Margins squeezed at Matalan

VALUE retail chain Matalan’s earnings dropped by 14% in the first quarter despite sales increasing by 4%.

The Skelmersdale-based fashion and homeware retailer found that EBITDA dropped to £23.6m in the 13 weeks to May 26 (2010: £27.6m). Sales climbed to £278.6m (£268.1m).

Stock levels were slightly higher at close at £138.8m (£134.3m) but the company was also sat on more cash – £93m, compared with £76.7m in 2011.

Chief executive Darren Blackhurst said: “We are pleased that our first quarter result is in line with expectations and the trend is encouraging through June.

“As we now move into the second quarter, the business will remain focused on exiting the spring season with a clean stock package and managing costs tightly whilst continuing to deliver exceptional value for customers.”