Topps Tiles rallies from four-year lows as like-for-like sales rise

Retailer Topps Tiles said it was making "good progress" on its strategic initiatives even as it reported lower gross profit margins and sales for the latest financial year.

However, in the eight weeks since period-end, like-for-like sales growth had picked-up to a 3.2% clip, versus a 0.2% dip in the comparable period one year ago.

For the twelve months to 30 September, revenue dropped 1.5% to £211.8m across the group, which when combined with lower margins saw pre-tax profits shrink 15% to £18.6m.

Gross margins decreased from 61.9% to 61.1% due to a weaker pound, the company said, although the impact of that had been partially offset by underlying sourcing gains.

To take note of, distribution and selling costs, in particular, increased, as did other operating expenses and administrative costs. On the other hand, employee profit sharing declined from £10.05m to £4.97m.

Net debt increased from £24.8m to £27.5m over the period.

Confident on outlook, but prudent

The firm said it would continue to focus its business strategy on "out-specialising the specialists" in the domestic tile market, while expanding its growth strategy into the commercial segment, which represented 45% of the overall market in Britain .

With the latter in mind, during the period it acquired Parkside Ceramics, a commercial tile supply company, for £1.1m, with a plan to invest another £1m into the business during the 2018 financial year to drive "longer-term growth."

Chief executive Matthew Williams said, "The business responded well to the more challenging trading conditions we experienced in 2017, maintaining tight control of costs to help offset the reduction in gross margin and continuing to make good progress with its strategic initiatives."

"While we are retaining our prudent view of market conditions for the year ahead, we are encouraged by this return to like-for-like sales growth. We are confident that the combination of the significant further potential in our strategy of 'out-specialising the specialists' with our accelerated plan to grow in the commercial tile market will underpin our future success," he added.

Be that as it may, basic earnings per share slipped from 8.05p to 6.98p.

Hence the outfit's decision to cut its final dividend by 8% to 2.30p.

As of 1000 GMT, shares had gained 7.00% from their 52-week lows plumbed on the day before to 65.00p.