Matalan revenue drops but remains "confident" in full-year profitability

Matalan has reported an 8% drop in revenue to £263.6 million for the 13 weeks ending 27 May 2023, with sales impacted by cost-of-living pressures and unseasonal weather.

EBITDA restated under IAS 17 totalled £2.1 million, compared with £20.2 million the previous year.

Taking account of market conditions, Matalan has re-examined its full year outlook and reshaped its trading plans, tightened stock commitments and remixed product offer for "improved value wherever possible in autumn/winter ranges".

The business said it is "confident" in its profitability for the second half of the year, supported by an improved and largely hedged cost outlook in relation to the key areas of freight, energy and currency.

As a result, Matalan expects EBITDA between £60-£65 million for the full year, driven by a" strengthened leadership approach that is part of a wider program of transformation".

Jo Whitfield, CEO of Matalan, said: "The business had a challenging first quarter with cost-of-living pressure resulting in depressed consumer spending in discretionary categories. Unseasonal weather delayed a refresh of wardrobes for early Spring creating a tough start to the season.

"However, as the new leadership team came together and the initial changes we have made started to take effect and as the weather improved, we have been able through June to reduce the cumulative EBITDA gap to last year from £18.1 million to £2.9 million. We are also confident of strong year-on-year profit improvement across the remainder of the year.

"In addition to a challenging market backdrop, internal operational challenges created a gap to the market in the first quarter. We have two key areas of focus, those being driving our online channel, and improving both product choice and the strength of our price position for customers."

Last month, Matalan named Phil Hackney as Chief Supply Chain Operation Officer and Katherine Davis as Chief Retail Officer as the business continues its transformation strategy.

Prior to this, the retailer appointed Karl-Heinz Holland as Chair, Jo Whitfield as CEO, and Ali Jones as Chief Customer and Omni-Channel Officer.