Matalan is “outperforming the sector”

New York –Value fashion chain Matalan has surpassed market expectations with a 50 percent increase in profits for the last fiscal year. The privately owned company said Monday that its annual pre-tax profit had risen to 30.1 million dollars, with sales up 3.8 percent to 1.1 billion pounds for the year ended in February.

Commenting the news, Matalan CEO Jason Hargreaves said: "The business has performed very well this year, outperforming the market in what remains a tough retail climate.” Hargreaves goes on, stating that "In uncertain times we are well position in offering the great design, quality and value that appeals to savvy customers."

Looking ahead, the retailer expects market conditions “to continue to be very challenging, and so remain cautious for the year ahead. However, we continue to be focused on the execution of a strategy that is clearly working."

Matalan’s online channel, a key advantage over Primark

Online sales rose more than 30 percent over the last 12 months, strengthening the retailer’s competitive edge. On the latter, Sofie Willmott, a senior retail analyst at Global Data quoted by ‘The Times’, said that Matalan’s advantage over Primark - another low-price fashion retailer reporting similarly strong results for the first half - was its online presence and its use of reality stars in its advertising.

She added that Matalan “should consider launching an edited range on third-party marketplaces such as Next or Asos”.

Matalan closed the year with 231 stores in the UK, 32 overseas franchise stores and a growing online presence.

Heavy IT investment wipes off admin savings at Matalan

The business was hit by a 39 million pounds currency wipe-off, although the company’s chief executive said strong underlying sales and cost management had helped it to absorb this. Regarding their strengths, Hargreaves pointed out how "In uncertain times, we are well positioned in offering the great design, quality and value that appeals to savvy customers."

The British e-tailer also said that investment in IT partially offset some of the administrative savings made by the company, which included a reduction in rental fees due to the purchase of the head office on a long-term lease, and the integration of Matalan Direct into the wider business structure.

Over the past year, Matalan has focused its attention and tech spend in RFID deployment, an in-house User Experience facility, and light touch automation, recalls ‘Essential Retail’. The retailer also completed the roll-out of a new EPoS system within its store estate.

Hargreaves sums up their the chonology advancements referring to their strategy of adding “more choice to a strong core product offer, while improving the shopping experience via refurbished store space and an enhanced online journey. We also continue to invest in infrastructure that helps us operate more efficiently."

Image: Matalan, Investor Relations