Matalan full-price sales rise improves profitability

By

Sandra Halliday

Published
Jan 9, 2017

Value-focused retailer Matalan recorded full-price sales that were 29.1% higher in the five weeks to December 31 even though its total sales dipped to £132.6m from £136.5m.

It also said full-price sales rose 12.9% in the 12 weeks to November 26. But while total sales again dropped, falling to £299.4m from £302.5m a year ago, underlying earnings rose to £35.1m from £32.2m and its closing cash position improved sharply.

The company gave the figures to bondholders due to concerns about the fashion and homewares retailer’s financial health.

John Hargreaves, managing director of the privately-held retailer, said it has seen “steady progress” despite the tough market and that its full-price focus had improved profitability. This should mean underlying earnings for the full year to be £75m-£77m, up from £56.5m a year ago.

Why the concern over the company’s finances? The Telegraph reported that Matalan has debt of around £500m and there are worries that it will struggle to service this. It also faces higher costs due to its Asian sourcing as the pound stays weak.

The newspaper said Hargreaves told bondholders that the retailer had “hedged its currency far out so nothing was going to fall off a cliff in the next few months”.

The retailer last year shook up its marketing as it launched a new regular fashion show in a content partnership with ITV and Time Inc UK. Presented by Denise Van Outen, the six-minute bi-weekly shows appear on its online platforms. The shows are produced by ITV and feature Time Inc fashion journalists. Excerpts also ran as shorter commercials on TV during the Christmas shopping period.