Clothing chain Matalan said it was in good shape today, despite like-for-like sales falling 6.4% over the past 26 weeks.
The group offset the decline with better margins as it carried out measures to improve efficiency and benefited from a more profitable mix of sales.
Among changes, Matalan has tightened stock levels and overhauled its distribution network, while it recently announced the completion of a restructuring that cost 300 jobs but should help save £15m a year.
It said the difficult trading conditions had impacted on sales, although the performance in the past eight weeks showed a more encouraging trend with a drop of 3.4% on a like-for-like basis.
The Skelmersdale-based company, which employs around 14,000 people and has 190 stores, said total sales growth – including new space – fell 1.8% in the 26 week period but was marginally ahead in the shorter time period.
Margins for the half-year were up by around 1.2%, compared with a 0.2% fall seen a year earlier.
Chief executive John King said the measures undertaken earlier in the year meant the business had remained in good shape “during a difficult six months in UK retail.”
He added: “The business is more streamlined as a result of tighter cost control and improved cash flows, and our stock position has been carefully managed.
“Our focus is now on a successful launch of the new season ranges.”
The company’s drive for improved profitability was given a boost by the reduced amount of excess stock, following a satisfactory clearance of spring and summer merchandise.
The distribution network has also been rationalised following the opening of a new warehouse at Corby, Northamptonshire, which now services around 80 of the company’s stores.
As well as looking to become more efficient, Matalan said 18 store refurbishments in the half year produced the minimum required sales uplift of 5%.
A further 17 will be improved in the second half of the financial year.
Charles Stanley stockbrokers said the performance was “slightly better than expectations”, but that margins and general conditions remained a worry.
It said: “We have argued for some time that we believe that Matalan is suffering from fierce competition in an increasingly crowded value clothing market – the acquisition of Littlewoods stores by the ascendant Primark can only intensify competition.”
