Lockdown piles more misery on Matalan as annual losses widen
Out-of-town discount retailer Matalan has slumped to an annual pre-tax loss of £131.5m in the year to February 27, 2021.
The figure, which includes £12.9m of exceptional items, compares with a pre-tax loss of £18.3m the previous year, including £1.6m of exceptional costs.
Turnover of £744.1m showed a fall from £1.129bn in 2020.
EBITDA of £80.5m also fell, from £183m the prior year, which comprised 53 weeks, compared with 52 weeks for the most recent figures.
The reduced sales and wider pre-tax losses were due to store closures forced on the business by the coronavirus pandemic, despite an increase in online trading.
The business said it incurred significant levels of additional discounting due to the need to liquidate stock during the limited period of store openings.
Matalan said it managed to deliver savings throughout the year within staff costs, due to furlough relief, however, this was offset by extra rental costs in the final quarter due to the sale and leaseback of the group’s Knowsley headquarters.
The group also revealed that £4.6m of the exceptional costs related to the loss on disposal of the head office, which was undertaken to raise liquidity to repay a portion of the RCF and CLBILS loan.
Chief financial officer, Stephen Hill, said in his review, that the group will recommence its store refurbishment programme following the easing of lockdown restrictions.
But it will also invest in online trading, with Mr Hill saying: “Our online channel has grown rapidly in the last year, in part due to the enforced closures of the stores, but also fuelled by an improved customer journey, investment in customer acquisition and greater fulfilment capacity.
“We believe there remains significant further growth opportunities to migrate loyal store customers into a multi-channel shopping pattern, increasing shopping frequency and customer value.”
He added: “We will continue to capitalise on increase operational headroom in the year ahead and further improve the customer journey to continue the progress already under way.”
While the focus is on online expansion, Mr Hill revealed that the group will still seek to expand its current portfolio of 230 stores “in a cautious and considered manner”.
He said Matlan also sees further scope in its international retail operations, which currently involves a franchise network trading in 48 stores across 14 countries.
