Value retailer Matalan yesterday insisted that it was holding market share despite reporting deteriorating trading conditions.
Group like-for-like sales tumbled 10.6 per cent in the nine weeks to 29 October. The retailer said clothing like-for-like sales were down 7.6 per cent implying homewares sales had fallen by as much as 20 per cent.
Chief executive John King said it “was not selling knitwear or winter coats” with trading deteriorating further in the last fortnight as Britain enjoyed unseasonably mild weather.
“Consumer behaviour, whether it is clothing or home, whether they like something or not, is based on need,” said King. He denied it was losing out to the supermarkets and Primark as well as Marks & Spencer, which has sharpened its pricing. “Our market share is flat; in clothing it has been between 2.9 per cent and 3 per cent for the last three years,” he said. “We will not chase sales at any price.”
Analysts took a knife to Matalan forecasts yesterday. Seymour Pierce analyst Richard Ratner said Matalan was one of the “losers” at the value game and
trimmed his estimate from £75.4m to £62m. Investec analyst Mark Charnock shaved £10m off his forecast and is now looking for £71m.
“These are disappointing results, but the current retail environment is only part of the problem,” said Ratner. “Five years ago Matalan was a star retailer. The problem is that everyone is now a value player.”
The Skelmersdale-based retailer said first half clothing like-for-like sales were down 6.3 per cent. It has stopped stocking grey market product such as branded sportswear, and King said if that effect was extrapolated, core clothing sales were down 1.5 per cent for the half, which was “better than the market”.
Matalan made a pre-tax profit before exceptionals of £33.2m compared to £41.7m last year. Sales dipped 2 per cent to £527.8m.
The retailer, which is controlled by founder John Hargreaves, has been on a cost-cutting drive this year shedding 300 jobs and restructuring its distribution network.