Matalan sales strong in H1 but earnings suffer on costs

When Nigel Oddy joins up-for-sale Matalan on 3 October, the interim CEO will be expected to oversee an in-place growth strategy that’s already delivering results. In a trading update to accompany the former New Look CEO’s impending arrival, it heralded record revenues for fiscal 2023’s first half and continued second-quarter sales growth both in-store and online.

Trading at Matalan has recovered since the height of the pandemic, with the company reporting 13-week Q2 sales of £286.4 million, up from £264.7 million last year. That’s getting close to the £292 million recorded in the 14-week pre-pandemic period in 2020. And the trading update also talked of “ongoing growth momentum”.

But there was a fall in profit as costs increased. Core earnings (EBITDA, post-IFRS16 adoption) of £36.7 million were way short of the £61 million recorded in fiscal 2022 and compared to £42.8 million in 2020. Restated EBITDA under IAS17 came in at £13.1 million compared to £38.9 million in fiscal 2022 and £16.3 million in the pre-pandemic year.

Closing unrestricted cash on balance sheet amounted to £101.6 million compared to £173 million last time and £73.3 million three years ago, with the Liverpool-based group burdened with more than £500 million of debt from an earlier recapitalisation and needs to refinance £350 million of this in 2023.

Looking ahead, Matalan expects sales of £1.4 billion by fiscal 2026. The group also expects its online sales channel to increase its share of total group revenues over the period, from 19% in FY23 to 26% in FY26.

Matalan sales strong in H1 but earnings suffer on costs

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