Matalan kicks off turnaround under new boss but slashes jobs

Matalan’s new boss has kicked off the fast fashion retailer’s wide-range turnaround which has revamped dozens of stores but caused the loss of more than 600 jobs.

Henrik Nordvall, who took the reins as chief executive in November, said he is “encouraged by the progress already underway” as the clothes seller pushes to renew its appeal and revamp its store estate.

Matalan, one of the UK’s largest privately held retailers, was snapped up by a group of lenders in 2023 after it piled up more than £500m of debt during the Covid-19 pandemic, which shuttered Britain’s high streets.

The company’s average headcount fell to 9,593 last year, suggesting more than 600 jobs were lost. Matalan said it hired less seasonal workers over the winter period as it aims to boost efficiency at its stores. Some of these job losses included logistics workers who were transferred to GXO, the retailer’s transport partner, it said.

The retailer narrowed its pre-tax loss by 18 per cent to £55m in the year to February, it revealed on Wednesday, as revenue inched up by 0.2 per cent to £987m. 

But the fast fashion giant says it has picked up steam at the start of this year, with a two per cent jump in revenue in the last three months delivering a 45 per cent jump in adjusted earnings, to £15m.

Matalan said its wide-ranging overhaul is focused on improving its value appeal, as it faces tough competition from sector giants like Next. 

The retailer said it is working to “improve opening price points, protect availability on core lines” and widen its margins.

More than 90 per cent of Matalan’s recent autumn/winter and sping/summer ranges were priced at £30 or below, it said.

Nordvall said the retailer’s progress so far has been driven by its “continued focus on delivering everyday style, quality and value for customers”.

This comes as retailers battle for shares of Brits’ increasingly tightened budgets, as fears of inflation caused by the Iran war knock consumer confidence.

Matalan warned in its accounts that recent hikes to employers’ national insurance contributions and minimum wages “could put pressure” on its profitability.

“Whilst the business continues to invest in its people, the business is also working hard to deliver efficiency savings in order to enable the business to absorb and mitigate the significant rise in employment costs,” it said.

The retailer said that these initial costs were a major contributor to its eight per cent jump in administrative expenses to £85m in the year to February.

Matalan is piling investment into a refurbishment of its store estate and has revamped 30 stores so far, eyeing 40 more in the next financial year.

These revamped stores outperform Matalan’s existing estate by 12 per cent, the firm said.

The retailer’s investors – Invesco, Tresidor, Man Group and Napier Park – have committed a string of £25m investment boosts to this refurbishment programme in recent months.

Matalan shed almost 200 jobs last year as it attributed falling sales to subdued consumer spending “driving an increase in market competition”.

Nordvall said the retailer has produced positive sales growth and market share gains despite “a challenging and highly competitive retail environment”.

Matalan operates more than 250 stores globally and was founded in Preston, Lancashire, in 1985.