Topps Tiles says strategy has 'full support' from board

Investing.com -- Topps Tiles Plc (LON:TPT ), has reaffirmed the board’s backing for its strategy, despite ongoing challenges in the broader market.

In its response to recent media commentary, the company flagged its continued resilience and focus, which it believes positions it well for growth in a tough trading environment.

As per a stock exchange filing, Topps Tiles reported that its adjusted revenue for the 2024 financial year fell by 5.4% compared to the previous year. 

However, this was better than the estimated overall decline of 10-15% in the UK’s repair, maintenance, and improvement sector, where bigger-ticket purchases have been particularly impacted by the economic climate.

The tile retailer pointed out that while the UK tile market has contracted by about 20% since 2019, its like-for-like revenue has remained steady. 

Total (EPA:TTEF ) revenue has risen 14.9% over the same period, buoyed by acquisitions such as Pro-Tiler, which has strengthened its online and trade offerings. 

Early trading figures for the current financial year have also shown promise, with group sales up 1.2% in the first eight weeks, excluding contributions from the recent CTD Tiles acquisition.

Topps Tiles has credited its strategic plan, dubbed “Mission 365,” as a critical driver of its ability to outperform the market. 

The plan aims to grow annual sales to £365 million and achieve an adjusted profit-before-tax margin of 8-10%. 

The company has reported early progress in areas such as expanding its trade digital capabilities, growing its presence in hard surface coverings, and capitalizing on new business-to-business opportunities through the integration of CTD Tiles.

A particular area of focus has been the growth of its online operations, which now account for 18% of total revenue. 

The company has invested heavily in its digital infrastructure, emphasizing tools designed to support trade customers, and this has been reflected in a 30% revenue increase for Pro-Tiler, its online pureplay platform.

Chairman Paul Forman said the group’s strategy had been reviewed earlier this year and was presented to shareholders in May, with further updates given during its full-year results announcement last week. 

“Our latest results show that we continue to take market share, consistently outperforming the wider tile market despite very challenging trading conditions,” Forman said. 

“We believe this demonstrates the effectiveness of our strategy, which has the full support of the board.”

The acquisition of CTD Tiles was highlighted as a pivotal step in the company’s growth plan. Topps Tiles described it as a “strategically compelling” move that boosts its presence in the commercial sector. 

The deal, completed after a thorough due diligence process, complements the group’s existing trade-focused operations.

“A clear strategy and robust balance sheet with £38.7 million cash headroom leaves the Group well placed to deliver significant medium term growth,” the company said.

Shares of the company traded 1.3% lower at 4:14 ET (09:14 GMT). 

Source: Investing.com