MusicMagpie’s turnover hit by Royal Mail strikes

MusicMagpie’s first-half revenues were knocked by trading over the Christmas and new year period as a result of industrial action and weak consumer confidence.

The secondhand electronics reseller revealed that overall turnover fell to £62million for the six months ending May, from £71million in the same period the previous year, even as its performance improved significantly from February. 

Demand for disc media and books continued its long-term decline, shrinking by £4.5million to £20.8million, and sales of consumer technology slipped from £46million to £41.2million.

Not delivering: MusicMagpie blamed the half-year result on Royal Mail workers striking again over pay and conditions, including on the last two days before Christmas Day.

AIM-listed MusicMagpie noted that business during December and January was hit by UK customers reducing their spending amid a more difficult economic backdrop.

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

But the firm’s total underlying earnings expanded by 7.7 per cent to £2.8million amid an enhanced focus on cost control and boosting profitability at the expense of chasing revenues from lower-margin products. 

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

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

Steve Oliver, co-founder and chief executive of MusicMagpie, said: ‘While we remain very mindful of the current tough consumer environment, the momentum in our business as we head into H2 means that we are confident of achieving our full-year expectations.’

MusicMagpie shares were up 5.2 per cent to 18.7p on late Monday afternoon, although they have still slumped by approximately 90 per cent from their initial public offering price.

Sales have fallen back at the Stockport-founded company due to loosening Covid-19 restrictions, inflationary pressures and weaker sales of books and physical media products like DVDs and CDs.

In the year it became a publicly-traded firm, MusicMagpie fell to £14.8million pre-tax loss after doling out millions in share-based payments.

Despite margins subsequently worsening following increasing usage of third-party platforms like Amazon and eBay, and cost hikes from sourced products, losses improved to £1.5million in the following 12 months.

Back in March, Oliver acknowledged that MusicMagpie had experienced a ‘tough year…in the face of a rapidly changing macroeconomic environment’.

The former managing director of collapsed high street chain Music Zone co-founded the company with Walter Gleeson in 2007, initially focusing on purchasing used books, CDs and DVDs before moving into technology products, which provided two-thirds of turnover last year.