Matalan's stock price may have recovered somewhat in the past few weeks but not everybody is happy with the performance of the Lancashire-based discount retailer.

SG Securities is understood to have lowered its rating to "hold" from "buy", following a visit to the company on Friday, and has made further revisions to its earnings forecasts. Apparently SG is now looking for pre-tax profits of £82m this year, back from £84m previously.

SG is also said to be advising clients that although Matalan is likely to see strong sales growth this year, gross margins are unlikely to recover due to competition from the likes of Asda.

Shares in Matalan, once a contender for a place in the FTSE 100, ended 9p better at 540p yesterday, valuing the company at £2.2bn.