Matchesfashion losses widen as company goes through period of change
Matchesfashion has filed its accounts for the year to the end of January and said that the effects of the pandemic continued to be felt throughout the year with customer demand fluctuating around the world.
Revenue for the period was £386.6 million, down from £390.9 million in the previous year. And adjusted EBITDA was a loss of £23.8 million, wider than the loss of £17.2 million a year before. The net loss was £38.6 million, again, bigger than the £34.9 million lost in the previous 12 months.
But the performance clearly improved during 2021/22 with the company, for once, showing both first-half and second-half figures. Overall orders in H1 fell 4.4%, but in H2, they rose 15.3%. And revenue in H1 was down 9.4% at £188.4 million, while in H2, it rose 8.3% to £198.2 million. The margin of 32.4% in the first half was down 0.5 percentage points, but it was up 5.2 percentage points in the second half at 34.1%.
The company saw quite a lot of change during 2021, saying that it worked with a leading luxury apparel group (which it didn't name) to change the way in which five of the brands it represents trade with the business. Rather than a supply arrangement, it has shifted to a concession model. That happened in Q4 and was part of a strategic shift to reduce promotions and sell more stock at full-price while maintaining strong levels of sell-through. And it said the strategy seems to be paying off.
The company also said that the UK's exit from the EU had an immediate and material financial impact in terms of additional EU duty costs, as around 70% of the goods it sells are of EU origin. Many non-EU-origin goods are also shipped from Europe to its distribution centre in the UK. While it has taken action to counter the problems with the opening of a hub in the Netherlands, Brexit "continues to drive, a material cost headwind”.
It added that following the end of the financial year, in question, demand growth has continued, albeit dampened by the group’s exit from the Russian market. In April, it received £40 million of new funding and it also now has a new CEO with former ASOS chief Nick Beighton taking the reins.
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