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Online boost helps Matalan grow full-year sales and profits

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Matalan’s ecommerce business grew by more than 30% in its latest financial year, helping to boost sales by 3.8% and pre-tax profits by 50%.

The value fashion to homewares retailer said it had outperformed the market as total revenues reached £1.1bn in the year to February 23, up by 3.8% on the same time last year. Earnings before interest, tax and asset write downs (EBITDA) came in at £102.4m, slightly down from £104.5m last time, but pre-tax profits reached £30.1m from £20m last time – a 50% rise. Full price sales over the year rose by 3.2%. 

In the fourth quarter of the year, the 13 weeks to February 23, revenues came in 4.5% ahead at £267.3m, while EBITDA came in at £14.8m, slightly ahead of £14.6m last time. 

Matalan chief executive Jason Hargreaves said the business had outperformed the market in a “tough retail climate”. “In uncertain times, we are well positioned in offering the great design, quality and value that appeals to savvy customers,” he said. 

He said that a £39m currency headwind had been offset by sales, margin and cost management. 

He added: “Our strategy has added more choice to a strong core product offer while improving the shopping experience via refurbished store space and an enhanced online journey. We also continue to invest in infrastructure that helps us operate more efficiently. Well-managed execution has enabled growth to accelerate this year in both complementary store and online channels, online growing by over 30%. We have achieved this while managing the promotional mix sensibly in what has been a distressed market.”

Market conditions, he said, seemed set to remain challenging. “However,” he added, “we continue to be focused on the execution of a strategy that is clearly working.”

Matalan, a Top150 retailer in IRUK Top500 research, trades through 231 UK stores, online and through 32 overseas franchise stores. It was taken private in 2006 and is ultimately owned by the Hargreaves family. 

Commenting on the results, Manu Tyagi, associate partner, retail and consumer goods at Infosys Consulting, said: “The news this morning that Matalan is defying the retail sector gloom reflects an intelligent and reactive strategy. There has been no shortage of headlines around store closures and failing retail chains in the UK in recent months, and even news this morning that retailers are warning of further job losses and store closures. So how are some large retailers struggling to survive while others thrive in the same challenging market?

“Matalan, much like Primark, another low-price retailer, is one of the retailers thriving in an industry seeing a barrage of closures and bad results. Interestingly, Matalan and Primark are succeeding for very different reasons. Matalan is focusing on its online presence and blending the online and offline experience to retain customers, while Primark is investing in the in-store customer experience.

“At the end of the day, consumers will spend wherever they get the best combination of choice, convenience, price, and experience. Matalan’s advantage over Primark is its acknowledgement of the online shopping boom, investing in online to meet the needs of how consumers want to be engaged now, adapting to changing consumer behaviour and finding ways to create a stand-out experience by bringing together the benefits of online and offline.”

Image: Screenshot of Matalan.co.uk/InternetRetailing Media

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