UK: Matalan profits rise 29 percent, to open 100 more stores

SKELMERSDALE: Budget fashion and homewares retailer Matalan has reported a jump in annual profits said its ambitious expansion plans are on track. The group, which abandoned a sale process earlier this year, posted a 29% rise in underlying full-year profits, with sales and margins both rising. The group has an ambitious store opening programme. It aims to open up to another 100 out-of-town stores over the coming years. It is also planning to invest in the store group's online service.

The retailer, owned by the family of founder John Hargreaves, made adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of £186.5m in the year to February 27, up from £145.1m in the previous year. Matalan, which trades from 205 stores, said revenues increased 8% to £1.12bn, with like-for-like sales rising an impressive 6.7%.

The growth in like-for-like sales was less than the previous year, but resilient compared with many high street rivals as hard-up consumers have turned to discount stores to save money. Gross margin were up 1.4 percentage points to 49.2%.

Chief executive Alistair McGeorge said, "We have benefited from our investment over the last three years in our product, our stores and our people." He added that the market remained challenging.

Having called off a process that could have seen Hargreaves sell the business to private equity, Matalan completed a £525m debt capital raising in April. Funds from the package will be ploughed into its growth strategy. The group launched a store opening plan last year, opening three new stores in Scotland, Manchester and London. The group will open between six and nine new stores this year and up to 15 next year. It is also seeking to drive web sales.

The group 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.

McGeorge said, "This has been an exciting year for us delivering very strong sales growth in what remains a challenging market." He added, "We remain convinced of the continuing relevance of Matalan's offer to UK consumers and have re-commenced our store opening programme and increased our investment in our online business to reach out to new customers."

About Matalan
Matalan is one of the UK's leading clothing and homewares retailers offering quality fashion and homewares at up to half the equivalent high street price.

John Hargreaves, the founder of Matalan, discovered the out of town retail US concept that sold a range of food and non-food products at low prices in the 1970's. John decided to implement the same retail concept in the UK, so in 1985 the first Matalan store opened in Preston. Since then Matalan has grown significantly and by 1995 there were 50 stores across the UK. In 1997, in order to cope with Matalan's growth, the head office was relocated from Preston to Skelmersdale along with a new distribution centre. Matalan now trades from 5 million square feet in over 190 stores.

Shopping at Matalan offers outstanding quality at prices that are simply unmatched elsewhere. By buying direct from the manufacturer and having convenient out of town stores with low overheads, Matalan is able to offer unbeatable value for money.

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Added: June 28, 2010 Source: Agencies
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