Matalan seeks buyer as sales rise

The group, which was taken private in 2006, is talking to a number of potential bidders after being approached by private equity in October.

Like-for-like sales for the 13 weeks to start of January rose 9.3 per cent. Including new stores, sales were up 10.4 per cent to 362m.

Over the crucial Christmas period – the five weeks to the start of January – same store sales were up nearly 14 per cent. Matalan said this performance was "particularly strong" given tough comparative figures a year ago.

"We are pleased to report this impressive performance in what continues to be a tough competitive environment," said chief executive Alistair McGeorge. "To have a business performing well doesn't do any harm." Private equity houses including CVC, TPG and Advert International are reported to have all registered an interest in acquiring Matalan. However, they have been reluctant to meet an asking price of 1.5bn, according to reports.

Mr McGeorge added the company is taking custom from mid-market rivals, as it attracts younger and more affluent customers.

Despite aggressive discounting by rivals, Matalan said it has maintained its level of discounting and further improved margins.

Strong cash generation has helped it to reduce debt levels, it added, taking the ratio of net debt to underlying earnings to one times, compared to 3.6 times at the time of the buy-out in 2006.

"These figures should assist the current sales process," said Singer analyst Matthew McEachran.

The group has 12 stores in Yorkshire, mainly based out of town centres, and has ambitious new store opening targets.

It opened three new stores recently, bringing its total to 205. Matalan hopes to open six to nine stores in its next financial year, and up to 15 in the year after, although declined to say where it is targeting.

Matalan's performance was ahead of figures reported by rivals Marks & Spencer, Debenhams and House of Fraser.

The group added footfall in December grew on a year earlier, and its online sales continue to expand strongly.