Tough year hits Matalan profits

Recent sales have improved, but are still falling

Budget retailer Matalan has reported a fall in profits after what it described as a "difficult year".

Pre-tax profits for the year to 25 February were £36.3m ($67m) compared with £80.5m a year earlier.

"The retail environment remains subdued and pressure on costs continues," said chief executive John King.

Like-for-like sales - which ignore new store openings - were down 6.9% for the year. However, in recent weeks the decline has slowed to 2.2%.

Matalan said that its core clothing sales had performed relatively well and maintained its market share, with much of the decline in sales stemming from a poor performance in its Homewares section.

Its profit figure was also hit by a £20.4m one-off charge to cover the cost of a decision not to go ahead with the implementation of a new computer software system.

The pre-tax pre-exceptional profit figure for the year was £56.7m - in line with analysts' forecasts.