Matalan, a leading UK value fashion and homewares retailer, continues its path to revitalization with a robust Q2 performance in various areas of its business. This progress is notable, given the challenging and volatile retail landscape.
During the 13-week period ending on August 26, Matalan achieved modest revenue growth and substantial earnings improvement. Jo Whitfield, the CEO, described the performance as «strong,» reflecting the resilience amid broader retail challenges.
Total revenue in the period showed a slight 0.8% increase to reach £288.6 million, while operating profit (EBITDA) under IAS 17 standards recorded a significant 8.7% growth, totaling £25.1 million. Additionally, unrestricted cash reserves expanded to £130 million, compared to £101.6 million a year ago.
This performance marks a clear upturn from Q1, where the company reported an 8% decrease in total revenue, settling at £263.6 million. EBITDA, restated under IAS 17, experienced only a marginal 0.8% increase, reaching £2.1 million.
A noteworthy aspect is the 34.7% drop in online revenue during the quarter, prompting Matalan to implement measures to address this issue.
Weather patterns played a pivotal role in Matalan’s Q2 results. The company capitalized on sunny weather in June, driving sales of summer items. In July, cooler weather presented challenges. However, the poor August weather spurred strong sales of early autumn products.
Whitfield commented that in Q2, «shoppers continue to feel the impact of the cost-of-living crisis, spending less frequently and making more deliberate purchase decisions, while retailers also encountered unpredictable weather patterns.»
The improvement in profitability year over year can be attributed to robust sales performance, diligent markdown control, efficient cost management, and favorable shifts in input prices.
Whitfield emphasized their dedication to initiatives that unlock substantial growth opportunities in the coming years while working diligently to provide loyal customers with improved choices, better value, and an enhanced shopping experience.
