Matalan has reported a 11.3% rise in revenues to £292m in the 14 weeks to 31 August, despite “extremely tough” trading conditions.
The value retailer reported a drop in restated EBITDA under leasing standard IAS 17 of £16.3m, compared with £22.8m in the same period 2018. IAS 17 prescribed the accounting policies and disclosures applicable to leases, for both lessees and lessors. It was superseded by IFRS 16 as of 1 January. Matalan’s EBITDA after adoption of IFRS16 was £42.8m.
“In July we outlined the challenges that we and the wider market faced in what has been an extremely tough trading environment”, said chief executive Jason Hargreaves. “The results released today reflect those challenges. Ongoing political and economic uncertainty has weighed heavily on consumer confidence and spending. Added to that, awful spring weather failed to improve until late in the summer, severely eroding the full price sales potential of the season. This resulted in a significant margin investment being required to sell through surplus stocks, although positively the business has succeeded in doing this effectively.
“Despite current trading conditions, we are making good progress in a number of strategic areas. These include opening fantastic new stores, refurbishing our existing estate, and improving the customer journey in our online channel which delivered underlying growth of over 25%. As a result we have consistently taken market share. Alongside this we continue to invest in improving our infrastructure, productivity and stock management capabilities. This balanced and well established strategy is further improving what is already a strong and relevant business that is well positioned within the market.
“We expect the autumn/winter season to remain challenging and are focussed on balancing the delivery of growth opportunities against the need to effectively manage stock risk and profitability. We will continue to be responsive to current trading conditions and remain confident in the longer term direction and progress the business is making.”