Matalan reports flat sales

British discount clothing retailer Matalan continued to face difficult trading conditions today after it reported flat sales for the past nine weeks.

The Skelmersdale-based chain said like-for-like sales were 0.1% lower in the period, although it pointed out that it had increased margins.

The figures were announced ahead of Matalan’s annual meeting, which is due to attract extra interest after it emerged on Friday that chairman and founder John Hargreaves was considering an offer for the rest of the company.

At the same time it emerged that Mr Hargreaves thought the company's proposed dividend was too generous when set against others in the sector.

It was also reported today that Harris Associates, which owns 6.9% of the company, planned to oppose the re-election of Mr Hargreaves, who controls 53% of the company in conjunction with his family.

The trading statement from Matalan offered some encouragement from the retailer as analysts had been expecting a fall of around 2%. The drop of 0.1% is also an improvement on the 1.1% seen across the past 18 weeks.

Chief executive John King said: “Whilst we are encouraged by improvements being made across the business, we continue to trade in a difficult marketplace and are planning accordingly.”

The company declined to comment on matters relating to the possible takeover offer from Mr Hargreaves.

Mr King said he believed UK consumers remained cautious, although he hoped the downturn in confidence may now have bottomed out.

He added: “The pressures we have talked about are still there on consumers - whether it be taxation or utility bills. There’s still some caution out there.”

Today’s like-for-like sales figure is based on 182 stores which have traded from the same retail trading space since February 2004.

In clothing, Matalan said its market share remained at 3%, as a result of improved ranges and better marketing.

It has also continued to reposition its homeware operation, with existing ranges being cleared ahead of the introduction of new stock later in the year.