Matalan posts profit rise after full-price sales focus

Matalan holding company Missouri Topco reported a 35.7% rise in EBITDA before exceptionals of £104.5m in the year to February 24, 2018, when sales edged up from £1.04bn to £1.06bn. Statutory post-tax profit climbed from £7.4m to £14.8m.

The retailer attributed its success to an improved product offer and execution, enhancing its omnichannel operations, engaging customers and optimising operations.

Matalan’s chief executive Jason Hargreaves said a focus on full-price trading was enabled by increased attention to design and range coordination, more frequent newness in-store and better visual merchandising.

He said: “The business has delivered a strong year, in which it outperformed the market and successfully refinanced in January. Our customer-focused strategy has succeeded in growing sales with operational efficiencies allowing us to improve margins.”

“In what remained a volatile and challenging market, customers were savvy in seeking out true value. Our offer is well positioned, providing great design, quality and value across our ranges.”

Online sales rose 30% in the year, when a more agile platform allowed improvements to navigation and responsiveness. However, while ecommerce “represents a significant opportunity for future growth”, Matalan said “it does not yet represent a significant portion of operating results”.

Next-day click and collect and extended cut-off for next-day home delivery were also introduced, and 41 stores were refurbished.

Matalan, which has 12 million active customers, said it was looking at “how we maximise the utilisation of our digitally enabled data warehouse to influence customer behaviour” through initiatives such as increased personalisation.

In the next 12 months, it intends to introduce RFID technology, modernise buying and merchandising systems, and pilot self-service checkouts as it seeks to further manage costs and deliver efficiencies.

Hargreaves concluded: “Going forwards, we expect general market conditions to remain challenging and consumer confidence to be fragile for the foreseeable future. The business also continues to manage inflationary pressures and the impact of the post Brexit weakness in sterling.

“We therefore remain cautious and have planned diligently for the year ahead, which has already seen high levels of market volatility in the Spring. However, we remain confident in our strategy and the growth levers we have in place.”