STANDARD & Poor’s downgraded Matalan’s credit rating yesterday, in a further blow to the budget retailer after it reported a slump in second-quarter profits last month.
The credit agency, which also cut the rating on its £225m debt to “junk”, said the group had been hit by “low consumer confidence, relatively high unemployment, and inflation, reducing its customers’ discretionary spending”.
The budget clothing and homewares retailer reported a profit slump of 63 per cent last month to £13.6m for its second quarter, blaming tough economic conditions.
The Skelmersdale-based group, which has 212 stores in Britain, insisted that while pressure on disposable incomes and low consumer confidence was “unlikely to change in the near future”, it continued to be a cash generative business.
“Matalan has £75.1m of cash on its balance sheet and continues to be a profitable, cash generative and robust business with growth opportunities,” a spokesman for the retailer said.