Matchesfashion, the luxury fashion retailer, has reported widening losses as the company experiences a period of change. According to its latest financial accounts, the effects of the pandemic continue to impact the business, with fluctuating customer demand worldwide. Revenue for the year ending in January decreased from £390.9 million in the previous year to £386.6 million. The adjusted EBITDA showed a loss of £23.8 million, wider than the loss of £17.2 million in the previous year. The net loss was £38.6 million, larger than the £34.9 million loss in the previous 12 months.

Despite these losses, Matchesfashion showed signs of improvement in performance throughout the year 2021/22, as reflected in both the first and second half figures. While overall orders in the first half fell by 4.4%, they rose by 15.3% in the second half. Similarly, revenue in the first half decreased by 9.4% to £188.4 million, but in the second half, it increased by 8.3% to £198.2 million. The first-half margin was down by 0.5 percentage points to 32.4%, but it increased by 5.2 percentage points in the second half to 34.1%.

Matchesfashion underwent significant changes during the year, including a partnership with a leading luxury apparel group. Although the specific company was not disclosed, this collaboration aimed to change the way five of the brands represented by Matchesfashion traded with them. Moving from a supply arrangement to a concession model, the retailer sought to reduce promotions, sell more stock at full price, and maintain strong sell-through levels. Matchesfashion stated that this strategic shift appears to be paying off.

The company also faced challenges due to the UK’s exit from the EU, resulting in immediate and significant financial consequences. As approximately 70% of the goods they sell are of EU origin, additional EU duty costs were incurred. Additionally, many non-EU-origin goods are shipped from Europe to their UK distribution center. Matchesfashion has taken action to address these issues by opening a hub in the Netherlands, but Brexit continues to pose a significant cost headwind.

Despite these challenges, Matchesfashion has experienced continued growth in demand after the financial year ended. However, the group’s exit from the Russian market has had a dampening effect. In April, the company secured £40 million in new funding and appointed a new CEO, former ASOS chief Nick Beighton. These developments mark a new chapter for Matchesfashion as they navigate the evolving landscape of the luxury fashion industry.

Useful links:

1. Matchesfashion Website
2. BBC Article on Matchesfashion’s Losses