Matalan eyes sale as inflation dents business

Matalan is reportedly eyeing a potential sale of the discount chain ahead of a looming refinancing deadline, as the business has been hit by rising inflation and weaker consumer demand. 

According to The Sunday Times, founder John Hargreaves is working alongside financial advisors at Lazard to either secure a potential buyer for the entire business or find investors to help “pump in” new equity. 

It comes as a “toxic combination of runaway inflation and weak demand wreaks havoc on fashion retailers”, The Times reported. 

The move to seek a buyer comes ahead of a January deadline for the retailer to refinance £350m in secured debt, while a further £130m instrument is scheduled for repayment a year later. 

Last month, reports emerged that Hargreaves was preparing for a new fight with Matalan’s lenders over its ownership ahead of the refinancing deadline. 

The month before, Hargreaves had reinstated himself as chairman of Matalan, and reportedly went on to inject tens of millions of pounds into the business. Under a proposed plan outlined last month, outright control of the company would remain with Hargeaves and his family.

According to Sky News at the time, some of Matalan’s senior creditors were likely to be “unconvinced by the proposal” however, and were preparing to push for the fashion and homewares chain to be put up for sale.

Sources cited by the outlet said there were suggestions that Matalan’s family shareholders were proposing to inject £25m to £50m, although the official sum remained unclear.

Matalan has been contacted for comment.