Matalan crashes to first-quarter loss as lockdown hits bottom line

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Matalan has tumbled into the red on its first-quarter result as boss Jason Hargreaves described coronavirus as “the biggest challenge ever faced by the sector”.

The homeware and fashion retailer posted a restated EBITDA loss of £35.8m in the 13 weeks to May 30 against a profit of £25m during the same period the previous year.

Revenue dived 72.3% in the quarter to £75.3m, in comparison with sales of £273.5m last year.

Seperately, deputy chief executive Greg Pateras has resigned from his position, according to an email sent by Hargreaves and seen by Retail Week, but will stay in his position until the end of the month to ensure a smooth transition. During his tenure Pateras, who has been with the retailer for three years and previously held the role of chief operating officer, led the retailer’s turnaround strategy and digital transformation, which included quadrupling Matalan’s ecommerce business and helping the stores business return to growth.

Matalan bolstered its board with the appointment of former Sainsbury’s executive James Brown as chief commercial officer and former Dreams executive Steve Johnson as chair in June. As a result, Hargreaves said he plans “to allow these roles to settle in before making a decision on my plans to replace Greg’s role”.

The retailer reported a “resilient” closing cash position of £40.9m at the end of the quarter, down from £71.2m the previous year.

Jason Hargreaves said: “The results released today reflect the severity of the Covid-19 impact on our business this spring. The stores were closed throughout most of the first quarter as the UK endured lockdown in what has been without a doubt the biggest challenge ever faced by the sector. The scale of revenue lost from our closed stores could not be offset by our smaller online channel which continued to trade throughout the quarter.

“Our estate of predominantly large and out of town stores performed strongly upon reopening as customers responded well. They recognise that we offer a very convenient, comfortable and safe shopping environment, but it’s still early days in the recovery period.

“There can be no doubt that consumer uncertainty and broader economic challenges present a tough market going forwards. We remain confident though that whilst we proceed with caution, we have been successfully evolving our business model over recent years and as such are well placed to respond. During the last few months, we have also accelerated initiatives that will make us more agile and efficient across all channels. We have done this alongside clearing the spring/summer stocks, enabling us to return to a more profitable level of performance in the autumn.”