DISCOUNT retailer Matalan is planning to invest millions of pounds in its stores despite the tough retail climate, after seeing profits rise almost 90%.

The Skelmersdale business saw its annual pre-tax profit rise 89.3% to £53.2m for the 53 weeks ending March 1, compared to the 52 weeks to February 24 last year.

Revenue fell 1.4% to just over £1bn, but Matalan put its profit performance down to improved cost efficiency, tighter stock control and better sourcing and buying.

The company yesterday confirmed it was investing another £19m in its store estate, and will ensure that every one of its 202 stores will have received some investment by next year. The company spent £18m improving the environment and appearance of its stores last year.

Matalan was founded by John Hargreaves in 1985 after he was inspired by low-cost out-of-town retailers in the US.

It floated on the Stock Exchange in 1998, but was taken private again in 2006 by Missouri Bidco, a company ultimately controlled by the Hargreaves family.

Matalan chief executive Alistair McGeorge said: “The UK non-food retail market experienced tough trading conditions last year, and we expect this to remain challen- ging for the foreseeable future.

“However, we have made consid- erable progress in implementing our plans to improve the profit- ability and growth prospects for the business since we took it private. We believe that we now have a solid platform to manage our cost base, and pursue growth, going forward.

“Strong progress was made in improving profitability and cash generation through significantly reducing the rate of sales decline, reducing our cost base and tightening financial management disciplines.”

Matalan says it is now “actively seeking” to grow its store portfolio.

alistairhoughton