British fashion retailer Matalan was into heavy discounting in its efforts to clear all the spring stock – all thanks to stock being accumulated during prolonged lockdowns in the country.
And this has now, expectedly, hit the value retailer’s profits!
In the 13 weeks that ended 29 August, Matalan witnessed its EBITDA drop by as much as 44 per cent year-on-year (Y-o-Y) to clock £28.5 million.
The total sales, during the same period, also fell by 3.9 per cent.
While stating that profits were hit due to accumulation of spring stock, Steve Johnson, Executive Chairman, Matalan, said that though the company achieved its plans of exiting the season with healthy terminal stock position compared to what it was in previous years, the profits were impacted significantly.
Back in June, Matalan had put additional liquidity into its business and brought down its cash paying debt service costs.
Steve substantiated that this decision along with good stock clearance as well as company’s decision to manage working capital and costs has helped it in having strong cash balance at the end of the quarter.
Notably, the net cash at the end of 13 weeks stands at an impressive £162.3 million.
With over 230 stores in the UK and 32 franchise stores in Europe and the Middle East, Matalan generated revenue of £1.1 billion in 2019.
It will be interesting to see where the company moves from here considering there is a fresh wave of coronavirus in the UK followed by strict Government-imposed restrictions that will define consumer behaviour and psyche in the days to come.
