Matalan sales stumble over Christmas period
Matalan endured a sales drop during the festive selling season as its online revenues were unable to make up for shuttered physical shops.
Sales dropped 11.2% in the five weeks up to January 2 for a total of £119.2 million. But at least that was better than the 21.4% fall down to £244.8 million in the 13 weeks up to November 28.
Both of those periods were affected by lockdowns in the UK and despite the company selling online, it remains heavily dependent on sales through its bricks and mortar shops.
But its online turnover did manage to rise strongly with an 84% hike in the Christmas period.
Some of the company’s stores remained open for much of the festive trading season but it faced challenges and even where consumers were able to shop in person, the company said that entry volumes were still 14% down year-on-year.
Executive chair Steve Johnson said: “Today’s results reflect the severe Covid-19-related disruption to store trading throughout November as government restrictions required us to close completely or trade only ’essential’ ranges within stores.”
Yet the company also said that autumn trading during September and October had been “robust”.
For those two months, it saw full-price sales growth year-on-year and said that customers were returning to its shops. It also said that performance in its stores during December was strong until tier restrictions led to closures yet again
Johnson added: “Since Christmas, the Covid-19 landscape has deteriorated significantly with all of our UK stores once again mandated to close on January 4 for an uncertain duration. As such, we remain very cautious about the months ahead and are working with our key stakeholders to manage the business accordingly, focusing on optimising online performance, cash preservation, working capital management and minimising costs.”
Yet the firm’s experience of reopening during 2020 mean he’s reasonably confident for the future, despite the tough retail environment.
But analyst Emily Salter at GlobalData thanks that Matalan "should have performed better than it has so far throughout FY2020/21 due to its accessible prices and presence of more resilient product categories, notably homewares and childrenswear.” Its total sales fell 34.1% in the 39 weeks to November 28.
She thinks it “needs to ensure it uses engaging social media posts to position itself at the front of shoppers’ minds for these items in order to benefit from an increased focus on value due to the inevitable rise in financial uncertainty and unemployment over the next few months, otherwise it risks losing out to competitors such as Dunelm and Next, which also benefit from better online offerings”.
And she added that it’s “suffering for being a digital laggard. In order to increase its online penetration and protect sales during the ongoing Covid-19 crisis and beyond as sales continue to shift online, the retailer must invest in its proposition to introduce missing basics. For instance, Matalan does not offer an express home delivery service, standard delivery is only free on orders over £50, and it has no third-party pick-up options”.
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