Outlook: Discounts pay off for clothes retailers
Thursday 02 September 1999
How they love this new found frugality round at Matalan. A virtual unknown until a couple of years ago, this discount retailer now has a bold expansion plan aimed at making it Britain's second largest clothing retailer to Marks & Spencer. Like Archie Norman at Asda, Matalan claims its inspiration came from Wal-Mart. The company was set up after its founder visited some of Wal-Mart's US stores.
John Hargreaves, a former market trader, established Matalan in Skelmersdale 14 years ago and now has a business worth nigh on pounds 1bn. The key is low prices with a claim to be up to 40 per cent cheaper than high street rivals. The secret, it says, is in the buying. Matalan buys direct from factories across the globe rather than through agents or middle men, who add on their mark-up. If it was all that simple one might wonder why everyone isn't doing it. As it is, Matalan looks like a company which has found the holy grail.
But perhaps a part of its success is rather more prosaic, for it has also benefited from coming to the stock market at a sensible price. Floated last May when the stock market was was getting jumpy about the retail sector, the shares were priced cheaply at 235p. Now they stand at 1047.5p, making it one of the best performing new issues of recent times.
Sadly, the same cannot be said of Monsoon, the upmarket fashion retailer whose drip feed of bad news has given new meaning to the phrase `it never rains but it pours.' With profits down for the first time in 13 years, the shares now stand at a fraction of the issue price. This is no surprise. At the insistence of the chairman and founder, Peter Simon, the shares were priced far too highly in the first place. It was always obvious that the company's margins were unsustainable.
Even so NatWest Securities managed to find enough mugs to get the issue away. The company had already been forced to abandon its float plans once before because of investor scepticism. It's now going to be doubly more difficult for Mr Simon to re-establish his City reputation. The kindest thing he could do is to take the company private once more, notwithstanding his insistence that his priority is to restore shareholder value.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 Loom bands: Bids for dress made from colourful rubber reach almost £154,000 on eBay
- 3 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 4 Why I'm on the brink of burning my Israeli passport
- 5 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber reach almost £154,000 on eBay
Israel-Gaza crisis: Eight killed in Gaza Strip cafe while watching World Cup semi-final
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...
£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...
Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...