MusicMagpie’s sales are hit by strikes at Royal Mail

MusicMagpie’s first-half sales were impacted by trading over the Christmas and New Year period due to labor disputes and weak consumer confidence.

The used electronics reseller said total sales fell to £62m in the six months to May from £71m in the same period last year, although performance has improved significantly from February.

Demand for disc media and books continued its long-term decline, falling by £4.5m to £20.8m and consumer technology sales fell to £41.2m from £46m.

AIM-listed MusicMagpie noted that business in December and January was impacted as UK customers reduced spending amid a tougher economic environment.

The result has also been attributed to renewed strikes by Royal Mail workers over wages and working conditions, including on the last two days before Christmas.

However, the company’s overall underlying profit rose 7.7 per cent to £2.8m as it focused more on cost control and increasing profitability at the expense of chasing sales from lower-margin products.

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

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

Steve Oliver, MusicMagpie Co-Founder and CEO, said: “While we are acutely aware of the challenging consumer environment we are currently in, the momentum in our business as we enter the second half of the year means we are confident of delivering on our full year expectations.”

MusicMagpie shares are up 5.2 percent at 18.7 pence late Monday afternoon, although they are still down about 90 percent from their initial issue price.

The Stockport-based company’s sales 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 went public, MusicMagpie posted a pre-tax loss of £14.8m after spending millions of dollars in share-based payments.

Although margins subsequently deteriorated due to increased use of third-party platforms such as Amazon and eBay and rising costs of procured products, losses improved to £1.5m over the following 12 months.

Back in March, Oliver admitted MusicMagpie had had a “rough year… given a rapidly changing macroeconomic environment”.

The former CEO of the collapsed Music Zone grocery chain founded the company in 2007 with Walter Gleeson and initially focused on buying used books, CDs and DVDs before turning to technology products, which accounted for two-thirds of sales last year.