Matalan breaks £1bn sales mark but sheds 721 jobs

Knowsley-based out-of-town discount retailer, Matalan, has staged a post-lockdown turnaround, figures for the year to February 26, 2022, revealed.

In accounts filed at Companies House, the group, founded by Liverpool docker’s son John Hargreaves, surpassed the £1bn sales mark, and slashed losses, although it shed 721 staff during the year, ending the period with a 10,837-strong headcount.

Revenues increased from £744.1m in 2021 to £1.027bn – despite six weeks of enforced store closures at the beginning of the year – and pre-tax losses were significantly reduced from £131.5m last year to £7.7m. Exceptional items also fell, from £12.9m the previous year to £2.9m.

Once again, no dividend payment was recommended.

The previous year was heavily impacted by the pandemic which led to store closures and a huge fall in trading, although the group showed an uptick in online sales.

Matalan said it also incurred significant levels of discounting in the year due to the need to liquidate the old stock that it entered the year with as a result of last year’s and this year’s store closures.

However, the business said it will invest in store refurbishments which will be reinstated in 2023.

And it revealed that, following a strategic review of its growth strategy and existing website capabilities, it has decided to move its website to an alternative platform, and has signed a letter of intent and agreed commercial terms with Manchester-based The Hut Group to utilise its Ingenuity platform to “create a differentiated online selling experience”.

The group said: “We believe a significant opportunity exists to convert our loyal brick and mortar-only consumers into omni-channel consumers, increasing shopping frequency and customer value.”

Matalan also intends to target clothing and homeware opportunities in its “core consumers, value-conscious, over-45 year olds”, although it has an eye to the younger generation.

It aims to evolve its ‘Real Life Ready’ branding campaign to reach younger audiences that are looking for on-trend fashion and homeware at convenient prices.

The strategic report for the year said: “We believe that the economic backdrop within the UK presents the perfect opportunity to position our brand as the go-to choice for consumers re-appraising their spending as a result of the increased constraints to their non-essential spending.

“Therefore, we intend to capitalise on what we see as an addressable gap in the clothing and homeware market for a business that can deliver an omni-channel proposition for consumers without compromising fashion, quality, choice or value.”

The current financial year has started well, with revenues rising by 29% to £286.5m in the first 13 weeks to May 28.

Executive chairman, Steve Johnson, said: “The results published today represent a strong recovery during what remained a period of ongoing challenges, including mandated store closures and the continuation of worldwide supply chain disruption as a result of the COVID-19 pandemic.

“Despite these obstacles, and assisted by the support packages provided by the Government, we significantly improved our level of performance and profitability in what remain demanding circumstances for both our sector and consumers more broadly.”

He also revealed: “We are pleased to announce that we have successfully agreed a commitment to refinance the near term July 2022 maturities relating to the Coronavirus Large Business Interruption Loan Scheme and our Revolving Credit Facility. Both of these will be repaid at maturity in July and be replaced by a new £60m loan facility for up to 18 months.

“This near term refinancing provides the business with a stable platform from which to continue to evaluate options with investors with regards to the January 2023 and January 2024 bond maturities over the coming months.”