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Topps Tiles: Trading And COVID-19 Update

Topps Tiles Stockton 725 x 500.jpg

Topps Tiles plc ("Topps" or the "Group") is today providing an update on the impact of the COVID-19 pandemic.

In response to the UK Government's announcement of 23 March 2020, the Group has ceased normal store operations in order to protect colleagues and customers.  The Group's online business remains in operation and we are working to fulfil existing customer orders to the extent possible within the constraints of the UK Government restrictions. 

The Board is taking prudent steps to ensure the business is protected through this period in order that it remains well positioned to recover, once the situation has normalised.

Current Trading

Like for like sales in the Group's Retail business for the 12 weeks ended 21 March 2020 were down 3.1%.

Financial Liquidity

Topps remains in a good financial position, with a robust balance sheet.  The Group's committed £39 million revolving credit facility has been fully drawn down, and the Group has approximately £20 million of cash liquidity immediately available.    In addition to the above committed facilities, the Group has an £11 million accordion facility which is subject to lender approval.  The Group expects total net debt at the half year end on 28 March 2020 to be approximately £19 million.

The Group welcomes the emergency support measures already announced by the UK Government, which will help retain cash liquidity in the business.  Specifically, the cessation of business rates for a period of 12 months will save us £9.5 million, and the deferral of the VAT quarter payment will improve cashflow by £3.1 million.  We will utilise the Job Retention Scheme to furlough colleagues who are unable to work due to store closures and we estimate that this will benefit cashflow by at least £2.0 million per month while this situation continues.  A number of additional steps are being taken to reduce costs, preserve cash and provide the business with maximum flexibility.

The Group has modelled a number of trading scenarios for the balance of the current financial year but is planning its finances around the most pessimistic expectation, which assumes that stores remain closed for a prolonged period.  In the event of a 12 week closure of retail premises, followed by a further quarter of materially reduced sales, when combined with the support detailed above, the Group believes that its cash reserves will provide it with good levels of liquidity for the remainder of the current financial year.  The Group has shared details of its modelling with its lending bankers, who remain supportive.

Full Year Outlook

While assessing the outlook with accuracy is impossible, it is clear that the COVID-19 pandemic will result in a material reduction to our expectations for revenue and profit for the second half of the financial year.  In these circumstances, the Group is withdrawing its financial guidance for FY20 and does not expect to pay an interim dividend this financial year.

While the immediate outlook is challenging and uncertain, Topps remains a resilient, market-leading business with good levels of cash liquidity and a strong management team and the Board is confident that the Group is well positioned to recover once the situation normalises.

The Board continues to monitor the situation closely and will provide a further update when appropriate.

Source : Topps Tiles PLC

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26 March 2020

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