Topps Tiles shrugs off building sector gloom as cost pressure headwinds ease and sales jump in third quarter
- Topps Tiles revealed sales for the three months ending 1 July were 4.4% higher
- Profit margins at the firm have been squeezed by rising building material costs
- The company was a notable beneficiary of the pandemic-induced DIY boom
Topps Tiles has maintained full-year profit expectations following sustained levels of demand during the last quarter.
Britain’s biggest tile seller’s sales for the three months ending 1 July were 4.4 per cent higher year-on-year, supported by more than 60 per cent growth from its ‘online pure play’ brands.
The group’s like-for-like revenues were up by 2.5 per cent as it benefited from lower inflationary pressures on goods and freight costs.
Outlook: Topps Tiles forecasts annual profits to be commensurate with market expectations
On a nine-month basis, the retailer’s total turnover rose by 7.6 per cent, thanks to the acquisition of Pro Tiler Tools and the launch of Tile Warehouse in 2022 helping to deliver record first-half sales.
Consequently, it expects adjusted pre-tax profits for the 12 months ending 4 July will align with current forecasts of between £11.3million and £12.3million, compared to £15.3million the previous year.
Profit margins at Topps Tiles have been squeezed by higher building material costs and supply chain disruptions, such as lorry driver shortages and major logistical issues at UK ports.
Russia’s invasion of Ukraine has also increased the cost of clay and gas, both essential components for manufacturing tiles.
Yet the Leicestershire-based company has defied much of the economic gloom impacting the building materials sector, which is also being hit by the Bank of England’s successive base rate hikes and soaring mortgage rates.
Rob Parker, chief executive of Topps Tiles, said: ‘Looking ahead, we are confident that our core strengths of leading brands, world-class customer service, specialist expertise and a strong balance sheet will enable us to continue to deliver value for all stakeholders.’
Topps Tiles was a beneficiary of the Covid-induced DIY boom as travel restrictions encouraged Britons who were spending more time indoors to use some of their extra savings on property upgrades.
Trading was further spurred by a temporary stamp duty holiday, rock-bottom interest rates and the rise of hybrid working.
The company scored two consecutive years of record turnover in 2021 and 2022 and expects to achieve its goal of accounting for £1 in every £5 spent on tiles and associated products in the UK by 2025.
Jocelyn Paulley, retail partner at legal firm Gowling WLG, said: ‘Despite the stark economic challenges facing all retailers at the moment, it has navigated through this period well through efficient supply chain management and the onset of cost price rises plateauing.’
Topps Tiles shares were flat at 48.5p on Wednesday morning, meaning their value has grown by over a fifth in the past 12 months.
