Matalan has improved underlying profitability but its executive chair has said there’s “more work to do” as it accelerates its transformation.
The value fashion retailer posted a 9% drop in sales to £985m for the 12 months to May 24 2025, with adjusted EBITDA climbing 6% to £56m.
Matalan said the improved profitability was the result of actions taken to “protect and grow gross margin and careful cost control”, and it was focused on driving profitability rather than sales growth to “enable sustainable growth as business transformation progresses.”
A significant improvement in profitability was made in the second half of the year, according to the retailer, with EBITDA up £11m during the period, including a £10m improvement in the final quarter.
The retailer said an improved product, style, quality and value for customers in menswear and childrenswear had won it market share gains in the second half of the year, but there was “more work to do” to improve womenswear and homeware.
Gross margin improved 3% year on year driven by “supply base rationalisation and improvements in buying”, and loss before tax deepened 12% to £67m due to exceptional non-cash impacting items.
Matalan’s former chief executive Jo Whitfield left the business in October last year, with chair Karl-Heinz Holland taking on the role of executive chair upon her departure.
Holland has since been driving the retailer’s store transformation strategy, announcing earlier this month that the retailer was to invest £25m in upgrading its store estate.
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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