Topps Tiles shares sink as “challenging environment” hits

Shares in tile retailer Topps Tiles (LON:TPT) sunk over 5 percent on Tuesday, after the group said a more “challenging” environment would mean pre-tax profits would be towards the lower end of expectations.

Pre-tax profits for the six months to April 1 fell 5.9 percent to £9.5 million, with revenues dipping 1.3 percent to £106.6 million.

Despite the group calling it a “solid performance in a more challenging market”, like-for-like sales declined 1.9 percent. The recent figures were hit by strong comparatives from 2016 when sales benefited from changes to Stamp Duty, with the company saying in a statement that they were “taking a prudent view of the second half outlook”, and that they expect pre-tax profits for the full year to be “towards the lower end of the range of market expectations”.

Topps Tiles operated with a gross margin of 61.2 percent, down slightly from 61.5 percent in 2016, with underlying gross margin broadly in line with the prior year. Business was boosted by the opening of eight new core stores during the period delivering strong performance and returns.

Commenting on the results, Matthew Williams, Chief Executive said:

“Our results for the first half reflect the more challenging macro-economic environment we have traded through so far in 2017 and the strong performance we delivered in the corresponding period in 2016 when housing transactions were boosted ahead of the changes to Stamp Duty. While these tougher comparatives begin to ease from the end of June, the key macro indicators for our market are weaker year-on-year and we are taking a prudent view of the second half prospects.

“Against this background, we remain confident in the longer term outlook for the business, as evidenced by the 10 percent increase in the interim dividend.”

Shares in Topps Tiles are currently trading own 4.66 percent at 98.20 (0903GMT).