Matalan optimistic despite sales drop

British discount retailer Matalan posted a 6.5 percent drop in first half profits on Tuesday. The company, which is being taken over by founder and majority shareholder John Hargreaves in a deal valued at €817 million, said same-store sales fell 1 percent. However company morale was boosted by a slight recovery in total core like-for-like apparel sales, which rose 0.5 percent. Operating cash flows improved from £66.1 million to £77.5 million this year.

“The results are much as expected,� said Richard Ratner, analyst at Seymour Pierce. Net debt improved from £36.3 million last year to £10.5 million. The company added that it had “tightened� its stock commitments for the second half. This will help drive cost efficiency. It also said it had negotiated payment terms and conditions with overseas suppliers and expects this to lead to an £25 million increase of working capital cash flow by the end of the financial year.

“Trading conditions remain challenging, however our agenda of focusing on improving profitability and cash flow is now beginning to bear fruit,� said chief executive John King.