Small caps round-up

Topps Tiles reported a drop in first-quarter revenue on Wednesday amid a "challenging" market backdrop.

In an update for the 13 weeks to 29 December 2018, the company said like-for-like revenues fell 1.4% compared to a 3.4% increase in the same period a year ago.

Topps said digital remains at the heart of its multi-channel business, with almost all of its customers using the digital aspects of its offer and its stores.

The group is now trading from 367 stores versus 371 a year ago, having opened one and close two during the period.

Topps said it continues to make "good" progress with its plans for commercial and its strategy of "disrupt and construct" is proving successful. It has recruited an experienced sales force and is evaluating opportunities to further strengthen the team.

In addition, the company is building an "encouraging" pipeline of future potential projects and said it's on track to open two new showrooms in the second quarter, bringing the total to four.

Chief executive officer Matthew Williams said: "Against a challenging market backdrop and a strong period of performance in the prior year we believe the business has performed robustly over the first quarter.

"We remain excited by both the opportunity for profitable growth that our expansion into commercial segment will bring and the continued opportunity to further strengthen our market leading position overall."

Liberum, which rates the stock at 'buy' with a 95p price target, said the statement shows an improving LFL trend through the period, but continued tough trading conditions mean the brokerage lowered its pre-tax profit forecasts by 3-4%.

"The strategy continues to deliver outperformance versus the competition, underpinning Topps' leading market position, and progress in the commercial division remains encouraging," it said.

"We do not see any change in the positive longer-term fundamentals and, with the group trading close to a five-year historic low price-to-earnings ratio, we see good value for those willing to look past the shorter term."

Logistics company Wincanton has been appointed by Weetabix to provide transport, warehousing and co-packing services from February.

As part of the new partnership, which is made up of two separate, five-year contracts, Wincanton will operate four warehouses where goods are stored and co-packed for retail promotion. It will also provide a nationwide transport operation for the delivery, management and transfer of finished goods and stock.

Chief executive officer Adrian Colman said: "We are delighted to have been selected as Weetabix's logistics partner of choice across both its transport and warehousing services. Our many years of experience in providing integrated supply chain networks put Wincanton in the best position to help take Weetabix's operations forward and we are keen to bring new ideas to the process."

Weetabix said it was "thrilled" about the new partnership.

"The culture and capability of the Wincanton business is a great fit for The Weetabix Food Company," it said.

Liberum, which rates Wincanton at 'buy', said: "No financial details of the contracts have been disclosed. However, we believe the scale of the contracts may be larger than the average Wincanton new business win announcement.

"Given the timing of the start of the contracts, we would expect no material financial contribution in the current FY (March 2019E), with modest upside to consensus for later years."