Matalan defies retail gloom

In the year to February 28, sales at the discount fashion and homewares retailer grew 2 per cent to £1.04bn. EBITDA rose 6.3 per cent to £145.1m. Operating profit before exceptionals rose £102m from £89.4m the year before. Gross margins were 47.8 per cent, up from 47.3 per cent the year before.

The retailer, which has 203 stores in the UK, said the recent like-for-like performance had been achieved with improved margins.

At the year end, cash levels at Matalan were £56.9m compared with £69.6m the year before. The retailer paid £45m of debt ahead of schedule and ended the year with a net debt to EBITDA ratio of 1.7 times compared with 2 times the year before. Total year-end debt was £247.4m.

Matalan said its strategy of launching new sub-brands including Et Vous, Soon and Roger+Rogers in womenswear, and 24/7 in menswear helped it gain market share in the year. It has since launched sub-brands Be Beau and Influence for spring/summer this year.

The retailer invested £16m in store revamps this year including the overhaul of 54 of its higher density stores and rolled out its M Party, gifts and party offer, into 70 stores.

The retailer also confirmed that, as first revealed by Retail Week, it would open its first overseas store in the Middle East via the franchise route. It will also expand its online offer during the coming year, after the launch of its transactional site in November.

It willl open three stores in the UK and accelerate expansion next year.

Chief executive Alistair McGeorge said he was “encouraged” by the strong start to the new financial year but that he expects the “coming 12 months to be challenging”.

“We have a financially strong business that will allow us to invest and further develop the business. This will ensure that we continue to broaden the appeal and offering to customers, invest in new stores and start to develop new sales channels”.