Matalan warns on margins after ‘tough’ May
Matalan warned today that poor spring weather would dampen its second quarter results after the retailer was forced to slash prices.
The budget fashion brand said May was one of the toughest months “in a number of years”, after unseasonable weather lead to earlier discounting.
Read more: Matalan boosts revenue despite tough retail climate
Total revenue was up 2.9 per cent to £273.5m in the 13 weeks to 25 May from £265.9m the previous year. However, the company said margins would be squeezed more tightly in its next quarterly results.
Earnings were £50.4m and the company ended the quarter with £71.2m in cash, up from £60.5m.
Matalan chief executive Jason Hargreaves said: “Although we delivered solid overall results, the market deteriorated significantly through the course of the quarter.
“An improvement to the awful spring weather failed to materialise until late June, the May market being one of the toughest we have seen in a number of years.
Read more: Matalan posts slow growth
“As a result, the market began to discount earlier and to a greater extent than expected, and we ourselves had to react and begin promoting seasonal stocks.
“Whilst having a manageable impact on the first quarter’s results, there will be more significant dilution to margins in the second quarter as we exit the summer season.”