Topps Tiles sales fall as home improvement market slows
Topps Tiles reported a drop in sales on Tuesday as it pointed to a slowdown in the home improvement market.
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In a trading update for the 26-week period ending 1 April, the tile specialist said total revenue fell to £106.5m from 108m in 2016, with like-for-like revenue down 1.9%.
Trading in the second quarter reflected softer market conditions and the group was also reporting against a stronger period from the previous year, when housing transactions accelerated ahead of the Stamp Duty changes in April 2016.
Topps said lower sales growth over the first half will mostly be offset by reduced operating expenditure. Based on an improving trend across the second quarter and a prudent view of the second half, expectations for full-year profits are within the current range of analyst's expectations.
The current range of analyst forecasts for underlying pre-tax profit for the year ended 30 September 2017 is £21.0m to £22.3m, with consensus at £21.8
Chief executive officer Matthew Williams said: "Market conditions over the second quarter have been tougher, but the business has responded well with tight control of costs. While we are taking a prudent view on the outlook for the balance of 2017, an improving trend over the second quarter provides some encouragement.
"We will continue to invest in the business and focus on executing our strategy of Out Specialising the Specialists to extend our market leading position in the second half of the year."
Neil Wilson, senior market analyst at ETX Capital said: "Brexit blues? It’s proving tough for Topps Tiles to generate continued revenue growth in a fairly flat property market. The company is a handy barometer for consumer sentiment and the broader property sector. Since the Brexit vote the market has noticeably cooled. UK house prices fell for the first time in two years last month - a sign of a much more subdued market and this is hitting firms like Topps Tiles."
Wilson noted that the stock has lost around 40% of its value since the EU referendum.
At 1100 BST, the shares were down 7% to 90.44p.