Matalan to step up price war despite profits slump

Matalan, the value retailer that issued two profit warnings either side of Christmas, yesterday insisted it had turned the corner as it pledged to step up its price war against the high street.

The out-of-town stores group, which saw its competitive advantage against high street rivals wiped out during the crucial festive season, yesterday said underlying sales had risen by 3.1 per cent during the past nine weeks. This was despite a "difficult Easter", it added. Its shares rose 1.25p to 173.25p.

John King, the chief executive, said 10 per cent lower average selling prices and better ranges helped lure customers away from town centre rivals in recent weeks. He said the company accepted that heightened price competition was "a way of life going forward". He added: "We will maintain our value proposition. If we need to cut prices, we will."

His comments came as the company revealed its preliminary pre-tax profits almost halved last year to £60.7m, dragged down by poor marketing, availability and a £5m one-off charge. Like-for-like sales for the 12 months to the end of February fell 6.5 per cent. A few years ago its underlying sales were growing by 20 per cent.

John Hargreaves, the group's founder and chairman, said the results were "deeply disappointing" but added: "I believe the building blocks for a recovery are in place."

Matalan signalled confidence in its recovery by opting to maintain its final dividend at 5.4p. This means its dividend cover for the current year will fall to just under 1.5 times. Some analysts predicted the company would slash its payout to as little as 3.7p.

Mr King said the company, which is some 50 per cent cheaper than the high street, would continue to invest in lower prices. Price deflation of about 3 per cent contributed to the group's lower average selling price during the past nine weeks, he added. He said the fact that the company's previous management allowed prices to drift up - by 4 per cent during 2002 - had contributed to its poor results last year. "That's not what value retailers should be doing," he added.

The company said it would roll out a new look for its 178 stores over the next three years after discovering that a more modern environment attracted more shoppers. Underlying sales at the three sites it has refurbished outperformed its average stores by 5 per cent during the past nine weeks.

Although the company has its eyes on 10 of the big W out-of-town sites being sold by Woolworths, Mr King said it would not "buy sites at any price", predicting the sale process would become "an auction between Asda, Boots, Next et al".

Matalan is planning to replace all three of its non-executive directors this year.

News
people
Sport
FootballGerman sparks three goals in four minutes at favourite No 10 role
News
Rumer was diagnosed with bipolarity, attention deficit hyperactivity disorder and post-traumatic stress disorder: 'I was convinced it was a misdiagnosis'
peopleHer debut album caused her post-traumatic stress - how will she cope as she releases her third record?
Sport
A long jumper competes in the 80-to-84-year-old age division at the 2007 World Masters Championships
athletics
PROMOTED VIDEO
Sport
Radamel Falcao was forced to withdraw from the World Cup after undergoing surgery
premier leagueExclusive: Reds have agreement with Monaco
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvHe is only remaining member of original cast
Life and Style
Walking tall: unlike some, Donatella Versace showed a strong and vibrant collection
fashionAlexander Fury on the staid Italian clothing industry
Arts and Entertainment
Gregory Porter learnt about his father’s voice at his funeral
music
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
tvHighs and lows of the cast's careers since 2004
Life and Style
Children at the Leytonstone branch of the Homeless Children's Aid and Adoption Society tuck into their harvest festival gifts, in October 1936
food + drinkThe harvest festival is back, but forget cans of tuna and packets of instant mash
Sport
Lewis Hamilton will start the Singapore Grand Prix from pole, with Nico Rosberg second and Daniel Ricciardo third
F1... for floodlit Singapore Grand Prix
New Articles
i100
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam