Profits at value fashion retail group Matalan have tumbled over the last 12 months, according to an unaudited full-year trading update released by the company today.
EBITDA for the 52 weeks ending February 25th 2012 totalled £91.1 million, down 41 per cent from the £153.6 million achieved in the previous year.
Total sales grew 1.9 per cent but like-for-like trading declined 0.4 per cent year-on-year, and higher input costs have significantly squeezed margins, while closing stock has risen from £120 million in 2011 to £131.8 million.
In today’s statement Matalan said: “EBITDA for the year at £91.1m was within the range guided at the last results announcement. There have been no material changes in the external environment or our outlook.
“Consequently, we expect EBITDA for the last 12 months to stabilise in the range of £85 million - £95 million through the first half of the new financial year.
“We enter the new financial year with a clean stock package with total units held and the cost of old stock below last year. The growth in stock balances is directly related to higher input cost prices impacting the current season’s stock package.”
Tough economic conditions were blamed when Matalan reported a massive 63 per cent drop in profits for its second quarter period, but comment from the retailer on its full-year performance will have to wait until its audited results are published in May.
Matalan did explain that it has had to recently negotiate a covenant reset on its revolving credit facilities (RCF) but did not renew terms with one of its previous lenders.
The facility lost is worth around £20 million to the firm but with its cash position of £96.2 million for the year-end, £13.1 million higher than 2011, Matalan remains positive regarding the outlook for its cash balances.
Matalan’s statement continued: “We were unable to reach agreement with one of our banks. We took the decision to cancel the £20 million of our RCF facility held by this bank.
“We are confident that we have sufficient levels of liquidity in our business from cash balances, the £30 million RCF facility that remains and the ongoing support of our shareholders.”