Matalan’s executive chairman Steve Johnson believes the company’s financial results for the year to February 2022 represent a ‘strong recovery’ despite the ongoing challenges of the pandemic, however the company’s full financial statement points out refinancing of the group’s debt structure will be required prior to January 2023.
The statement explains that Matalan borrowed funds from the UK Government’s Covid-19 loan scheme and it is on track to pay back GBP27.7m (US$33.96m) by the maturity date, which is from July 2022 onwards. However it also has GBP350m from First Lien Secured Notes maturing in January 2023, Second Lien Secured Notes of GBP80m maturing in January 2024 and Shareholder Notes maturing in July 2024.
Johnson remains confident and states: “The near term refinancing will provide the business with a stable platform from which to continue to evaluate options with investors with regards to the January 2023 and January 2024 bond maturities over the coming months.”
However, the company points out in its financial statement that “given the ability to successfully refinance our debts involves geo-political, economic and market factors outside the direct control of the business, this constitutes a material uncertainty that may cast significant doubt on the group’s and parent company’s ability to continue as a going concern, and to realise their assets and discharge their liabilities in the normal course of business.”
Matalan fiscal year 2022 results
The financial results for the fiscal year 2022 (52 weeks ended 26 February 2022) included total revenue of GBP1.03bn compared to GBP744.1m in 2021.
The company says much of this sales growth was as a direct result of the period being less impacted by government enforced store closures than FY21 but it nevertheless experienced six weeks of store closures at the beginning of the year. Online continued to perform strongly with the growth seen in FY21 retained in the year despite the ending of the advantageous online trading conditions provided by the UK government legislated lockdowns.
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Gross profit was GBP149.7m compared to GBP30.5m in the same prior period and Matalan explains that it incurred significant levels of discounting in the year due to the need to liquidate the old stock package that it entered the year with as a result of last year’s and this year’s store closures. Matalan also points out the level of discounting was offset by use of the Coronavirus Job Retention Scheme and government-issued business rates relief.
Johnson says: “We significantly improved our level of performance and profitability in what remain demanding circumstances for both our sector and consumers more broadly. Throughout the last year, our large and spacious out-of-town stores with free parking remained safe and appealing destinations for customers, with the two newly opened stores also performing well. Our stores complement what is now a significantly scaled online business, having grown its turnover by over 50% since the beginning of the pandemic, with lots more potential still to realise. Together, they provide our customers with convenient and flexible access to the great quality and value ranges that they trust and rely on, now more than ever.”
Spring 2022 results
Total revenue for the 13 weeks to 28 May 2022 (fiscal 2023) was GBP286.5m compared to GBP221.8m in the same prior period, while EBITDA post adoption of IFRS16 of GBP44.4m compared to GBP41.8m in the same prior period.
Johnson adds the spring 2022 market remained volatile, hampered by widespread inbound supply disruption and weak consumer sentiment in the face of the spike in inflationary pressure on broader consumer spending.
He says: “Against that backdrop we remain well positioned, offering outstanding value to our customers, which has shown through in our sales performance. Particularly pleasing has been the positive response to the new in-house developed brands launched in March 2022, Et Vous and Be Beau within womenswear. With fantastic prints, great designs, and ensuring that we continue to offer the excellent value we are famous for, they have performed extremely well, both online and in stores. Such strong customer reactions give us the confidence that as our stock-flow continues to normalise in the months ahead, we are well placed to capitalise on our market positioning in supporting our customers through these challenging times.”