Oct 18, 2021
Matalan profits rebound despite supply disruption
Discount retailer Matalan said profits recovered strongly in its first full quarter of trading since the end of lockdown, raising the chances that it will be able to restructure its substantial debt next year without having to resort to an insolvency process. The Liverpool-based group said on Monday that full-price sales were up 25 per cent in the second quarter to August 28, resulting in a £35m operating profit against a £36m loss in the same period last year and a £15.9m profit in the first quarter of the current year. Executive chair Steve Johnson cautioned that, like its peers, the company had "Been feeling the impact of disruption" in its supply chain, "Delaying the flow of stock into the UK and adding extra costs". With its 230 stores shut for long periods and a relatively immature online offering, sales in the year to February 2021 fell by a third and Matalan's Guernsey-domiciled holding company reported a net loss of £115m. It relied on government-backed loans and the financial support of founder John Hargreaves, who took the company private in 2006, to get through the pandemic. A restructuring expert who has looked at the company said that unlike Arcadia, which went into administration last year, Matalan did not have onerous pension liabilities while its customer base was loyal and "Still likes shopping in stores".
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