‘Awful’ spring weather and uncertainty dent profits at Matalan
today Oct 14, 2019
Matalan saw its profits plunge in the second quarter of the year after “awful” spring weather forced the fashion retailer to sell its summer collection at a discount.
The value chain released on Monday its financial results for the 14 weeks ended 31 August, with CEO Jason Hargreaves describing the company’s performance in “an extremely tough trading environment”.
He said ongoing political and economic uncertainty continued to impact consumer confidence and spending in the second quarter, while Britain’s mixed summer weather eroded the full-price potential of the season.
This forced Matalan to cut prices to sell excess stock, hurting its profit margin and sending Ebitda profits down from £22.8m in the second quarter of 2018 to £16.3m this year. On a post-IFRS 16 basis, Ebitda profits stood at £42.8m.
Revenue growth remained strong, growing 11% to £292m.
“Despite current trading conditions, we are making good progress in a number of strategic areas,” said chief executive officer Jason Hargreaves.
“These include opening fantastic new stores, refurbishing our existing estate, and improving the customer journey in our online channel which delivered underlying growth of over 25%.
“As a result we have consistently taken market share. Alongside this we continue to invest in improving our infrastructure, productivity and stock management capabilities. This balanced and well established strategy is further improving what is already a strong and relevant business that is well positioned within the market.”
The retailer, which sells clothing for the whole family at low prices, expects the autumn/winter season to remain challenging, and said it will focus on the need to effectively manage stock risk and profitability.
“We will continue to be responsive to current trading conditions and remain confident in the longer term direction and progress the business is making,” Hargreaves concluded.
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