Topps Tiles Q1 revenues dip amid 'challenging' backdrop

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."

At 0945 GMT, the shares were up 0.6% to 64.10p.