Topps Tiles profits slip, Brexit stockpiling planned
Tile specialist Topps Tiles posted a drop in full-year profit on Tuesday as it announced plans to stockpile ahead of Brexit.
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In the year to 29 September, adjusted pre-tax profit fell 14% to £16m even as revenue edged up 1.5% to £214.8m. The company attributed the profit decline to additional costs as a result of new stores and inflationary pressures.
The final dividend was maintained at 2.3p a share, taking the total dividend for the year to 3.4p, in line with 2017.
As far as current trading is concerned, revenue on a life-for-like basis was down 1.9% in the first eight weeks of the new financial period compared to a 3.2% increase in the same period a year ago. Topps said trading conditions remain challenging and LFL sales were negative against a strong prior year comparator.
Chief executive Matthew Williams said: "This has been an important year of strategic progress for the Topps Tiles group, in which our expansion into commercial has seen us double our addressable market while remaining firmly within our tile specialism, where our buying scale and expertise gives us a significant competitive advantage.
"Against a challenging market backdrop, the group delivered a robust trading performance for the year with flat like-for-like sales and market-leading gross margins in retail, and the foundations laid for significant sales growth in commercial in the year ahead.
"Whilst retaining a cautious view on the outlook, we remain confident that our expansion into the commercial tile market, coupled with our market-leading retail operation, gives us a solid platform for future growth."
Topps also said on Tuesday that Brexit could have a number of implications, including disruption to the flow of imported goods resulting in supply issues, a reduction in consumer confidence resulting in lower sales and a reduced labour pool resulting in staffing issues. The company said it will focus on increasing stock levels of its key selling lines ahead of March 2019.
Liberum said the adjusted pre-tax profit figure was slightly ahead of its estimate of £15.5m.
"Topps' leading, specialist market position leaves it better placed than competitors and the group's longer-term growth prospects, including within the UK commercial tile sector, remain very much intact. The shares trade close to a 5-year historic low price-to-earnings ratio and we see good value for those willing to look past the shorter term," it said.
At 1020 GMT, the shares were down 2.3% to 64.50p.