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Topps Tiles share price crashes after profit warning

Topps Tiles good pic

In a pre-close season update on Wednesday, the UK's largest specialist tile retailer Topps Tiles announced their trading performance for the 52-week period ending 30th September 2017.

The retailer which opened 5 new stores in the period and now stands at 373 UK stores said turnover was expected to end around £211.6m, down from £215m a year earlier. The group said its full year like-for-like revenues were down 2.9%, versus a +4.2% gain last year, whilst like-for-like revenues in the 13 weeks ended 30 September 2017 decreased by a further 3.0%.  

Whilst they said they've seen a moderate improvement in trading in their final quarter, market conditions remain challenging and the Group expects adjusted pre-tax profits for the 52 week period ended 30 September 2017 will be at the lower end of the current range of market expectations. As a result of the announcement, the company saw its share price drop dramatically and they currently stand at 72p compared to a 52 week high of £107p. 

Analysis of LFL sales by quarter

 

Q1

Q2

First Half

Q3

Q4

H2

Full Year

FY 2017

+0.3%1

-4.1% 2

-1.9% 3

-4.7%4

-3.0%

-3.9%

-2.9%

FY 2016

+4.4%

+4.9%

+4.7%

+6.2%

+1.4%

+3.8%

+4.2%

Strategic Progress

'We continue to invest in the business and to make good progress with our strategy of "Out-Specialising the Specialists" to strengthen our market leading position' said the company.  'We have also maintained good control over gross margins and effective cost management over the year.  Specific strategic initiatives in the period include':

 

·     Inspiration - Our aim is to continue to inspire our customers and deliver competitive advantage by evolving both our online experience and the store environment.  Our customer service ratings were at record levels during the period and we continue to build strong customer engagement with our industry leading online visualiser.  

 

 

·     Range - We have launched 34 new tile ranges over the last 12 months.  New products accounted for 9.2% of our tile sales for the year.  Continued focus on increasing the contribution of in-house developed ranges, together with more own brand and owned brand ranges, means that more than 83% of our tiles are now exclusive to us.

 

 

·     Trade - Our Rewards+ loyalty scheme is now 12 months old and has been a great success.  We have 55,000 traders registered, an increase of around 35% year on year. 

 

·     Commercial - We completed a small acquisition in the commercial tile market during the period and continue to build our capability for addressing commercial opportunities originating through our store network.

 

 

·     People - This quarter we have finalised our business-wide service training for all store management and further developed the use of our new learning management system, "theHub", which has resulted in the business being shortlisted for an external award.

 

 

Matthew Williams, Chief Executive Officer, said: "It has been an important development year for the Group.  Significant strategic progress has been made and we remain excited by the growth opportunities open to us.  Despite this, the tougher market conditions we first highlighted in Q2 continued into the final quarter and, as a result, we are taking a prudent view on market conditions for the year ahead.  

"We remain focused on our strategy of "Out Specialising the Specialists" and are beginning to gain traction with a number of new initiatives.  In particular, we have made progress in the commercial tile market, completing a small acquisition during the period and building more commercial capability internally.  We will update shareholders on this initiative in more detail at the time of our full year results in November." 

Topps Tiles will announce its final results for the 52 week period ended 30 September 2017 on Tuesday 28 November 2017.

Source: Insight DIY Team & Topps Tiles press release

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04 October 2017

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