Topps Tiles has reported a rise in full-year sales and profits as it captured one third of the tile market. This is what the analysts said.
“Today marks another sterling set of results for Topps Tiles, which continues to cement its position as the dominant force in tiling. It was good news across the board, with revenue and profits both showing a marked increase on the previous year.
“Recognising the crucial role played by stores in the shopping process for highly tactile items such as tiles, its boutique stores in high street locations have made it more accessible to consumers and its sleek new branding has given stores a more enticing, contemporary appeal. In spite of the focus on stores, it has not neglected its online operation, with Topps keen to point out the important role its website plays in the research process.
“Longer term, obstacles such as the broader shift away from home ownership to rented accommodation, which is currently keeping housing transactions way below pre-crisis levels, may limit Topps Tiles’ growth potential. However, for now the retailer is ideally placed to reap the rewards of the consumer and housing market recovery for as long as it continues.” – David Alexander, Conlumino
“Having hit its strategic goal of a one-third share of the domestic tile market a year ahead of schedule you may wonder where Topps Tiles goes next, but its strategy of ‘out-specialising the specialists’ still has legs and the business is full of ideas about how to make its stores more accessible and appealing to consumers, as well as trade customers.
“The strategic goal of taking £1 in every £3 spent in the UK domestic tile market was achieved one year early (the seventh consecutive year of market share gains) and trade sales increased from 46% to 50% of the total, driven by the growth of the trade loyalty programme and the trend for ‘do it for me’. And although like-for-like sales in the first eight weeks of the new year have slowed to 3.3%, Topps says it is in line with their expectations.” – Nick Bubb, independent analyst
“Results were marginally better than our forecasts. Looking ahead the company should benefit from a number of self-help initiatives and a supportive macro-economic backdrop. Following this update, we are raising our FY2016 pre-tax profit forecast to £22.5m from £22m.
“The company continues to make good progress with the development of its boutique stores and now has 13 sites. We see potential for up to 70 boutiques, which will provide valuable insights into new ranges and store design. It is also planning to centralise its support function to one site and close down the nine remaining clearance stores. In addition, the company should continue to benefit from a steady improvement in UK housing transactions from a low base, consumer confidence and the rise in house prices. It should also benefit from B&Q’s and Homebase’s plans to close down stores over the next two years.” – Freddie George, Cantor Fitzgerald
“Topps has seen real traction from new designs and product introductions, which continue to be a driving force behind the rising value of average revenue per sq m, and also a significant contribution to like-for-like sales growth (which remains fairly evenly split between volume growth and value). New products introduced over the previous 12 months generate nearly 10% of group sales. Moreover, Topps is becoming more confident and forthright in delivering exclusive ranges and new designs, providing a genuine point of difference from both multiple and independent competitors.
“We leave forecasts unchanged at this early stage, although our assumptions remain conservative, we believe.” – John Stevenson, Peel Hunt