Matalan reports better sales and earnings, despite poor online trading
Knowsley-based out-of-town discount retailer, Matalan, has achieved better sales and earnings during its second quarter period, to August 26, 2023.
Despite not releasing its annual results to February 25, 2023, the retailer revealed sales of £288.6m, up slightly from £286.4m compared with the same period the previous year.
EBITDA of £25.1 was up from £13.1m the previous year.
The group had unrestricted closing cash at the end of the period of £130.4m, compared with £101.6m in the prior year. It said liquidity was further bolstered by and additional £25m debt issuance in June.
Matalan said it enjoyed several strong categories, including a record season for school wear, although its online conversion levels remained weak ahead of interventions starting to impact.
The online performance has remained challenging with a decline in the second quarter revenue of 35% due to product offer weakness from option and value reduction, website development post-launch and tough market conditions, with strong competition and a shift to physical store shopping.
There was strong store trading in June as summer weather emerged, igniting the market. However, July revealed a tougher market as the good weather receded, but there was strong early autumn sales in August due to the ongoing poor weather.
Matalan also managed to lower property rateable values and favourable rent reviews reduced property costs by £1.3m.
Looking ahead, the retailer sees tough market conditions with a high level of market volatility.
The autumn heatwave and continued disposable income pressures could affect the second half performance.
Market promotional intensity is increasing, although online customer demand remains weak as the retailer looks to recover its online performance.
In response, Matalan said it is keeping its trade and promotional plans flexible, investing in value across 500 lines and focusing on online recovery action plans. It is looking to mitigate these challenges by focusing on cost and stock control.
Its autumn/winter buy is much tighter managed than last year, entering the second half with 16% less new season stock.
Matalan said its priorities and focus include establishing improved prices and stronger product range assortments for spring summer 2024 and autumn winter 2024 alongside trialing new marketing and loyalty plans.
Its Value Creation phase 2 is under way, covering product cost improvements and improved ranging and promotions for periods spring summer 2024 and beyond.
Chief executive, Jo Whitfield, said: “We have delivered a strong Q2 performance against the backdrop of a challenging and volatile retail environment.
“Shoppers continue to feel the impact of the cost-of-living crisis, spending less often and being more considered with their purchases, while retailers also faced unseasonable weather patterns.”
She added: “We improved our profitability year on year, driven by a solid sales performance, tight control of markdown, effective cost management and positive movements in input prices.
“We are focused on initiatives that will open up material growth opportunities in the years ahead, while working at speed to deliver better choice, value and experience for our loyal customers.”
