Matalan’s total sales fell 1.5% across the Christmas trading period, following a 4% sales slump in its third quarter, as the retailer cut back on discounting.

The fashion and homewares retailer’s EBITDA jumped 8.6% to £45.3m in its third quarter to November 24 despite sales falling to £309.5m.

Matalan chief executive Darren Blackhurst said it had made margin gains as it did not resort to the same level of discounting as the previous year.

He said:”Whilst headline revenues are broadly in line with last year, this should be viewed in the context of the promotional activity that took place last year.

“We have deliberately focussed on the quality of our earnings throughout the current quarter and into December, and have delivered a robust improvement in margins.”

It posted a “strong” closing cash position of £100.6m for the quarter but said the outlook “remains cautious”.  

Blackhurst added: “Our active customer base is growing, the quality of our offer for customers is improving and we continue to improve our earnings.

“We have exited the peak trading period with a good stock position and a strong cash balance.

“The market continues to be challenging and competitive and we therefore remain cautious in our outlook.”