// Matalan EBITDA drops 44% and sales down 3.9% in 13 weeks ending August 29
// It attributed the drop to heavy discounting to clear spring stock accumulated over lockdown
Profits at value retailer Matalan have taken a hit after it carried out heavy discounting in a bid to clear spring stock following the nationwide lockdown period.
In the 13 weeks ending August 29, the high street chain saw EBITDA plunge by 44 per cent year-on-year to £28.5 million.
Meanwhile, total sales for the same period dropped 3.9 per cent.
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Matalan added that its net cash at the end of the period came in at £162.3 million.
“A key focus for us during the summer was selling through the surplus seasonal stocks that we brought out of the lockdown period,” Matalan executive chairman Steve Johnson said.
“We achieved our objective of exiting the season with a healthy terminal stock position, comparable with previous years, accepting this action had a heavy impact on profits during the quarter.
“The achievement of this important objective is a testament to the hard work of all of our colleagues in shaping and executing compelling events for our customers and positions us well to recover our full price sales mix in the autumn/winter period.”
He added: “As previously announced, in June we successfully introduced additional liquidity into the business and reduced our cash paying debt service costs.
“The benefit of this exercise, in addition to the good stock clearance and sales performance, as well as the actions taken to manage working capital, capex and costs, are evident in a strong cash balance at the end of August.
“This healthy liquidity position provides the business with headroom to normalise its working capital position as we enter what will be another volatile and challenging trading period.”
Johnson went on to warn that the current second wave of the coronavirus and the new government-imposed restrictions would put pressure on consumer behaviour in the coming months.
“As a result, we will remain cautious as we trade through the autumn/winter season, although confident that Matalan has demonstrated its robustness since trading in stores resumed and that we have taken all appropriate actions to protect our business, colleagues and customers,” he said.
“Whilst much of our focus is necessarily on the near-term trading environment, there remain many opportunities to develop the business by further enhancing customer choice and experience alongside continuously improving our own efficiency and agility.
“As always, we intend to vigorously pursue these opportunities.”