Topps Tiles revealed a fall in profits despite a sales uplift in its full year, both of which were inline with expectations. Retail Week talks to Topps Tiles chief executive Matt Williams and chief financial officer Rob Parker about attracting a more affluent customer base and improving its online proposition.
Profits fell despite a sales uplift. Why were earnings hit?
MW: The first half is where the damage was done. The market has been very tough. The big drivers are housing transactions and consumer confidence which were both down. And margin was slightly softer. But it was a very good result, albeit down on the year before.
How would you describe the market at the moment?
MW: The trading environment remains tough. The market is flat at best, and it’s down to the two big drivers I mentioned earlier.
But we’re seeing a change in the market. People are being a lot more adventurous. They are less concerned with offending future owners of their home, it’s more about them being happy for the next three to five years.
It plays into our hands. We’re focused on being the absolute authority on what we do. That impacts service levels and the product range to ensure we are bang on trend. We’re responding to what the market is demanding.
[We’ve been attracting] a more affluent customer set too. There have been misconceptions about our range, I don’t think people have appreciated how broad our range is. It’s very difficult for our competitors to compete with. We’re uniquely placed to respond to that market.
How are the store revamps progressing?
RP: We spent £6m on the store estate this year, opening 23 stores including 10 conversions from Tile Clearing House to Topps. We have completed 18 light touch refits, and there’ll be more of that this year. We’ll spend £1m a year every year on stores.
How and why has Topps Tiles increased its direct sourcing?
MW: We opened a second warehouse which has allowed us to increase the amount of product we source directly and improve margin. There’s still more to come on that and it will prove very effective.
What proportion of overall turnover does online make up?
MW: 2%. Our website is much more about marketing and inspiration. We view it more as a payment channel rather than a channel in its own right.
What online developments can we expect?
MW: We’ll optimize our site for mobile devices and launch apps. We’re looking to inspire our customers. That’s the strength of online for us.
You recently launched an apprenticeship scheme. Is it proving a success?
RP: The youth apprenticeship scheme has been successful for us. The majority we found positions for.
600 out of 1,400 colleagues have been through the adult apprenticeship scheme. It’s been phenomenally successful for us. We’re absolutely seeing the effects on the shop floor.
What’s your outlook on the current year?
MW: We’re basing our plans on the market remaining tough. If we get a helping hand from the market it will be very welcome. The morale in the business is very strong on the basis that we can continue to take market share.