Topps Tiles will use funds raised from a proposed placing of 17.1 million shares, equivalent to 10% of its existing capital, to refocus on UK expansion as consumer confidence returns to the home sector.
The specialist retailer closed 11 UK stores in the last financial year – in line with the typical number it closes each year – but did not replace them with new shops as is usually the case. Topps Tiles chief executive Matthew Williams said: “This financial year we want to replace what we closed and we’d hopefully like to open more.”
Williams believes consumer confidence in the home market has bottomed out, with like-for-like sales up 0.5% in the first seven weeks of the new financial year. “If sales continue in this positive vein then we’d like to get a bit more aggressive with expansion,” he said. “The home market is showing encouraging signs of stability but there are a lot of unknowns out there that, as well as giving us firepower for expansion, is another reason for the fundraising.”
The retailer will continue to scale back its operations in Holland. Last year, Topps Tiles closed 10 of its 22 stores in the country and Williams said that exiting altogether it is “clearly an option”. He added: “We’ll continue to review the business hard and to close stores as they become loss making.”
KBC Peel Hunt analyst John Stevenson said: “Having fundamentally restructured its cost base, Topps is well prepared for the year ahead.”
Topps Tiles reported adjusted full-year pre-tax profits of £16.3m for the 52 weeks to September 26, down from £29.5m the year before. Like-for-likes fell 13.5% and total group sales fell 10.6% to £186.1m for the year.