Retailer Topps Tiles reports subdued demand as consumers remain under pressure

It was worse than the 7.1 per cent drop seen in the previous quarter, although Topps said this was partly due to the timing of Easter this year.

The group said: “Subdued demand in the domestic repair, maintenance and improvement sector, especially for bigger ticket projects, has persisted into 2024, resulting in lower footfall into Topps Tiles stores.”

Topps cautioned that first-half profits would be impacted by a number of factors, including the weaker market.

Total Group sales in the first half were £122.6m, down 5.9 per cent year-on-year, against a record revenue performance in 2023.

The statement added: “Trade customers have once again proved more resilient, although trade sales were also lower year-on-year. “While conversion rates grew year-on-year and the brand made further improvements to its already world-class customer service scores (up 1.0 percentage point year-on-year to 92.5 per cent overall satisfaction), like-for-like sales in Topps Tiles were 11.3 per cent lower year-on-year in the second quarter, driven by lower footfall and volume.

"As expected, the gross margin percentage in Topps Tiles was up year-on-year as cost of goods pressures continued to ease, but net profits were impacted by lower volumes, operating cost inflation and the impact of operational gearing, despite strong cost control throughout the period.”

Topps said trading in the online pure play businesses remained strong, with good growth in Pro Tiler and positive sales progress in tile warehouse, resulting in year-on-year sales growth of 38.3 per cent over the first half.

The group said it will soon complete the acquisition of the remaining 40 per cent shareholding in Pro Tiler Limited, following the end of the earn-out period.

Topps said it was “delighted that the co-founders will be remaining with the business as we continue to invest in and grow the brand”.

“Parkside continues to show a significant year-on-year improvement in its financial performance,’’ it added.

"Following the business improvement plan implemented last year, we have achieved our short-term aim and expect the business to be at breakeven over the first half, despite the difficult commercial market.”

In the statement, Topp said group profitability in the first half of the year will be impacted by a number of factors including the weaker market, the timing of the holiday pay accrual and seasonally higher energy usage in the period.

"We continue to expect the group’s profits in 2024 to be weighted towards the second half as indicated in our Q1 (first quarter) trading update.

“With its market leading brands, specialist expertise and world-class service, the group is well positioned to benefit from a cyclical recovery in the RMI (repair, maintenance and improvement) market. The business remains in a strong financial position, with a robust balance sheet, and is focused on maximising market opportunities and emerging in a stronger competitive position as the market improves.”