Matalan shrugs off jeans troubles

DISCOUNT retailer Matalan is confident it will meet City profit forecasts this year, despite a tumble into the red at its Lee Cooper jeans business over the first half.

Reporting a 4.5% increase in underlying sales, chief executive John King said much remains to be done in the second half, but he 'remains comfortable' with analysts' forecasts.

Most are expecting full-year profits of about £85m, up from £60.7m.

King highlighted a good performance from womenswear and home, and said Matalan has also re-established itself as the UK's largest denim retailer by volume. But its Lee Cooper business continued to experience difficult trading, largely in France, and made losses of £800,000.

Sales were boosted by the early launch of the group's autumn/winter ranges, estimated to have added 0.8% to the like-for-like rise.

Margins were slightly down, reflecting reduced prices and a bigger proportion of lower-priced products. Average selling prices were down by just over 5%, of which 2% reflected price cuts. Total sales for the 26 weeks to 28 August were ahead by 13.6%.

The refurbishment programme is proceeding, with 30 stores due for completion by October, after which it will be suspended for several months while the group concentrates on Christmas.

'The actions we have implemented are starting to bring results, with improved stability across the Matalan chain,' said King.