Matalan's earnings rise, trading strong

LONDON (Reuters) - British out-of-town fashion and homewares retailer Matalan reported a 6.3 percent rise in core annual earnings on Monday and said it had made a strong start to its new financial year.

The privately-owned firm, which runs 203 stores across the UK, said like-for-like sales were up 8.2 percent in the 14 weeks to June 6 on improved profit margins.

Earnings before interest, tax, depreciation and amortisation (EBITDA) were 145.1 million pounds for the year ended February 28 on a 2 percent rise in revenues to 1.04 billion pounds.

Chief Executive Alistair McGeorge forecast another year of challenging trading conditions, but was confident Matalan's focus on the budget end of the market would yield benefits.

Low cost fashion and homewares retailers, like New Look and Dunelm (DNLM.L) respectively, have outperformed higher price rivals in the economic downturn.

Matalan, taken private in December 2006 and controlled by the Hargreaves family, said net debt was 247.4 million pounds at the year end, down from 275.3 million the same time last year.

(Reporting by Mark Potter; Editing by Hans Peters)