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Topps blames slowing housing market for poor results

Topps Tiles good pic

Earlier today, Topps Tiles Plc the UK's largest tile specialist, announced a trading update for the 13 week period ending 1 July 2017.  Often seen as a bell-weather for the broader home improvement market, Topps announced that like-for-like revenues for their Q3 period had declined by a worrying 4.7%.

Trading Update

They stated that trading during Q3 reflected continued weaker macro-economic conditions this year and a strong period of performance in the prior year when the business was benefiting from the increased level of housing transactions resulting from the Stamp Duty changes in April 2016.  

The Group is currently trading from 367 stores (348 at this point last year), having opened a net nine stores during the quarter and they expect to end the year with approximately 370 stores. 

Analysis of LFL sales by quarter

 

Q1

Q2

First Half

Q3

FY 2017

+0.3%1

-4.1% 2

-1.9% 3

-4.7%4

FY 2016

+4.4%

+4.9%

+4.7%

+6.2%

1 Quarter 1 in 2017 included one additional trading day due to the timing of public holidays which we estimate increased LFL sales growth by c.0.6%.  This effect reversed during the second quarter.

2 Quarter 2 2017 included the loss of a trading day explained in (1) above and also the effect of a later Easter which generated one additional trading day.  These two adjustments broadly offset each other over the quarter.  

The net impact of (1) and (2) over the first half of 2017 was one additional trading day which benefited LFL sales growth by c.0.3%.

Quarter 3 2017 includes the loss of a trading day, due to a later Easter, when compared to the prior year.  The impact of this is to reduce LFL sales by approximately 0.6%. 

Strategic Progress

They continue to invest in the business and are making good progress with their strategy of "Out-Specialising the Specialists", with specific initiatives in the period including:

  •  Inspiration - Almost all of our customers visit both our website and one of our stores at some stage in their shopping journey.  We are focussed on making this combined store and digital experience as inspirational as possible.  During the period we have generated 20,000 personalised digital brochures, with over 90% of these generated in store, assisted by our store colleagues.
  •  Range - We have launched 34 new tile ranges over the last 12 months and these ranges accounted for 9.7% of our tile sales for the year.  80% of our tiles are either own brand or exclusive.
  • Trade - Our Rewards+ loyalty scheme for trade customers continues to gain momentum, with over 50,000 traders now collecting points.  In addition, we continue to ensure that we lead our market by offering the best value to our trade customers.
  • Commercial - We continue to explore opportunities to expand our presence in the commercial tile market through a small acquisition and are in active discussions.  We plan to provide a more detailed update on the opportunities in the commercial tile market as part of our year end results presentation.
  • People - During the quarter we commenced the roll out of our updated "Natural Service" training programme to further improve the specialist service we give to our customers.

Matthew Williams, Chief Executive Officer, said: "At the time of our interim results in May we pointed to a more challenging macro-economic environment and this has persisted through the remainder of the third quarter.  Tougher comparatives resulting from the changes to Stamp Duty in the prior year were a feature throughout the period and we have seen a modest improvement in trading over recent weeks as they have begun to ease.   

"Against this background, we will continue to extend our market leadership position by focusing on our proven strategy of "Out-Specialising the Specialists".  In particular, we continue to evaluate selective acquisition opportunities in the commercial segment of the UK tile market."  

Source: Insight DIY Team & Topps Press Release

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05 July 2017

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Neil Anderton - Sales Director, British Ceramic Tile
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