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Matalan embarks on second phase of its digital transformation – and says stores remain important despite online growth

Image: Matalan/PR Shots

Matalan says it has now completed the first phase of its digital transformation programme, and is now moving its website to the THG Ingenuity platform in order to “transform” the user experience.

The value fashion and homewares retailer says its annual online turnover now tops £200m but that its stores remain an important part of its multichannel business model, in which it will continue to invest.

The update came as Matalan, a Top50 retailer in RXUK Top500 research, this week reports a 10% rise in full-price sales in the third quarter of its financial year – despite supply chain issues that meant stock was late coming into the UK over the peak trading period. Customer demand for its womenswear range was strong and, says Matalan, with better availability it could have sold more.

The retailer reports revenues of £291.4m for the 13 weeks to November 27 2021, 19% up from £244.8m a year earlier. Earnings before interest, tax and asset write downs (EBITDA), stated under IFRS16 accounting regulations, came in at £61.1m in the retailer’s third quarter, up 13% from £54.1m at the same time last year.

In the peak trading five weeks to January 1 alone, revenues came in at £130.7m, up 8% from £121.0m last time. IFRS16 EBITDA came in at £30.2m, down 5% from £31.8m last time. The retailer is now looking to a potential refinancing of its debt. As of January 1, it had cash of £163.3m, down from £187.7m last time.

Steven Johnson, executive chairman of Matalan, says the results reflect a strong performance in challenging circumstances that range from stock availability to disruption and added costs in the UK labour and logistics markets. “ I’m pleased with the way in which our business has responded in managing these challenges, demonstrating unprecedented levels of agility in making stock available to customers as quickly and efficiently as possible,” he says.

Multichannel strategy

Matalan completed the first phase of its digital transformation programme, adding online batch picking and sortation automation at its Knowsley warehouse in October to ship from store capability introduced in 2020.

Now the retailer is to work with THG Ingenuity, moving later this year to the Ingenuity platform in order to grow its online sales faster. It says the new platform has a “multitude of customer-focused features that will transform the user experience.”

Online turnover has now passed £200m a year but Matalan says it will continue to invest in its out-of-town stores that have proven an appealing destination for customers during the Covid-19 pandemics and one that also complements the online channel.

Johnson says: “We’re excited about the opportunities ahead and avenues for growth in both store and online channels as we further build capability, while adding new own label ranges and growing our popular stable of third-party brands.”

Matalan sells online and through 229 UK shops and 52 overseas franchise stores. It is ultimately owned by the Hargreaves family.

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