Matalan continues to impress, says GlobalData

Following today’s release of Matalan figures for Q3 FY2018/19 and the 2018 Christmas trading period, Kate Ormrod, lead retail analyst at GlobalData, a leading data and analytics company, comments: ‘‘Matalan has continued its run of decent results with Q3 sales up £14.5m on the year to £308.3m, despite the tough trading conditions. However, more impressive than that is its festive performance, with the retailer maintaining growth despite a strong comparative.

“Significant is Matalan’s surge in full price sales growth, recording 7.3% in Q3, versus 2.6% last year – and rising from 3.3% in H1 FY2018/19. This fell back to -0.5% in the final five weeks of the year, however that was to be expected given the highly promotional market – though Matalan clearly played the right promotional game to lure shoppers in the run up to Christmas. While its value price positioning is beneficial, the fact that there remains appetite for its proposition is a confidence boost for the retailer amid a particularly competitive market, both from value players such as Primark, but also from discounting midmarket retailers. The decline in Q3 EBITDA, falling £4.9m to £40.0m, spoils these results though Matalan maintains it is due to currency headwinds.

“Notable is the difference in trading performance between its stores and online for the five-week period, with the latter’s growth accelerating 8.6 percentage points on the year. UK stores did still record an uplift of 1.6%, aided by one new store and the retailer’s ongoing store refurbishment programme. Store trading will remain challenging in 2019, but it still plans to open new stores this year. Despite strong online growth, Matalan has an opportunity to further invest, particularly on fulfilment and payment options, to make its offer more accessible and compelling. Plans to widen product choice online will boost destination appeal and drive online penetration.

“These results emphasise how Matalan has got its strategy right, ensuring it has been able to navigate the unforgiving trading environment, leading to the retailer winning share in the UK clothing market in 2018 (up 0.1 pp to 2.1%). We expect its strategy to continue to serve it well in 2019, and with shoppers still cautious, Matalan is in a position to exploit this, ensuring it can remain a retail winner like its rival Primark.”