Matalan Q1 revenues dive as ‘severity’ of Covid-19 impact exposed

Matalan has reported a 72 percent year-on-year drop in revenue for the first quarter as Covid-19 took its toll on the business.

For the 13 weeks to 30 May, total revenue at the omnichannel fashion and homeware retailer was 75.3 million pounds, down from 273.5 million pounds the same period last year.

EBITDA loss post adoption of IFRS16 was 10.2 million pounds, down from a profit of 50.4 million pounds last year.

The company ended the quarter with cash of 40.9 million pounds, down from 71 million pounds.

Matalan CEO Jason Hargreaves said the results reflected the “severity” of Covid-19’s impact on the business back in the Spring. “The stores were closed throughout most of the first quarter as the UK endured lockdown in what has been without doubt the biggest challenge ever faced by the sector. The scale of revenue lost from our closed stores could not be offset by our smaller online channel which continued to trade throughout the quarter,” he said in a statement.

Physical stores performing well, but still early days in recovery

He continued: “In response, the business took immediate action to preserve cash, manage working capital and reduce costs in addition to accessing all available government support and drawing down on our revolving credit facilities. Liquidity was well managed and resilient, then further supported in June with the successful financing exercise. This positions us well to manage through a period of recovery and adjustment over the coming months.”

Physical stores have performed well since reopening, Hargreaves said, though “it is still early days in the recovery period”. “There can be no doubt that consumer uncertainty and broader economic challenges present a tough market going forwards. We remain confident though that whilst we proceed with caution, we have been successfully evolving our business model over recent years and as such are well placed to respond,” he said.

“During the last few months we have also accelerated initiatives that will make us more agile and efficient across all channels. We have done this alongside clearing the spring/summer stocks, enabling us to return to a more profitable level of performance in the autumn.”

Photo credit: Matalan, Facebook