Matalan refutes profit warning

On Tuesday British retailer Matalan denied that it had issued a profit warning, despite reporting a 10.6 drop in underlying sales since the beginning of the second half. The company also admitted that there was “little evidence to suggest that this will improve in the near term.”

Finance director Phil Dutton said the drop in sales did not equal a profit warning, but said “the next eight weeks will determine everything and it’s very difficult to predict and so we’re giving no guidance.” Chief executive John King admitted that the company had bought 40 percent less seasonal stock for Christmas than last year in an effort to remain conservative, but told the Financial Times that he was nervous, like he was every year.

The company attributed the recent disappointing results to slower sales of coats and sweaters due to the warm autumn weather, as well as its planned departure from the “grey” clothing market, a slow start to the Christmas season shopping and a continued poor performance of its home business. Pre-tax profits were down 28 percent to £30.7 million for the first half, while sales dropped 2 percent to £527.8 million. On the up side, gross margin was up 1.4 percent.