Topps Tiles’ adjusted pre-tax profit tumbled 16% to £4.7m in the 26 weeks to March 31 and the retailer remains cautious on the outlook.
Turnover was up 0.9% to £87.4m while like-for-likes declined 0.2% “reflecting weaker levels of consumer confidence”.
Topps Tiles said it saw a “step back in consumer confidence in the second quarter”, resulting in like-for-likes falling 2.1% compared with a 1.6% rise in the first quarter.
Current trading has worsened further, with like-for-likes down 2.6% in the eight weeks to May 25.
Topps Tiles chief executive Matt Williams said the retailer “further strengthened our market-leading position” in the period.
“We continued to invest in the long-term interests of the business, upgrading our store portfolio; improving the effectiveness of our marketing programme, particularly to the trade; and further developing our digital offering,” he said.
“In response to the weaker market conditions we saw across the second quarter, we are implementing a programme of self-help initiatives and significant cost-reduction measures and are pleased with the progress made to date.
“However, we are also mindful of the current trading environment which has deteriorated slightly over the last eight weeks. At this early point in the second half, assessing the likely impact on the full-year outcome is difficult, but we continue to be cautious on the like-for-like sales outlook for the remainder of the current year.
“While recent indications of an improvement in the UK housing market give encouragement for the future, it is too early to judge the sustainability of this trend and given the historic relationship between housing transactions and home improvement spend, any impact on trading conditions can be expected to lag a recovery.
“That said, Topps remains well placed to respond to any sustained increase in housing market volumes. Against this backdrop, we will continue to focus on taking further market share as we consolidate our position as the UK’s number one tile retailer.”
Gross margin for the first half increased to 59.8% from 59.7%.
Topps Tiles operates 322 UK stores.
Espirito Santo said Topps Tiles beat its profits forecasts of £4.4m.
Analyst Sanjay Vidyarthi said: “Our view remains that this is a well run business that is gaining market share and will benefit from an upturn in housing transactions at some point. We think the market should look through weak current trade and would see any weakness in the shares as an opportunity to buy for the longer term recovery.”