Matalan notes cost pressures starting to ease

The update, which was published yesterday, offered some reassurance to shoppers.

Next recently said there will be little to no inflation in its 2012 prices after the cotton price bubble burst.

Matalan, which has 212 UK stores, said its profit margins were squeezed in recent months as it struggled to pass on rising prices to cash-strapped shoppers and it put on discounts to shift summer stock.

But it said its recent cost pressures had been more subdued and it expected to see the benefits in the pricing of next year’s ranges.

Underlying profits fell 47 per cent to £41.2m in the half year to August 27, while sales fell 2 per cent to £526.6m.

June proved a “particularly difficult” month as competitors started summer sales early and although July and August saw an improvement, September’s sales were hindered by the hotter than usual weather.

Sales of ladieswear remained the most challenging area of its offering, it added, although menswear and childrenswear performed well. Matalan said its outlook remained cautious because the challenging conditions are unlikely to change in the near future.

Official figures released yesterday suggest recent clothes price inflation is already starting to ease. It rose 4.4 per cent in September, compared to the record 6.4 per cent surge a year earlier.

The Skelmersdale-based firm opened a store in Crawley in recent weeks, which will be followed by an outlet at Newtonards, County Down. Matalan, which also runs six stores overseas, was delisted from the stock market in 2006 after it was bought by founder John Hargreaves and his family.

Earlier this year it appointed former Asda chief merchandising officer Darren Blackhurst as chief executive after Alistair McGeorge left to take over at New Look.

Matalan has 18 stores in Yorkshire and North Lincolnshire.

In the 1970s, Mr Hargreaves predicted that the US out of town retail concept would be a hit with shoppers in the UK.

He decided to implement the same retail concept in the UK. In 1985, the first Matalan store opened in Preston.

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