Matalan reports consumer slowdown

Matalan, the discount retailer that ousted its chief executive last month, reported a 9 per cent increase in full-year profits yesterday but confirmed that consumers were tightening their belts.

Matalan, the discount retailer that ousted its chief executive last month, reported a 9 per cent increase in full-year profits yesterday but confirmed that consumers were tightening their belts.

Like-for-like sales in the year to 1 March were up 3 per cent on the same period last year but the company said it was budgeting for much lower growth in the coming year. John King, who has taken over as chief executive from Paul Mason, said: "We are planning for flat to low like-for-like growth over the next 12 months. We just think that's the prudent thing to do."

The group said the clothing market in the past quarter was flat on last year compared with annual growth of 5 per cent this time last year. Matalan said it had grown market share and claimed its value proposition, which includes men's suits priced from as little as £40, would stand it in good stead in a consumer slowdown.

Matalan said it is "on plan" in terms of sales and margins in the early weeks of its new financial year. It will provide a fuller update at its annual meeting on 4 June.

Pre-tax profits were £117.4m for the full year helped by 20 new stores which took the total to 163. A further 16 new openings are planned this year.

The group admitted that shareholders had asked searching questions after its decision to jettison its second chief executive in two years. Phil Dutton, the finance director, said: "We were telling them that the strategy remains in place, intact and on time. The shift is towards execution and day to day operations."

Matalan shares closed up 1p at 154p.