Matalan adds to Christmas joy for retailers with 9.2% sales rise

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The Independent Online

Matalan, the discount retailer, saw its shares rise 12 per cent yesterday as it shrugged off City fears about its performance to report buoyant sales over Christmas.

Matalan, the discount retailer, saw its shares rise 12 per cent yesterday as it shrugged off City fears about its performance to report buoyant sales over Christmas.

The shares closed 37p higher at 350p as Matalan said like-for-like sales in the six weeks to 5 January were up by 9.2 per cent on the same period last year.

However, the company warned that gross margins were down by almost one percentage point as it was forced to discount more heavily in the autumn to shift unsold stock.

This prompted the group's house broker, UBS Warburg, to downgrade its full-year profit forecast by 5 per cent to £107m. Ian Smith, Matalan's finance director, said he remained gloomy about the UK outlook. "I said in November that 2002 would not be a strong year [for retailing] and that the UK could run into recession and I'm not changing that view," he said.

Austin Reed, the clothing retailer, had a good Christmas, following Next, Arcadia and Selfridges which all reported strong growth earlier this week. Its underlying sales were up 6 per cent in the five weeks to 5 January.

Elsewhere on the high street, HMV Media, which also owns the Waterstone's book chain, said record DVD sales had helped drive sales in the five weeks to 5 January by 11.1 per cent. Alan Giles, its chief executive, said like-for-like sales at HMV Europe, which mainly comprises British stores, had risen by 16 per cent.

"In music we had been a bit apprehensive because growth the previous year had been so strong but Robbie Williams, bless him, topped both the album and singles charts [the first time anyone had done that since the Spice Girls in 1996]. DVD sales were treble what they'd been the previous Christmas," Mr Giles said.

DVDs of Bridget Jones's Diary, Shrek and Pearl Harbor dominated people's Christmas lists. He described Christmas at Waterstone's as "solid if unspectacular" after a more aggressive approach to advertising helped sales increase by 9.1 per cent.

Meanwhile, the fantasy appeal of Harry Potter and The Lord of the Rings helped the book retailer Ottakar's to beat sales expectations with a comparable sales growth rise of 7.5 per cent in the six weeks to 29 December.

Edward Knighton, the finance director, said this was "no flash in the pan because the second film of each of these was due out next Christmas". The company is on track to report full-year profits in line with expectations.

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