Full-price sales lift Matalan third-quarter profits, but revenue drops

By

Barbara Santamaria

Published
Jan 15, 2018

Fashion and homeware retailer Matalan announced on Monday its third quarter and December sales, revealing an increase in full-price sales which contributed to profit growth.

But the 2.6% increase in full-price sales, was not enough to offset weakening demand in the 13 weeks to 25 November, with total revenue falling by 1.9% to £293.8 million. However, EBITDA for the period increased from £35.1 million to £44.9 million, and the company had a closing cash position of £102.7 million versus £95.6 million a year earlier.

Matalan’s performance improved in December, with revenue up 7.3% to £142.3 million. Full-price sales also increased by 2.6% during the five-week period, driving a 15.5% increase in EBITDA to £22.3 million. Store sales grew 6.2%, while online sales surged 24.7% as shoppers turned to the value retailer for Christmas gifts for their loved ones.

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CEO Jason Hargreaves commented: “The strong third quarter and December results released today continue the progress made in the first half, with the business delivering a great offer for our customers across our complementary store and online channels. We planned rigorously for what we knew would be a volatile autumn market and have successfully navigated through a challenging consumer backdrop, growing our full price sales, and significantly improving our trading margins and profit.

“In the run up to Christmas, savvy customers cut through the growing promotional noise in the market in seeking out genuine value. Our offer is well positioned to respond to this, outperforming the market both in our stores and online, with all major product divisions delivering growth in December.”

Matalan expects the market to remain challenging, however Hargreaves said he is “confident in the sustainability of our progress”. 2018 priorities will be continuing with the store refurbishment program and driving enhancements to the online experience, he said.

The company is also issuing £330 million first lien secured notes due 2023 and £150 million second lien secured notes due 2024 to refinance its existing debt and pay costs, fees and expenses incurred in connection with the refinancing.