Matalan warns as prices slashed
DISCOUNT retailer Matalan hit the City with another profits warning today, a month after its shock pre-Christmas earnings alert.
Chief executive John King said there had been no improvement in trading conditions since mid-December, forcing the group to slash prices to shift unwanted stock.
Its shares, which stood as high as 800p three years ago, tumbled 11 1/2p to 158 1/2p today.
Like-for-like sales for the five weeks to 10 January fell 5%, leaving the drop for the 19-week period at 6%.
Gross margins have slipped by 1.7%. Before December, analysts had expected profits of £110m for the year to February.
That was cut to between £75m and £85m, but the group warned today that profits are likely to drop to between £60m and £70m.
Price cuts have been raised to 75% on clothing and the half-price homewares sale starts this weekend.
King said the group, which is generally about 50% cheaper than its High Street rivals, has improved its product ranges and also sharpened up prices in response to the discounting activity by High Street rivals.
