UK online retailer Gear4music is readying an assault on Europe after confirming plans to float on the London stock exchange and open a Central London flagship outlet.
The York-based company hopes to raise £10.3m through the sale of shares at 139p on the AIM in the first week of June, that will value it at £28m. The firm has been touting itself to City investors with a number of presentations. Back in 2012 it managed to raise £3.4m, selling a minority stake to investor Key Capital Partners.
Over the last two years the firm has seen sales double to more than £24m, despite difficult trading conditions in the UK market and elsewhere.
“This is completely about growth,” said founder and chief executive, Andrew Wass.
He said the firm plans to use money raised from the flotation to further develop its e-commerce platform, invest in and improve its marketing, extend the range of products held in stock, pay down debt and also open a flagship store in London’s Soho to increase the profile of the Gear4music brand.
The firm has appointed City finance veteran Eric Ford as chairman, a former chief executive of merchant bank Teather & Greenwood and a past chairman of the Quoted Companies Alliance. Wass will, however, remain the firm’s largest shareholder.
With the UK market experiencing little or no growth, Gear4Music is one of a number of companies looking to the international market as the only way to continue to develop and expand. Much of this international expansion has been on the supplier side, however, and in a European market so dominated by Thomann, it is certainly an ambitious move and a rare example of growth in a UK MI retail market which has experienced a number of high profile casualties over the last two to three years.
Wass founded the business in 1995 to sell IT systems for the audio recording market and launched Gear4music in 2003. Revenues have increased every year since then, with 37 per cent like for like sales growth in the year-ending February 2015.
The firm operates 19 websites in 15 languages and eight currencies and has the capacity to expand into new markets and handle increased volumes of sales and traffic.
The group sells more than 27,000 different products from more than 550 brands including Fender, Yahama and Gibson and more than 1,400 own-label goods.
It operates from a 135,000 square feet office, showroom and distribution centre on the outskirts of York, with 110 employees and adds up to 50 more during the Christmas period.
“Over the last 12 years, we have established ourselves as one of the largest UK-based online retailers of musical instruments and music equipment and are well-placed to build on the positive momentum we have generated to date, particularly over the last two years, which have seen our revenues almost double and our European business expand significantly,”explained Wass.
“We are very excited about this next stage in our development, with our forthcoming flotation on AIM enabling us to develop further our bespoke e-commerce platform, invest in additional marketing initiatives, extend the range of products we stock and open a flagship showroom in central London.”
He added: “The way that people buy has changed a bit. People want the convenience of buying online. When you get something from us you can try it out. If you are not totally happy you can send it back. There are pretty good upsides to buying online.”
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