Topps Tiles has issued a profit warning, blaming margin pressures from ongoing macroeconomic uncertainty and “extreme heatwave conditions”.
For the third quarter, Topps reported a 1.8% year-on-year dip in group revenue to £75.6m and flat like-for-like revenues. It said that while the retailer continued to “outperform the wider market”, performance was “below our forecast”.
Since its last update, Topps said: “We have seen some margin pressure as ongoing uncertainty in the macroeconomic environment has led to a current greater demand for lower priced products.”
It also noted that the recent heatwave had led to “temporary work stoppages among housebuilders and traders”, which further affected sales.
Topps said while there is “likely to be a catch up over a six-month period, this is unlikely to come back fully in our financial year, which ends in September”.
In terms of outlook, the retailer said: “While significant progress is being made… the macroeconomic environment has continued to be challenging, with lower consumer spend and commercial areas such as housebuilding under further pressure.”
Taking this into account, Topps said it now expects adjusted profit before tax for the full year to be above £6.5m.
Chief executive Alex Jensen said: “Topps continues to outperform the wider market despite weaker consumer sentiment and an increased focus on lower priced products. We’re making significant strategic progress across our priorities and the self-help actions we are taking to support profitability are working and will position the business for long-term sustainable growth. In the short term, the macroeconomic environment continues to remain challenging.”
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