Budget clothing retailer Matalan reported a 29.6 per cent drop in annual profits tosday and warned that consumer demand remains weak despite some improvement in recent sales.
Pretax pre-exceptional profit fell to £56.7 million (€82.4 million) in the year to February 25th, compared with £80.5 million (€117.6 million) in 2005.
"This was a difficult year for Matalan in a tough retail environment," said chief executive John King, who has said he would be quitting at the end of the calendar year.
"The retail environment remains subdued, and pressure on costs continues." Matalan, which has about 190 mostly edge-of-town stores selling clothes and home furnishings, is finding the budget end of the market increasingly competitive, with rivals Asda, privately owned Peacock and New Look and ABF's Primark among those battling for market share.
Poorly received homeware ranges are currently hampering the group's performance and the retailer is discounting old stock to get new ranges in quickly, which is impacting profit margins.
Matalan maintained its total dividend at 8.9 pence a share.
It compares with an average dividend yield of 3.3 per cent for the general retail sector.
There is constant speculation that the chairman and founder of Matalan, John Hargreaves, whose family owns around 52 per cent of the chain, is looking to sell. Press reports have said he is willing to take around 235p a share but analysts remain sceptical of any bid interest.