Matalan revenue grows 5% as full-price sales accelerate

By

Barbara Santamaria

Published
Jan 14, 2019

Value retailer Matalan has unveiled strong third quarter and Christmas trading results, bucking the retail gloom with both in-store and online growth.

The clothing chain, which competes with Primark in the affordable fashion segment, said revenues increased by 4.9% in the third quarter ended 24 November, making £308.3m in sales compared with £293.8m a year earlier.

Notably, the company increased its full-price sales growth by 7.3%, rising from 3.3% in the first half of the year. This is an impressive achievement considering the highly promotional market in the UK ahead of Black Friday last year, and the muted consumer spending.

Matalan said its underlying profit performance was also “robust”, supported by strong sales growth, stock management and operational efficiency. However third quarter EBITDA fell by almost £5m to £40m due to currency headwinds.

CHRISTMAS BOOST

Whilst retailers in general suffered the worst Christmas in a decade, Matalan relied on its marketing strategy and investments in new product and refurbished store space to emerge as a bright spot.

The company’s positive third quarter sales performance continued into the Christmas period, with total revenues increasing 4% to £148m in the five weeks to 29 December 2018. This was particularly boosted by the brand’s online store, which experienced a 33% jump in online sales, but Matalan’s stores also helped, reporting a 1.6% increase in sales.

Full-price sales fell slightly by 0.5% due to a higher level of promotional activities.

Matalan CEO Jason Hargreaves commented: “In the run up to Christmas the market became increasingly distressed, and we benefited from a planned increase in our promotional sales mix. We also tactically used our database of 12 million active customers to target exclusive offers and discounts in further support of the trade plan. Growing sales over Christmas by 4%, including 33% growth online, without material dilution to our full price position is a testament to the strength and relevance of our offer.”

“Although cautious for the year ahead in what we expect to be a very tough market, our approach is clearly working. As we move into the new year we are focused on our growth strategy, always putting the customer at the heart of what we do. The refurbishment of our existing store estate will continue as will the opening of several new stores. Alongside this we will further grow our online penetration and add even more product choice.”