Matalan, the discount fashion chain based in the UK, is considering selling and leasing back its head office in Knowsley, Merseyside. The company hopes to generate extra funds to counter the impact of the Covid-19 pandemic. Matalan plans to sell its 132,000 sq. ft. premises at Knowsley Industrial Park, which it has owned since 2018, and then lease them back. This move is expected to raise approximately £29 million, which will be crucial in supporting the business after the UK lockdown.

Critics of the sale and leaseback strategy argue that Matalan’s founder, John Hargreaves, is not willing to invest additional personal funds into the company. Hargreaves, a multimillionaire residing in Monaco, has not used his own money to help the retailer during the pandemic. Matalan has already furloughed 11,000 employees through the Government Coronavirus Job Retention Scheme and recently obtained a £25 million loan through the Coronavirus Large Business Interruption Loan Scheme.

Selling and leasing back properties has been a popular approach among other retailers. Next appointed agents to sell its Leicester head office for £45 million in April, while Sports Direct sold its Shirebrook logistics centre for £120 million in 2019. Earlier this year, Ted Baker reached an agreement with British Airways’ pension scheme to sell its Ugly Brown Building in north London.

In summary, Matalan’s decision to sell and leaseback its head office is a strategic move aimed at generating much-needed capital to overcome the challenges posed by the Covid-19 pandemic. This is a common tactic used by retailers to access additional funds and ensure business continuity during difficult times. The successful implementation of this plan will be crucial for Matalan to survive and thrive in the aftermath of the lockdown.

Useful links:
1. Matalan Official Website
2. Government Coronavirus Job Retention Scheme Guide for Employers