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Shares drop as cracks appear at Topps Tiles

The writing was on the wall for investors in Topps Tiles when co-founder and former chief executive Barry Bester sold his entire stake of 22.95million shares or 11.95 per cent of the equity at 70p a pop in June.

He had obviously heard that Mo Iqbal had joined forces with another former Topps Tiles commercial director Jeremy Harris and Nick Ounstead to a form a specialist tiles e-tailer called Tile Mountain.

It left Topps literally with a mountain to climb to keep ahead of the game during the strong UK housing market recovery.

Goldman Sachs may have said that the risk from ‘online disruption’ is low because people will still want to buy floor coverings and tiles from shops, not over the internet. Analysts from rivals N+1 Singer strongly disagree and after spending a day with the team at Tile Mountain have advised clients to sell Topps down to 30p. The close was 3.25p off at 84.5p.

The broker heard that the Tile Mountain team reckon that by selling direct on the web they can offer consumers the very best value, with prices on average around 40-50 per cent cheaper than Topps.

Tile Mountain sources the majority of its products direct from overseas factories, so achieving competitive prices and terms, which should improve further with scale.

Tile Mountain’s management says the domestic UK online tile market is worth £50million, but that is expected to grow as customers become more comfortable with buying tiles online. It has the potential to cause disruption in the marketplace and Topps as market leader is most at risk of sales transfer.

Source : Geoff Foster – ThisIsMoney.co.uk
www.thisismoney.co.uk/money/markets/article-2395027/MARKET-REPORT-Shares-drop-cracks-appear-Topps-Tiles.html

16 August 2013
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