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Last Updated: Thursday, 11 December, 2003, 16:47 GMT
Matalan spreads Christmas gloom
Matalan clothes
Matalan says its customers are waiting for the January sales
Budget clothing chain Matalan has seen its shares sink after warning on weaker-than-expected profits.

Matalan said that its pre-tax profits in 2004 would fall "materially short of market expectations".

Sales at stores open at least one year fell 7% in the 14 weeks to December, the UK company said.

Matalan's troubles - ahead of the key Christmas trading season - sent shivers through the retail sector, hitting shares in Marks & Spencer and Next.

The company's gloomy outlook came after retail data group Footfall said that Christmas shopping had got off to a slow start on Britain's high streets.

Savvy customers

Earlier in the month, the British Retail Consortium warned that consumer confidence remained fragile.

Matalan put some of the blame for its poor performance down to the fact that customers were buying fewer winter items, which are traditionally more expensive.

The company's chief executive, John King, said many customers had decided to wait until the January sales before stocking up on coats and leather jackets.

"I feel that consumers are a lot more savvy than they used to be," Mr King said.

On the London stock exchange, Matalan's shares closed down 32.25p, or 16.4%, at 179.5p.

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