Matalan - comment

The retailer had a strong underlying quarter. Volumes were down but planned for, such that inventory is at -16% YoY. Average sales price was up 16% in return, yielding almost flat sales (just slightly up). Online is still struggling - apparently on all fronts: traffic, basket, conversion... FX weighed a whopping 5% on margins, which computes to £14m - the missing EBITDA figure to a very good quarter. So EBITDA was merely 8.7%, or £25m. Energy costs remain benign and hedged through next year. September was slow and summer clearance has been pushed into that month, so £2m of the £25m EBITDA were borrowed from Q3. Competition remains intense, but conservative stock levels allow for margin protection; therefore losing some volume market share. Management signalled some deflation in their FY25 (next year) planning. Guidances were upheld, as too early to lift. Liquidity was strong at $130m. Feeling good overall.