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Matalan woes make share sale look good
(Daily Mail Via Thomson Dialog NewsEdge) MATALAN'S woes show no sign of abating, illustrating why shareholders were probably wise to accept founder John Hargreaves' GBP817m takeover bid.
But it would have been difficult to get many to admit they had been offered a fair deal as the discount retailer scrapped the dividend after sales and profits slumped.
The unseasonably balmy weather was blamed for the 2pc drop in underlying revenues in the last two months as it struggled to shift winter coats and jumpers. Pretax profit in the first half slumped 7pc to GBP28.7m, while overall sales were down 1pc to GBP522.6m.
However analysts say the problems cannot all be put down to the onset of global warming.
Matalan has struggled to compete against the onslaught of the supermarkets selling jeans for a fiver and the rapid expansion of value fashion chains such as New Look and Primark.
The retailer has gone some way in tackling the problem by controlling costs and stock levels, which has boosted profit margins.
Chief executive John King said the colder weather in the last few days had helped trade, with Matalan's GBP40 mustard yellow duffel coat selling well.
Shareholders will vote on Hargreaves' 200p-a-share bid later this month. The City clearly thinks it is a done deal as the stock hardly moved, ending up 1/4p at 1971/4p.
Analysts reckon Hargreaves' offer for the 46.5pc of the business he and his family does not already own looks reasonable considering the competitive pressures on the business. Former Littlewoods boss Alistair McGeorge has been unveiled as the new chief executive, replacing King at the end of this year.
For more on Matalan go to www.thisismoney.co.uk/mtn
Shares in Blacks Leisure rose on talk that secretive-billionaire Mike Ashley is mulling a bid for the owner of Millets. In a highly uncharacteristic move, Ashley - who has always shunned the scrutiny a City listing would bring - is thought to have drawn up plans to reverse his Sports World chain into Blacks.
The plan would involve Blacks (up 6p at 437p) keeping its stock market quote, while Ashley would become chief executive of the enlarged business.
The tycoon has built up a 29pc stake in Blacks.
Copyright 2006 Daily Mail. Source: Financial Times Information Limited - Europe Intelligence Wire.
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