Matalan outperforms rivals with continued growth

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Matalan pay rise

Matalan has continued to outperform its more upmarket department store rivals and has posted continuing growth through its second quarter.

In the 13 weeks to August 25 Matalan saw total revenues edge up 0.9 per cent to £262 million, compared to £260 in the same period a year earlier.

While underlying earnings stayed flat at £22.8 million, the retailer managed to reduce its discounted sales leading to full-price sales growth of 3.3 per cent.

Investment in its website during the period also led to a 25 per cent increase in online sales, helping accelerate its growth efforts amid what it called “volatile and challenging” conditions.

Though the difficult market continues to batter its more upmarket department store rivals, the decreasing amounts of cash consumers have to spend has worked in favour of budget-focused Matalan.

In January, Matalan refinanced its debt pile through a £330 million offering of secured notes due in 2023, alongside a second tranche of £150 million due a year later.

“A strong focus on our strategy, good operational disciplines and the hard work of our colleagues has enabled us to absorb significant currency pressure in the first half of the year,” chief executive Jason Hargreaves said.

“This pressure increases through the remainder of the year and we don’t expect the difficult market conditions or consumer confidence to improve in the short term. However, we remain confident in our strategy, focused on execution and believe this will continue to drive outperformance to the market.”

GlobalData’s senior retail analyst Sophie Wilmott added: “Matalan is making progress with its store refurbishment programme with almost a third of its 227 UK branches now revamped to offer a better shopping experience. Unlike many other clothing retailers including M&S and Debenhams, Matalan has not reduced its store numbers in the past year, demonstrating its commitment to physical retail.

“The value retailer is wise to invest offline but it also has a significant opportunity to drive continued growth through digital channels where close competitor and the UK’s second largest clothing retailer, Primark does not operate a transactional website.

“The value retailer reported that its product range performed “extremely well” over the period with its accessible high summer clothing and beachwear appealing to shoppers requiring hot weather items in the UK.”

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