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Supporting a family brand through the COVID-19 lockdown
- When UK stores were unable to open due to lockdown, British fashion and homeware retailer Matalan needed to plug the gap left by its usual in-store sales. Acting quickly, Matalan explored options to see it through the initial stages of the pandemic. The funding package we put together and the support we provided helped the business navigate a turbulent period.
The outbreak of COVID-19 posed huge challenges to retailers at a time when things were already tough on the high street.
As the UK lockdown measures temporarily closed physical stores, much-loved British fashion and homeware retailer Matalan took quick action.
Matalan needed to secure additional funding to ride out the pandemic. So it turned to Deloitte for help.
A regional presence
Established in 1985 on Merseyside, Matalan began life as a family business. It prides itself on providing high quality value-led clothing and homeware to today’s families.
The company is an important employer regionally, especially in Merseyside which is home to its HQ, and across the country with over 13,000 staff nationwide.
Its place in the local community is further cemented by its ongoing work with charity partners, Liverpool’s Alder Hey Children’s Hospital and the NSPCC, to which it has donated over £13 million.
A difficult market
“As retailers entered 2020, contending with an already difficult market, the outbreak of COVID-19 meant that, overnight, in-store sales faced a sudden and sharp decline” said Deloitte partner Jodi Birkett.
And with over 12 million customers shopping in its stores each year, Matalan needed to find a way to support the business through the initial disruption caused by the pandemic until shops could re-open for business.
Securing funding was a key part of Matalan’s strategy to bridge this gap.
Closing the funding gap
Having advised Matalan for over 13 years, previous work with the business has included helping to restructure its supply chain and warehousing.
This relationship gave us a strong understanding of the challenges Matalan was facing and meant were ideally placed to support its people.
In response to COVID-19 there was an immediate action to preserve cash, manage working capital, reduce costs and access all available government support.
“On this occasion, a multi-disciplinary team from Deloitte supported our client Matalan to raise a new funding package of £50m” continued Birkett.
“This included support from its existing bondholders and accessing government funding under the CLBILS initiative (Coronavirus Large Business Interruption Loan Scheme), alongside its three banks extending existing debt facilities.”
Our team comprised experts from our restructuring, debt advisory, tax and assurance practices, working closely with the Matalan team to deliver this complex financing solution.
Greater financial stability
As a result of this re-financing Matalan is now in a stronger position to manage through the current period of recovery and adjustment.
With an estate made up predominantly of large and out of town stores, Matalan has been able to adopt social distancing measures in a safe and convenient environment, and customers are returning to its stores.
In addition, Matalan has prioritised initiatives that will make its business more agile and efficient across all sales channels, including online.
Supporting Alder Hey
Not only is Matalan a trusted family brand, but the business has long had a positive impact in its own region, near Liverpool.
Aware of the pressures both hospital staff and patients have faced from the COVID-19 outbreak, Matalan committed to donating comfortable clothing and homeware supplies to staff at the Alder Hey Children’s Hospital, with clothing and other supplies donated to hospitalised elderly patients across Liverpool.