Published
Jun 7, 2017
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Matalan revenue drops as retailer focuses on full-price sales

Published
Jun 7, 2017

Matalan chief executive officer Jason Hargreaves was upbeat as he unveiled on Tuesday the company’s results for the year to 25 February, saying that “the business had made huge progress this year” despite a fall in revenue.


Matalan


The company said improving its full-price sales was prioritised over growth last year as it revealed that revenue for the 52 weeks decreased to £1.037bn from £1.06bn. The focus on the sales mix, however, drove full-price sales up 7.5% during the period.

Gross profit before exceptional items grew to £111.6m from £87m a year earlier, supported by the group’s strategy to focus on full price sales, which reduced the level of discounting and markdown costs. Distribution costs decreased in the period due to the stabilisation of the warehouse operation coupled with further efficiency and productive savings.

Meanwhile, EBITDA for the year increased to £77m from £56.2 million.

“The business has made huge progress this year in re-establishing itself as a full priced retailer and delivering a much stronger proposition for our customers,” said CEO Hargreaves.

“The product offer has continued to improve, as has our execution and brand reach, supporting the strong growth in full priced sales. Last year’s operational challenges are behind us and we now have a supply chain capable of effectively supporting the business going forward.”
 

Matalan


In its effort to improve the full-priced sales mix, Matalan invested in creating stronger clothing ranges, particularly within the core ‘Good’ and ‘Better’ offer. The improved quality and design of these lines reinforced the point of difference to the opening price points, offering more potential for consumers to trade up through the range.

Homeware also continued to gain momentum in the period, with growth expected to continue via category extensions, the store refurbishment program and the integration of Matalan Direct.

Online strength

Over the 12-month period, Matalan’s online channel increased revenue by over 60%, supported by the launch of a branded fortnight celebrity-hosted programme titled “The Show”. E-commerce continues to deliver incremental business and is proving to be a key route to acquiring new customers, said the brand. A new online site is expected to launch later this year.

Additionally, the business opened four out-of-town stores during the period and closed one store. A store refurbishment programme of over 50 stores has been rolled out which will deliver new fixturing to better segment sub-brands.

Matalan has more than 227 UK stores, five clearance stores and 25 franchise locations in countries including Armenia and Malta.

Moving forward, the business plans to mitigate the continuing cost and inflationary headwinds facing the UK retail sector by increasing production efficiency, waste minimisation and improved supplier compliance.

“We expect the market to remain very challenging, but are clear as to how we will focus our efforts on the key areas that will drive sustainable performance improvement. With the continued hard work and commitment of our colleagues, we are confident that the business will further deliver on the solid foundations we have laid this year,” said Hargreaves.

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