The tile retailer says it has outpaced a shrinking market, but investors focused on the soft backdrop rather than the cost cuts.
Topps Tiles (LSE: TTR) shares fell 3% on Thursday even as the company confirmed full-year adjusted pre-tax profit would land in line with forecasts of roughly £6.6m, for the year to 26 September.
The drop came despite evidence that the group is holding its own against a difficult backdrop: group revenue, including CTD, eased around 1.3% to about £292m on the back of store closures, while revenue excluding CTD actually ticked up 0.7%. Like-for-like sales at the core Topps Tiles brand were roughly flat, dented by an unusually hot summer but picking up through September, in a market the company said fell around 1.7% over the same period.
Beneath the flat headline numbers, some parts of the business are clearly firing: trade-focused Pro Tiler Tools posted record revenue, up more than 18%, while online sales now make up almost 23% of group turnover and newer ranges such as acoustic panels and outdoor tiles grew 9%.
Management also pointed to the completion of a self-help programme covering store closures, a more flexible labour model and head office cost reductions, alongside a contribution to profit from the recently acquired Fired Earth business. Together these measures appear to have offset the drag from a subdued tiling market and falling footfall-driven revenue.
Even so, the share price reaction suggests investors remain wary that cost discipline can only do so much while end demand stays weak. With guidance reiterated rather than upgraded, attention will now turn to whether the September sales improvement extends into the new financial year and whether Fired Earth and Pro Tiler can keep offsetting softness in the core Topps brand.
This report is based on Topps Tiles’s announcement and coverage by UK Investor Magazine. Company announcements can be tracked via London Stock Exchange RNS and Investegate, and the full markets calendar is worth watching for the next update.
This article is for general information only and does not constitute investment advice or a recommendation to buy or sell any security. Photo: Fab Lentz on Unsplash.
Small Cap News covers London’s junior market – AIM, small-cap and growth companies – with concise, sourced reporting on the results, deals and regulatory news that move share prices. We track the stories private investors actually need, from contract wins and drilling updates to fundraises and half-year figures, straight from the market’s own announcements.