Discount success order of the day as Matalan thrives

Published on Sunday 18 January 2009 22:27

DISCOUNT fashion and homewares chain Matalan yesterday said its value-for-money products were helping it weather the consumer spending downturn as it reported a hike in festive sales.

The group, which owns 203 out-of-town stores across the UK, including ten in Scotland, said like-for-like sales rose 5.9 per cent in the five weeks to 4 January. Comparable sales in the 13 weeks to 4 January also rose, ahead 3.4 per cent, in sharp contrast to recent grim trading updates from many high street rivals.

Next said sales plunged 7 per cent across its stores between the end of July and 24 December as it suffered amid the tough retail conditions. And Marks & Spencer's trade has also been hit, seeing the group report an 8.9 per cent fall in general merchandise sales for its third quarter.

But discount groups have proved far more resilient, with cash-strapped shoppers hunting out bargains and trading down to cheaper alternatives.

Primark last week reported better-than-expected Christmas sales, up 18 per cent over the 16 weeks to 3 January, helped by "very good" like-for-likes.

Matalan said yesterday its offering appealed to consumers in the current economic climate.

It added: "Footfall in December was up as our strong value proposition chimed with our customers in the deteriorating macro-economic environment."

The firm maintained that it was able to improve gross profit margins by avoiding the hefty sales discounts offered by many other retailers desperate to lure in shoppers.

Matalan will continue with plans to pump millions into its stores. Last year it spent over 18 million on refurbishing outlets, with 35 stores getting a major overhaul and investment will ongoing, Matalan confirmed.

Founder John Hargreaves opened the first Matalan in Preston in 1985, taking inspiration from low-price, out-of-town retailers in the US. By 1995 there were 50 stores across the UK.

The business was taken private in 2006 by Missouri Bidco, a company ultimately controlled by the Hargreaves family.