with a large consumer base" to musicMagpie's partners list, noting other increased exposure strategies with large online players such as Amazon and eBay.
"We are pleased to see today's news," Shore Capital said, "we look forward to seeing how the partnership develops."
Despite this, the investment bank left its outlook for the firm unchanged.
"Currently, we forecast financial 2023 sales of GBP150.3 million, up 4% year-on-year, Ebitda of GBP8.7 million, up 36% year-on-year, and anticipate that the group is again set to be close to breakeven for adjusted pretax profit," it said.
By Heather Rydings, Alliance News senior economics reporter
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