Positive Matalan strives to build on omnichannel strength

By

Nigel TAYLOR

Published
Jun 28, 2021

UK fashion and lifestyle retail giant Matalan joined many of its peers in delivering a set of pandemic-ravaged results in its latest reporting period. But fear not. Matalan’s an upbeat business that’s far from struggling.

 
“There remain many opportunities to develop and grow the business by further enhancing customer choice and experience, alongside evolving our operating model to enable greater agility and efficiency. We will continue to pursue such opportunities,” its executive chairman Steve Johnson said in the trading statement.

High on the list are further developing its online channel, “which has now doubled its turnover over the last two years” and pressing ahead with a store refurbishment scheme in 2022.

This comes despite the group slumping to a pre-tax loss of £118.6 million in the 12 months to 27 February, compared to the loss of £16.7 million posted in its prior year period. Matalan's sales also plummeted to £744 million from £1.129 billion a year ago.

And it could have been so much worse had online sales not come to its rescue. Indeed, they “continued to perform strongly, reaching significant year-on-year growth”, the retailer said.

And although its physical stores suffered, with long closure periods during the lockdowns, its current tally of 230 retail units across the UK is to not only to be maintained but will be supported by a restart of that store refurbishment scheme next year.

Although the results “reflect the severity of the impact Covid-19 has had on the business, with our stores enduring mandated closures in seven out of the 12 months of the financial year”, Johnson noted that “rapidly increased fulfilment capacity enabled both new and existing customers to switch into the online channel”.

He added: “Such capacity enhancements and the newly created ability to fulfil online demand from store inventory will serve customers well as we move forwards and continue to develop our omni-channel capabilities”.

Also helping underpin the business during those cold pandemic months, Matalan said it raised additional financing, tightly managed working capital, costs and capex, and worked with its stakeholders to preserve cash. “As such, liquidity has been well managed and resilient”, noted Johnson.

"Decisive action ensured we were not only able to manage through the lockdowns, but also be set up to trade well when the stores were permitted to re-open”, he added.

Good news too was that in April and early May the business saw a “strong and encouraging level of pent-up demand from customers. When permitted to trade, our stores have performed well, with customers reassured by our large, safe and convenient out of town shopping environments.

"Alongside strong store performance since reopening, the complementary online channel has continued to grow strongly with click and collect remaining extremely popular”. 

But Johnson added a cautionary note: “While we have welcomed such a positive customer response, we are mindful that the initial demand levels are not indicative of what will undoubtedly be a tough retail landscape.

"We therefore proceed with caution, although are confident that the format and locations of our store estate, the sustainable growth opportunity within our online channel, and our value positioning within the market, leave us well-placed to recover our performance”.