Topps Tiles profits rise by a fifth as homeowners go on shopping spree
Topps Tiles said profits jumped by a fifth last year, thanks to a surge in people doing up their homes and the retailer’s own efforts to modernise its brand and its stores.
The FTSE 250 retailer reported a 19.3 per cent jump in pre-tax profits to £20.4m in the year to 3 October.
Revenue rose 8.7 per cent to £212.2m while sales at stores open more than a year increased by 5.4 per cent. Like-for-like sales are up by 3.3 per cent in the first eight weeks of the new financial year. Chief executive Matthew Williams said:
We have made an encouraging start to the new financial year, with like for likes sales in the first eight weeks ahead by 3.3 per cent, in line with our expectations. The Group has entered the period in good shape and with a clear purpose, and we remain energised by the multiple growth opportunities open to the business in the years ahead.
Topps Tiles embarked on a strategy two years ago of trying to “out specialise the specialists” by broadening its product range, sprucing up the appearance of its stores and offering better customer service and inspiration to homeowners in both shops and online.
The company said its strategy was paying off and that it has reached its target of capturing one third of the UK tile market a year ahead of plans. It now sells over 5,000 different items and said its new tile ranges accounted for 9.3 per cent of total sales over the last year.
It has also been using its smaller Boutique store format to enter more affluent catchment areas in London such as Chelsea and Fulham. The Group has a total of 346 shops after opening 19 and closing nine last year.
David Alexander, a consultant at retail research firm Conlumino, warned that in the longer term obstacles such as the broader shift away from home ownership to rented accommodation could limit Topps Tiles' growth.
However, "for now the retailer is ideally placed to reap the rewards of the consumer and housing market recovery for as long as it continues", he added.
Shares closed down 1.08 per cent at 161p. Peel Hunt analyst John Stevenson maintained his "buy" recommendation, saying there was still "plenty of upside to come".