Specialist retailer Topps Tiles remains confident of gaining market share as trading conditions worsen, despite revealing a 27 per cent decline in full-year pre-tax profits to £27.7 million.
In the year to September 27 like-for-like sales slid 5.4 per cent. In the first seven weeks of its new financial year the decline worsened to 18.3 per cent.
Group sales grew 0.1 per cent to£208.1 million and in the seven-week period dropped 13.5 per cent. Gross margin declined 1 percentage point to 61.8 per cent and the board will not pay a final dividend.
But chief executive Matthew Williams said: “These results show how resilient Topps is. We are still profitable and highly cash-generative.”
Topps Tiles has 22 per cent market share and Williams insisted it would grow. “Our main competitors are the independents. We have a brand and margins to fall back on,” he said.
Williams has cut TV ad spend completely to save costs, but is resisting redundancies. “I’m loath to cut into the muscle of the business,” he said.
The retailer has also tightened its cost base for the coming year, reviewed its growth plans, focused on cash management and extended its banking facilities.
Topps Tiles trades through 320 stores in the UK and 22 in Holland, where it has written down goodwill by£1.2 million to nil for this year.
Numis analyst Nick Coulter said: “The primary issue remains a debt-laden capital structure and the likelihood that Topps will again have to renegotiate covenants.”
Dresdner Kleinwort analyst Sanjay Vidyarthi said: “The company’s statement on covenants and bank relationships suggests the banks remain supportive – it makes little sense to pull the plug on Topps in the current environment.”
Singer Capital Markets analyst Matthew McEachran said: “Both the UK division and especially the Dutch division came in below expectation. This update will most likely result in further big downgrades, potentially in the order of 15 to 20 per cent.”
Group sales grew 0.1 per cent to£208.1 million and in the seven-week period dropped 13.5 per cent. Gross margin declined 1 percentage point to 61.8 per cent and the board will not pay a final dividend.
But chief executive Matthew Williams said: “These results show how resilient Topps is. We are still profitable and highly cash-generative.”
Topps Tiles has 22 per cent market share and Williams insisted it would grow. “Our main competitors are the independents. We have a brand and margins to fall back on,” he said.
Williams has cut TV ad spend completely to save costs, but is resisting redundancies. “I’m loath to cut into the muscle of the business,” he said.
The retailer has also tightened its cost base for the coming year, reviewed its growth plans, focused on cash management and extended its banking facilities.
Topps Tiles trades through 320 stores in the UK and 22 in Holland, where it has written down goodwill by£1.2 million to nil for this year.
Numis analyst Nick Coulter said: “The primary issue remains a debt-laden capital structure and the likelihood that Topps will again have to renegotiate covenants.”
Dresdner Kleinwort analyst Sanjay Vidyarthi said: “The company’s statement on covenants and bank relationships suggests the banks remain supportive – it makes little sense to pull the plug on Topps in the current environment.”
Singer Capital Markets analyst Matthew McEachran said: “Both the UK division and especially the Dutch division came in below expectation. This update will most likely result in further big downgrades, potentially in the order of 15 to 20 per cent.”
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