Matalan drops Asian supplier in pricing dispute

By

Sandra Halliday

Published
Oct 31, 2016

Budget and homewares retailer Matalan has dropped a long-term supplier on the back of pricing issues, according to reports.

Matalan chief executive Jason Hargreaves is reported to have taken the decision to cut ties with Korean company JJ Global in the wake of the falling pound that could push UK clothing prices up later this year and in 2017.

The Sunday Times wrote that Hargreaves, who runs the 226-store chain founded by his father in 1985, and JJ Global head Kenny Kim had fallen out over the issue.

Pricing issues have been in the news in recent months following the near-20% fall in the pound’s value since the UK voted to leave the EU. While many of the headlines have focused on higher prices for foods and beverages, fashion is likely to be hit hard.

Many fashion retailers in Britain buy their goods from Asia in US dollars and have consequently been under pressure from suppliers to pay more and analysts said the Matalan dispute is likely to be one of many for the fashion sector in the months ahead.

Matalan needs to retain attractive pricing as this is its USP. The company has seen its profits falling of late with full-year earnings almost halving to £56.2m in 2015. They were dented by problems with a new Liverpool warehouse that caused a major stock writedown.