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Topps lifts profit forecast but remains cautious

Published: 3 October 2018 - Fiona Garcia
 

In a trading update for its full-year results, Topps Tiles has reported improved trading in Q4 and said pre-tax profits will be ahead of previous expectations but the group says it remains cautious in its outlook and is maintaining a tight control on costs.

The tile and flooring retailer said adjusted revenues for the 52 weeks ending September 29, 2018 are expected to be in the region of £215million, compared with £211.8million the previous year. Like-for-like revenues were flat when compared to the prior year when they declined -2.9%.

Meanwhile, the final quarter saw trading improve, with LFL sales up 1.2%, which Topps attributed to its strategy for creating exclusive and drive product differential, as well as the development of a commercial business – something it says has continued at pace since its acquisition pf commercial supplier Parkside Tiles, which it acquired last September. The adjusted revenues in the trading update exclude Parkside Tiles, which Topps says is being treated as an adjusting item during the first two years of ownership while it invests for future growth.

As a result of the uplift in revenue, the Topps board now expects adjusted pre-tax profits for the year ended September 29, 2018 to be “slightly ahead of the top end of the current range of market expectations.

However, the retailer said: “Looking ahead, the uncertainty in the UK economic outlook means we remain cautious and will be maintaining our focus on our industry leading gross margins, tight cost control and strong underlying cash generation”

Detailing its strategic process during the trading period, Topps said it had launched more than 25 new product ranges, exclusive to Topps, in the last 12 months. We are successfully leveraging our specialism in tiles to drive product differential. It is also making targeted investment in both digital and traditional marketing and is refreshing its stores, with more than 150 of the 370-strong estate now having benefited from the company’s “latest merchandising treatment”. Topps said it will continue this programme in the year ahead.

On the aim of developing its commercial business, investments have been made to expand the sales resource, create two architectural showrooms in Chelsea and Leicester, and to integrate the supply chain into the group function.  Topps explained that “sales growth and margin is in line with plan and new lead generation is very encouraging for the future”, adding: “ As expected, commercial will report trading losses of around £1.1 million for FY18, while we continue to invest in its future growth.

Topps CEO Matthew Williams said: "I am pleased to report an improvement in trading over the final quarter which has enabled the Group to post a full year sales result which is slightly ahead of the top end of market expectations and which represents an outperformance of the overall tile market.  Our core Topps Tiles business is a well invested, cash generative market leader with a proven strategy and we continue to make good progress with our expansion into the commercial segment of the UK tile market which will be an important source of future growth for the ggroup."

 

 

 

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