Matalan, a retail company, has announced a positive increase in its revenue for the year ending in February, reaching £1.129 billion, representing a 2.3% growth. The company also experienced a significant boost in its online sales, with a growth rate of 24%, contributing to its overall market share expansion. However, the restated EBITDA for the year was £80.3 million, a decline from the previous year’s £102.4 million.
Despite the favorable results, Matalan recognizes the difficult retail environment, attributing it to the political uncertainty surrounding Brexit and the prevalence of discounts across the market. To maintain competitiveness, the company had to lower its prices, putting pressure on profitability.
The outbreak of the coronavirus pandemic has posed additional financial challenges for Matalan, leading the company to access a £25 million government-backed credit facility. Nonetheless, the company believes that its business model is well-equipped to adapt to the “new normal.” CEO Jason Hargreaves emphasized the rapid growth and profitability of Matalan’s online channel, as well as the successful implementation of social distancing protocols in its predominantly large out-of-town stores.
Matalan’s online operations and physical stores are synergistic, with the company currently fulfilling orders from 75 of its shops in addition to its distribution hubs. Analysts consider Matalan’s focus on expanding its online business as crucial, as the performance of its physical stores was deemed “mediocre” last year.
Sofie Willmott, Lead Retail Analyst at GlobalData, highlights Matalan’s strong online performance in the previous fiscal year as advantageous during the pandemic. While the company’s online offering may not yet match that of its more established competitors, it has enabled Matalan to capture customer spending during the lockdown period, particularly from Primark, which lacks an online presence.
Matalan also enjoyed an edge over other clothing players in adapting to the “new normal” due to its early opening, allowing its stores to sell essential homeware products a month earlier than most non-essential retailers. This additional time allowed the company to implement safety measures, assess customer demand, and sell-through summer stock.
In conclusion, Matalan remains confident in its ability to navigate the current retail landscape by capitalizing on its online growth and implementing safety measures in its physical stores. The company’s focus on expanding e-sales and leveraging the synergy between its online and offline operations positions it for success amidst the ongoing challenges brought on by the pandemic.