DISCOUNT clothing chain Matalan has continued to suffer tough trading conditions on the high street as it reported a 6.4 per cent fall in its first-half sales yesterday.

The group said it was, nevertheless, in good shape, offsetting the decline with better margins as it carried out measures to improve efficiency and benefited from a more profitable mix of sales.

Matalan has tightened stock levels and overhauled its distribution network, following the opening of a warehouse at Corby, Northamptonshire.

The Lancashire-based company has also cut 300 jobs across its 190 stores as part of a restructuring programme to help save £15m a year.

About 15 jobs have gone at stores across the region, including Consett, Darlington, Durham, Gateshead, Newcastle, Hartlepool, Stockton, Middlesbrough, Scarborough, Knaresborough and York.

Matalan said 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 per cent on a like-for-like basis.

The company, which employs about 14,000 people, said total sales growth - including new space - fell 1.8 per cent in the 26 weeks to August 27, but was marginally ahead in the shorter time period.

Margins for the half-year were up by about 1.2 per cent, compared with a 0.2 per cent fall 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 said: "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 clearance of spring and summer merchandise.

Matalan said 18 store refurbishments in the half-year produced the minimum required sales uplift of five per cent. A further 17 are to be improved this financial year.