Matalan's credit rating downgraded

Credit agency, Standard & Poor has announced that it has downgraded the clothing and

homeware retailer Matalan’s credit rating. The retailer has been downloaded one notch to B and the agency has also cut the rating on its £225m debt to ‘junk’.

Standard & Poor said the downgrading reflects, ‘the deterioration in Matalan's operating performance in a challenging UK retail market’. Additionally, commenting on the fact that the retailer had been hit by ‘low consumer confidence, relatively high unemployment, and inflation, reducing its customers’ discretionary spending’.

This is a further setback for the budget retailer who reported a profit slump of 63% to £13.6m last month for its second quarter, blaming tough economic conditions.