Matchesfashion, a prominent luxury fashion retailer, has reported wider losses for the year ending in January. These losses can be attributed to the lingering effects of the COVID-19 pandemic, which have caused fluctuations in customer demand worldwide. In terms of revenue, there was a decrease from £390.9 million in the previous year to £386.6 million. The adjusted EBITDA loss also rose from £17.2 million to £23.8 million, and the net loss increased from £34.9 million to £38.6 million.
However, there are some positive signs indicating an improvement in Matchesfashion’s performance during the 2021/2022 fiscal year. For the first time, the company has reported figures for both the first half (H1) and the second half (H2) of the year. While overall orders declined by 4.4% in H1, they saw a significant rise of 15.3% in H2. Additionally, revenue decreased by 9.4% to £188.4 million in H1 but increased by 8.3% to £198.2 million in H2. There was a slight decrease in the margin during H1, but H2 witnessed a notable increase of 5.2 percentage points.
Throughout 2021, Matchesfashion has undergone several changes to adapt to the challenging circumstances. The company collaborated with an undisclosed luxury apparel group to transform the trading model for five of the brands it represents. By shifting to a concession model in Q4, Matchesfashion aimed to reduce promotional activities and increase sales at full price while maintaining a high sell-through rate. This strategic shift seems to be yielding positive results for the company.
In addition to the pandemic, Matchesfashion has had to navigate the financial impact of Brexit. As around 70% of its products are of EU origin, the company faced additional EU duty costs due to the UK’s departure from the European Union. Moreover, many non-EU goods are shipped from Europe to Matchesfashion’s distribution center in the UK. Although the company has established a hub in the Netherlands to mitigate these challenges, Brexit remains a significant cost burden.
Despite these obstacles, Matchesfashion has experienced continued growth in demand following the end of the financial year in question. However, the company’s exit from the Russian market has slightly dampened this growth. To support its operations and future expansion, Matchesfashion secured £40 million in new funding in April. Additionally, the appointment of Nick Beighton, the former CEO of ASOS, as the new chief executive officer signifies the company’s commitment to driving its success.
Matchesfashion’s losses are a reflection of the ongoing challenges faced by the fashion industry, exacerbated by the pandemic and geopolitical factors like Brexit. Nevertheless, the company’s improved performance in the second half of the year and its strategic shifts in the trading model demonstrate its resilience and ability to adapt to changing circumstances. With new leadership in place and sustained demand growth, Matchesfashion is well-positioned to navigate these challenges and emerge stronger in the coming years.
Useful links:
– [Matchesfashion Website](https://www.matchesfashion.com/)
– [Matchesfashion’s Strategic Shift News](https://www.businessoffashion.com/articles/news-bites/matchesfashion-shifts-from-selling-for-brands-to-concession-model)
