Fashion and homeware retailer Matalan’s underlying profits fell by 63 per cent to £13.6 million during it second quarter period, as the company blamed tough economic conditions for the disappointing results.
Total revenue for the 13 weeks ending August 27th 2011 remained broadly in line with last year at £258.5 million, although the company claims that early summer sales initiated by competitors hampered like-for-like (LFL) trading.
Unseasonably warm weather in September meant that, although the month started well, sales decreased during the period and, as a result, the company is keen to manage the seasonal risk in its stock package.
EBITDA for the last 12 months stands at £117.7 million, as the company remains positive about the growth of its online strategy, hoping that a focus on multichannel operations will improve footfall in-store.
Despite the considerable drop in profits over the period, bricks and mortar expansion remains a priority, following the opening of a new store in Crawley and the reopening of a store in Grimsby.
A third store is due to open in Newtonards in Northern Ireland next month, while the company’s Scunthorpe store is to be relocated. Existing stores which have been refurbished with a new fit-out are reportedly outperforming the main estate.
Darren Blackhurst, Matalan CEO, claimed that, while the retailer remains cautious amid unpredictable economic conditions, it is still well-placed to improve its standing within the market.
“Our customers continue to tell us that our value proposition, selling higher quality low cost product, is exactly what they need as they face increasing pressure on their disposable income,” he commented.
“The challenging conditions that we faced in the first quarter continued into the second quarter.
“While we do not expect these conditions will change in the near future, Matalan continues to be a profitable, cash generative and robust business with growth opportunities.”