Matalan’s turnaround gains momentum with steady profit growth

Matalan has lifted its underlying profitability, despite a decline in sales, as it steps up investment in stores, online and supply chain amid its ongoing turnaround.

For the year ending 22 February 2025, the value fashion and home retailer reported an EBITDA of £56m, up 6% year-on-year, driven by improved gross margin and tight cost control.

Sales fell 9% to £985m, reflecting a challenging consumer backdrop and competitive market.

The improved EBITDA was supported by a 3% rise in gross margin to £510m, helped by supply base rationalisation and better buying strategies.

The retailer also saw significant profit gains in the second half of the year, with EBITDA in the fourth quarter up £10m to £16m, compared to £6m in the prior year.

Despite the sales drop, the company highlighted ongoing improvements, particularly in online sales, as its business transformation progresses.

Loss before tax narrowed to £67m year-on-year, impacted by exceptional non-cash items.

Matalan plans to open 10 new stores and upgrade 30 existing locations in the coming financial year as part of its expansion and store investment programme.

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Executive chair Karl-Heinz Holland said: “In the last year our focus has been on further driving the transformation of Matalan against a challenging consumer and wider economic backdrop. The additional £25m of funding secured from our core investors post-year end has now enabled us to start to accelerate our strategic plan.

“With a clear focus on maintaining profitability, we have delivered EBITDA growth. Our store investment plan is delivering results even better than we expected, and we’re making good headway on our plan to open 10 new stores and upgrade 30 existing locations in FY26.

“Our customers are central to everything we do and our renewed focus on ever sharper quality and value reflects this, and I want to thank all our colleagues who have worked so hard to ensure we are delivering every day.

“While we started the new financial year with positive momentum, we continue to operate in an increasingly competitive market and uncertain macroeconomic conditions. Against this backdrop, we remain mindful of the tough operating environment and know there is much more to do to complete our transformation.

“At the same time, we are confident in the strength of the Matalan brand and the opportunities ahead, and believe the business is well positioned to continue to transform and grow its profitability.”

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