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Matalan profits and sales drop as it refinances debt           

Value retailer Matalan has reported declining sales and profits in its full-year results as it readies a major £492m debt refinancing.

Sales declined 0.2% to £1.122bn from £1.125bn during the period. EBITDA dropped to £95.4m in the 53 weeks to March 1, 2014, down from £100.4m the year before.

Matalan blamed “challenging” UK trading conditions and increased markdowns due to adverse weather in early spring for the results. It said trading improved over the financial year as availability and range improvements were made, particularly in womenswear.

Online sales increased 32.9% compared with the previous year, with click-and-collect orders now making up 50% of online turnover. Ecommerce now accounts for 3.9% of total turnover.

In the nine weeks to May 3, Matalan said like-for-like sales increased 0.2% compared with the same period a year ago. Total sales rose 5.5% to £181.7m and EBITDA climbed 43.8% to £13m.

Matalan put the rise in sales and profits down to a strong performance in womenswear, footwear and kidswear, adding that margins benefited from “improvements in the company’s buying process and fewer markdowns in the current period”.

Matalan also said it intends to refinance its debt by issuing £342m and £150m of new bonds, due for repayment in 2019 and 2020 respectively, through its subsidiary Matalan Finance.

It also plans to increase its existing revolving credit facility from £30m to £50m and extend the maturity of this debt to early 2019.

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