Topps Tiles’ share price climbed last week as bid speculation swirled around the retailer.

The shares were up as market gossip did the rounds that Carpetright was considering a takeover. There has been similar speculation before, which came to naught.

Some analysts believe the rise in share price had more to do with Topps Tiles’ impending pre-close trading update, scheduled for release as Retail Week went to press.

House broker John Stevenson of KBC Peel Hunt said: “Shares grew on the back of the trading update, not bid speculation. The key issue is the balance sheet and debt covenant.

“Topps’ underlying cash generation is stunning and it has a market share advantage. Topps is a stock people are looking at. The fact that management is buying stock gives us confidence.”

Although Stevenson is not convinced of the likelihood of a takeover, he believes Topps Tiles’ valuation means it “fits the bill for bid speculation”.

Carpetright chairman Lord Harris revealed in January that he could be interested in Topps Tiles, but said he would not make any move for at least a year.