Matalan earnings slump 40%

OUT-of-town fashion and homewares chain Matalan, has reported a sharp slump in annual earnings, despite growing sales 2% to £1.1bn.

The Skelmersdale-based group, controlled by founder John Hargreaves’ family, said ebitda in the year to the end of February fell from £153.6m to £91.1m. Matalan flagged-up its tough outlook in January when it said higher costs and price cuts to woo shoppers were denting margins.

The retailer, which has 213 stores nationwide, said sales growth had been driven by new openings and that like-for-like sales had dipped 0.4% during the year.

It said it remains “cautious” on prospects for this year but is in a strong financial position and is cash generative.

It added: “Prior to the year end we successfully agreed and executed a covenant reset on our revolving credit facility. We were unable to reach agreement with one of our banks. We took the decision to cancel the £20m of our RCF facility held by this bank.

“We are confident that we have sufficient levels of liquidity in our business from cash balances, the £30m RCF facility that remains and the ongoing support of our shareholders.”