Matalan reduces staff by more than 700 despite sales passing £1 billon in FY22

Omni-channel fashion and homeware retailer Matalan has announced its results for the 52 weeks ending 26 February, reporting a rise in revenues from £744.1 million in 2021 to £1.03 billion in 2022.

Matalan's rise in revenues and profits for the financial year was largely driven by its "large and spacious out-of-town stores", which the company said remained appealing to customers during early 2021.

The COVID-19 pandemic and the UK government restrictions in response meant that the financial year began whilst under a national lockdown at which time all stores selling items deemed to be non-essential were mandated to close.

Despite no further government mandated lockdowns being introduced in the UK, the 52 weeks to 26 February 2022 were "punctuated by a number of market and economic disruptions caused by the COVID-19 pandemic", according to Matalan.

International shipping was severely impacted by the pandemic leading to worldwide supply-chain delays, whilst the rise in the Omicron variant in Winter 2021 led to extremely high infection levels severely impacting everyday life.

Despite a rise in revenues, Matalan reduced its number of employees from 11,558 in 2021 to 10,837 in 2022, mostly across retail and distribution roles.

Financial highlights for the 52 weeks ending 26 February 2022:

• Total revenue of £1.027 billion, up from £744.1 million in 2021.
• EBITDA post adoption of IFRS16 of £197.8 million, up 146% from £80.5 million in 2021.
• Restated EBITDA under IAS17 of £100.3 million, compared to a loss of £21.5 million in 2021.

Matalan also revealed a short trading for Q1 of fiscal year 2023:

• Total revenue reached £286.5 million, up from £221.8 million in Q1 2022.
• EBITDA post adoption of IFRS16 of £44.4 million and restated EBITDA under IAS17 of £20.2 million.

Commenting on fiscal year 2022 performance, Steve Johnson, Executive Chairman of Matalan, said: “The results published today for the year to February 2022 represent a strong recovery during what remained a period of ongoing challenges, including mandated store closures and the continuation of worldwide supply chain disruption as a result of the COVID-19 pandemic. Despite these obstacles, and assisted by the support packages provided by the government, we significantly improved our level of performance and profitability in what remain demanding circumstances for both our sector and consumers more broadly.

“Throughout the last year, our large and spacious out-of-town stores with free parking remained safe and appealing destinations for customers, with the two newly opened stores also performing well. Our stores complement what is now a significantly scaled online business, having grown its turnover by over 50% since the beginning of the pandemic, with lots more potential still to realise.

“In parallel to navigating the near term market conditions, we continue to progress our digital transformation programme, building on last year’s first phase of supply chain automation and further developing the planning for the migration of the website onto the THG Ingenuity platform in spring 2023.

“We are pleased to announce that we have successfully agreed a commitment to refinance the near term July 2022 maturities relating to the Coronavirus Large Business Interruption Loan Scheme and our Revolving Credit Facility. Both of these will be repaid at maturity in July and be replaced by a new £60m loan facility for up to 18 months. The 1.5 lien secured notes also due in July will be repaid at maturity from cash reserves. This near term refinancing provides the business with a stable platform from which to continue to evaluate options with investors with regards to the January 2023 and January 2024 bond maturities over the coming months.”