Revealed: Matalan lost over £100m as lenders took control
Matalan lost more than £100m in the year it was taken over by its lenders, newly-filed accounts have revealed.
The group agreed a deal to take control of the Liverpool-headquartered fashion and homewares retailer in January 2023 in a move which ended the involvement of founder John Hargreaves.
The group, led by Invesco, Man GLG, Napier Park and Tresidor, sealed the deal after Matalan launched a sales process in September 2022.
The move saw the lenders cut the group’s gross debt by £257m to £336m and agreed up to £100m in new growth funding as part of the deal.
Now, newly-filed accounts with Companies House have revealed that Matalan slumped to a pre-tax loss of £103.4m in the year to February 25, 2023, after losing £7.6m in the prior year.
The losses were despite its revenue increasing from £1.028bn to £1.153bn over the same period.
Matalan’s UK revenue increased from £999.1m to £1.121bn while its sales in the rest of the world rose from £29.6m to £31.9m.
During the year, the average number of people employed by Matalan grew from 10,837 to 11,246.
A statement signed off by the board said: “Against the rising inflationary economic backdrop, the growth in sales was driven by movements in selling price and range mix.
“Store sales grew strongly year on year, in part due to the early months of FY22 still being subject to lockdown restrictions.
“Online sales fell slightly from the FY22 historic high, in part due to a rebalancing of customer demand back to stores following the Covid-19 pandemic.
“Nevertheless, total online sales remain significantly higher than pre-pandemic levels.”
Matalan added: “Gross profit was severely impacted by a significant increase in in-bound supply chain costs following the expiry of pre-existing shipping contracts during a period of historic highs in freight rates due to the disruptions to worldwide shipping caused by the Covid-19 pandemic.
“We also incurred significant levels of discounting in the year as we invested heavily in price discounting in order to clear surplus inventory as the market backdrop deteriorated and cost-of-living crisis emerged.
“The prior year also benefitted from the utilisation of Covid-19 mitigations like the Coronavirus Job Retention Scheme and government-issued business rates relief.
“FY23 did not benefit from these same cost mitigations, leading to an increase in establishment and personnel costs, further compounded by the impact of rising in the National Living Wage and National Minimum Wage.”
Under its previous leadership Matalan, despite being a private business, issued quarterly financial updates. However, the company has stopped doing so in recent months.
Before the change, Matalan reported a revenue of £263.6m for the 13 weeks to May 27, 2023, down from the £286.5m it posted for the same period in 2022.
For its second quarter, Matalan posted a revenue of £288.6m for the 13 weeks to August 26, 2023, compared to the £286.4m it reported for the same period in 2022.
A Matalan spokesperson said: “These accounts are historic and relate to a period that ended over a year ago.
“The trading performance within them has already been previously publicly reported.
“Given that, they do not reflect the current Matalan business, under new ownership and leadership, which is focused on ensuring the business is on a much more solid footing.
“Matalan will be reporting full year results relating to the current period in June 2024.”