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Topps Tiles Sets New Market Share Goal Amid Revenue Decline

Topps Tiles Plc ("Topps", "Topps Tiles" or "the Company"), the UK's largest tile specialist, announces its annual financial results for the 52 weeks ended 26 September 2020.

Strategic and Operational Highlights

• The Group, which is already the UK’s leading tile specialist, has set a new market share goal, aiming to account for £1 in every £5 spent on tiles and associated products in the UK by 2025 – “1 in 5 by 2025”;

• This will be achieved by serving a broader customer base, with a current focus on enhancing our value credentials in Retail and growing our Commercial business;

• In our Retail business, we have launched a new strategy: “Great Experience, Great Product and Great Value”, ensuring the journey for our customers starts and ends with a great service experience - whether in-store or online;

• The world-class customer service delivered by our staff across our 342 stores remains key to our offer and this is bolstered by our recently relaunched website which, during the first national lockdown, saw online sales treble;

• In our Commercial business, we remain committed to our strategy of disrupting the commercial tile market and constructing a new market leader over the medium term;

• Sustainability is becoming a key part of our agenda; we are working with suppliers on high recycled content tiles and investing into energy efficient infrastructure

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Adjusting items are detailed in the notes below – these include the impact of IFRS 16 in 2020, items which are one-off in nature or can fluctuate significantly from year to year (such as some property-related items).  In the prior year, adjusting items included trading losses from the Commercial business whilst the business went through an initial two-year phase of investing in growth. 

Financial Summary

• Revenue decline of 12.0% (to £192.8 million; 2019: £219.2 million), with retail like-for-like sales decline of 12.5%, predominantly reflecting the impact of the Covid-19 pandemic, including a period of temporary store closures in Q3;

• Strong recovery in retail like-for-like sales in Q4, up 16.5%;

• Adjusted profit before tax of £3.6 million (2019: £16.0 million), with trading losses in Q3 from store closures being partially offset by Government support and improved trading in the final quarter of the year;

• Balance sheet transformed over the period, moving from adjusted net debt of £11.3 million at the beginning of the year to an adjusted net cash position of £26.0 million at year end (before the impact of IFRS 16). The £37.3 million improvement includes a one-off £17.9 million net receipt from the sale and leaseback of our head office and central warehouse buildings as well as a significant focus on cash management as part of Covid-19 response;
• Based on a prudent view of the commercial market following Covid-19, recognised a non-cash impairment of Commercial goodwill, intangible assets and property, plant and equipment of £5.6m under IAS 36;

• After adjusting items (detailed below), including the impact of IFRS 16 and the Commercial impairment, loss before tax on a statutory basis was £9.8 million (2019: profit of £12.5 million);

• No final dividend proposed in light of the challenges faced this year (2019: full year dividend of 3.4 pence per share). Cash dividends paid in this financial period relate to prior year final dividend payment. The Board is keen to re-instate the dividend policy as soon as is appropriate. This should be possible in the new financial year, subject to delivering a positive adjusted EPS.

Current Trading and Outlook

• In the first eight weeks of the new financial period, retail like-for-like revenues increased by 19.6% (2019: decrease of 7.2%);

• Retail business benefitting from the current increase in home improvement activity;

• Commercial market remains subdued but activity levels starting to improve.

Commenting on the results, Rob Parker, Chief Executive said:

"In what has been a very challenging year, I am pleased with our response as a business, in the resilience we have shown and, in particular, the strong bounce-back in retail sales delivered since the initial national lockdown.  Underpinning all of this have been our exceptional colleagues across the Group, and I would like to thank them all for their hard work and commitment throughout this testing period. 

“During the year we have transformed our balance sheet and have accelerated our strategic development, building on our credentials as the UK’s leading tile specialist.  We are ambitious for the business and have set ourselves a new goal of taking £1 in every £5 spent on tiles and associated products in the UK by 2025. 

“It has been a year of challenge and change for Topps but we are emerging stronger and refreshed.  Our new financial year has begun strongly, with retail like-for-like sales in the first eight weeks ahead by 19.6%.  With our true omni-channel offer, specialist credentials and strong financial footing, Topps is well-positioned for growth as the UK economy begins to recover.”

Read the full results presentation here.

Source : Topps Tiles

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01 December 2020

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