Matalan improves profitability amid 'challenging consumer backdrop'

Matalan has reported a year of improved profitability despite a decline in sales, as the British retailer pushes ahead with its business transformation aimed at sharpening product, investing in stores and boosting digital performance.

For the 52 weeks ending 22 February 2025, Matalan's revenue declined 9% year-on-year to £985 million. However, adjusted EBITDA was up by 6% to £56 million. This included a significant boost in the second half including a £10 million improvement in Q4, which closed at £16 million compared to £6 million the year prior.

Gross margin also improved by 3% to £510 million, supported by more considered buying practices. The group posted a full-year loss before tax of £67 million, impacted by exceptional non-cash items.

Karl-Heinz Holland, Executive Chair at Matalan, said: "In the last year our focus has been on further driving the transformation of Matalan against a challenging consumer and wider economic backdrop.

"With a clear focus on maintaining profitability, we have delivered EBITDA growth. Our store investment plan is delivering results even better than we expected."

Operationally, the retailer saw strong performance in menswear and childrenswear — categories that have helped drive recent market share gains. Womenswear and homeware remain areas for improvement. A renewed focus on quality and value has led to investments in better fabrics and more curated product ranges.

Looking ahead, Matalan reported that positive momentum from Q4 has carried into Q1 FY26, with EBITDA for the 12 months to 24 May 2025 reaching £64 million. However, the outlook remains cautious given ongoing cost pressures, heightened competition and macroeconomic uncertainty.

Holland added: "While we started the new financial year with positive momentum, we continue to operate in an increasingly competitive market and uncertain macroeconomic conditions.

"We remain mindful of the tough operating environment... and believe the business is well positioned to continue to transform and grow its profitability."

Earlier this month, the retailer announced an investment of over £25 million in its UK store estate. It marks the beginning of a multi-year programme to modernise and expand its brick-and-mortar footprint.

These plans include the refurbishment of 12 stores, with plans to open 10 new and relocated sites and upgrade 30 more in FY26. Matalan's refurb also extends to digital, with the retailer set to enhance its omnichannel offering through the launch of a new app. The platform will support its e-commerce operations and loyalty programme.