​Matalan full year performance hurt by warehouse relocation

By

Barbara Santamaria

Published
Jun 6, 2016

The UK’s leading out of town fashion and homeware retailer, Matalan, announced its full year results for the 52 weeks ended 27 February, 2016.

In the period, the family retailer decreased revenue to £1,056.9m, down 3.4% from £1,094.0m last year. This was attributed to challenging market conditions and significant operational issues related to the transition into a new warehouse.

This caused disrupted stock flow to Matalan’s northern stores and subsequent reduction in store stock availability, said the company.

The distribution issues also led to increased markdown costs, as the impact of disrupted stock flow meant that additional seasonal stock had to be liquidated at deeper levels of discount.

EBITDA dropped by 44% to £56.2m.

“In line with the update provided in January, the full year results issued today reflect the scale of the operational challenges encountered with last year’s warehouse transition. As a consequence, the overall proposition delivered to customers, both in stores and online, was severely challenged and margins were significantly eroded,” said Jason Hargreaves, Managing Director of Matalan.

The warehouse is now operationally stable and store availability has returned to normal levels, he added.

Gross profit before exceptional items was £87m, compared to £132.2m in 2015.

“The online business is also being adequately supported, allowing service levels and delivery options to be restored for customers,” said Hargreaves. “Having faced into the problem, we closed the year with clean stocks and are well positioned to continue to improve our mix of full price sales and margin.”

“While the market remains challenging and volatile, we are clear and focussed on our recovery plan and cautious in our planning. We thank all of our colleagues for their hard work and commitment in delivering the improvements seen to date.”

Matalan ended the financial year with a strong cash position of £74.5m, down from £93.5m in 2015.