Matalan sees jump in profits

Discount retailer Matalan saw profits surge 84% with cost cutting its operations and a rise in demand for affordable clothes. Revenue rose from £1.04bn ($1.57bn) to £1.12bn ($1.69bn) for the 52 weeks to February 27 as like-for-like sales rose 6.7 per cent

with the company’s new own-brand clothes ranges – Et Vous and Be Bau – selling well.

Gross margin increased by 1.4 percentage points, from 47.8 per cent to 49.2 per cent after a round of cost-cutting, and pre-tax profit jumped from £56.5m to £104.2m, reported the Financial Times.

“This has been an exciting year for us delivering strong sales growth in what remains a challenging market,” said Alistair McGeorge, chief executive. “We remain convinced of the relevance of Matalan’s offer to UK consumers and have recommenced our store-opening programme and increased our investment in our online business to reach out to new customers.”

Matalan stopped opening stores in the first quarter of 2007 after it was taken private.

However, last year it opened three new stores and plans to open between six and nine shops in the UK in the current financial year followed by 10 to 15 the year after – towards its final target of adding 100 out-of-town stores.

The retailer also opened three international stores in the past year – expanding into Abu Dhabi, Dubai and Jordan – as part of a plan to have up to 15 stores in the Middle East in the next five years.

The chain is owned by John Hargreaves, its founder, who took the company private in an £817m ($1.23bn) deal four years ago.

Mr Hargreaves abandoned an attempt to float the company for £1.5bn earlier this year.

Image: Matalan
Source: Financial Times