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Matalan delivers positive sales growth despite tough climate

Matalan has warned trading will continue to be tough this year due to deflated consumer confidence, despite a like-for-like sales rise and its best week since 2005.

For the 13 weeks to November 26, the value fashion and homewares group posted total revenues of £310.8m, with third quarter sales up 3.5% on the same period last year, or 1.3% on a like-for-like basis. EBITDA from continuing operations was £41.7m during the period.

Matalan said that maintaining a strong price message had a positive impact on footfall and conversion. Online the business continued to deliver “strong growth”.

For the five weeks to December 31 like-for-like sales rose by 9.9% due to its product offering, the response to its Christmas TV ad campaign and weak comparisons caused by snow last year.

During the Christmas trading period, Matalan achieved its best sales week to date, beating its previous record set in 2005. Matalan said due to the challenging market conditions it decided to adopt a targeted promotional strategy offering customers promotions on selected lines.

On December 31 cash levels were £114.0m compared with £102.5m the year before.

The retailer warned that the outlook for the UK consumer confidence remains uncertain with increasing pressure on disposable income and declining confidence levels.

Matalan added that higher cotton prices in the latter part of 2010 and early part of 2011 were now hitting margins and due to its buying cycle the recent fall in cotton prices will not be reflected in its margins until the second half of next year.

Chief executive officer Darren Blackhurst said: “It is clear that Matalan is well positioned in this increasingly competitive market to offer customers the higher quality, lower cost value proposition they seek. Style, quality and value are key to the Matalan offer and our customers recognise that.

“During these challenging times, it is encouraging to see us deliver our best ever week’s sales in the run up to Christmas and I would like to thank all of our employees for their efforts in delivering this great result.

We remain focused and cautious and recognise the need to maintain healthy cash levels and tight control of costs as we look after customers and exceed their expectations going forward.”

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