Matalan reveals Christmas sales boost

Out-of-town fashion and homeware retailer Matalan today hailed its Christmas television advert as it revealed a surge in sales in the run-up to the festive period.

The 190-strong chain said like-for-like sales in the five weeks to December 31 increased 9.9%, up from 1.3% in the 13 weeks to November 26, as customers responded well to the TV campaign, which features customers floating inside a giant snowglobe.

The company said it delivered its best sales week to date during the period, beating its previous record in 2005 as a number of discounts on selected lines also helped to pull trade.

However, the company warned that the combined impact of the January 2011 VAT increase, higher input costs and promotional mark-down continues to put downward pressure on margins.

The strong sales performance comes against a mixed backdrop of the retail sector over Christmas, as chains such as John Lewis posted strong sales while others suffered, such as La Senza and Blacks Leisure, which both fell into administration.

Elsewhere, Matalan recorded total revenues of £310.8 million in the quarter, with underlying earnings of £41.7 million.

The company said whereas the increased cotton prices in late 2010 and early 2011 have now finally filtered through, subsequent falls in the cost of cotton will not be reflected in its margins until the second half of 2013.

Looking ahead, Matalan added: "The outlook for the UK consumer continues to remain uncertain with increasing pressures on disposable incomes, declining confidence levels and the expectation of a tough January and February 2012."

PA