Gear4music has warned that full-year profits will fall “slightly below” those achieved last year, despite a spike in sales during the crucial Christmas quarter.
The online musical instruments and equipment specialist said total sales grew 41% to £48.7m in the four months to December 31.
UK sales climbed 36% to £25.5m during the same period.
However, Gear4music said sales growth was “constrained” by its York distribution centre, which “reached maximum capacity” between Black Friday and Christmas.
The retailer said that, as a result of the capacity issues, further sales growth could not be achieved to compensate for the lower margins it achieved during the first half of its financial year.
It cautioned that full-year EBITDA would therefore come in below the levels achieved in its 2017/18 fiscal year.
Gear4music boss Andrew Wass said: “We have seen high levels of consumer demand alongside positive margin momentum, but sales growth has been constrained by our UK logistics operation reaching maximum capacity during our peak trading period between Black Friday and Christmas.
“We are already working on plans to further expand our UK distribution capacity ahead of our peak trading period next year and we are confident that this can be achieved by autumn 2019.”
Wass added: “Our focus has been on gaining market share in what has been a highly competitive environment, and in support of this target and following a period of planned investment, margins during the period began to return towards historical levels. We are confident of further improvements as we progress through FY20.”
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