Instrument retailer Australian Music Group receives capital injection, but warns trading conditions still poor

Australian Music Group, which owns the Allans Music chain, has received a capital injection as part of an internal restructure, although the company’s joint managing director complains of difficult trading conditions.

Tim Mason, the joint managing director of retail management group The Brackenbury Group and the Australian Music Group, which operates the Allans Music + Billy Hyde retail venture, says the capital injection is “welcome news” that will keep the company moving forward.

“This is very good news. This reduces our debt significantly, is welcome news for the industry and for all the suppliers who deal with us.”

Offshore firm Revere Capital is behind the latest injection. 

However, Mason says conditions still remain poor and that price deflation in the music industry is putting pressure on margins.

“There has been significant price deflation, and that’s affecting all of retail. These things are undeniable and inescapable, and that’s causing ramifications across the entire space.”

“There’s also heavy web competition in some industries, and we can see what’s happening there.”

However, Mason says some of the research being conducted on the online retail industry isn’t giving the full picture.

He points out that research shows fewer than 5% of instruments are being purchased from offshore retailers, although admits trading is still under pressure.

“I think the last 12 months have been a very difficult trading environment. But I think with the efficiencies we’ve introduced, we’re poised for a period of growth.”

“However, the environment does remain difficult.”

Australian Music Group has a complicated history. In 2005, Brackenbury acquired the Allans Music retail business from Roland Corporation and a number of private investors.

Then, in 2010, Allans Music was merged with Australian Music Group, which operated the Billy Hyde Music retail stores. The entity created 28 co-branded stores across Australia, with a number of other divisions including Musiclink distribution and the Stage Systems hiring business.

Private equity firm Crescent Capital owned a majority stake in Australian Music Group after investing in 2008. A report in the Australian Financial Review says Crescent sold that stake last year and took a loss of $50 million.

The AFR also said Australian Music Group had $60 million debt before this latest injection.

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