Topps Tiles posts slowdown in LFL sales

Tile specialist Topps Tiles reported a slowdown in sales in the first quarter due to “softer trading conditions”.

In the 13 weeks to the end of December, like-for-like revenues were up 0.3%, down from a 1.4% increase in the previous quarter.

The 0.3% rise in LFL sales includes one additional trading day due to the timing of public holidays, which Topps reckons will have increased LFL sales growth in the quarter by around 0.6%.

Canaccord Genuity said: “Against our 2% FY17E LFL sales growth assumption, this is a disappointing performance.”

The company said it continues to invest in the business and is making good progress with is strategy of ‘out-specialising the specialists'. During the period, it saw early results from the expanded trade rewards+ loyalty programme and now has 24,000 participating traders.

Following the exit from low margin real wood flooring in 2016, the group’s enhanced wood effect tile ranges continue to deliver strong growth and the newly launched XL ranges are trading ahead of initial expectations, Topps said.

It opened five new stores in the core estate during the quarter and is currently trading from 356 stores, including 15 boutique stores, up from 340 stores and 13 boutique stores previously.

Topps expects to open around 15 new stores in the current financial year.

Chief executive Matthew Williams said: “We experienced softer trading conditions during the first quarter but we remain confident that we have continued to outperform the overall tile market. Against this background, our proven strategy, well-invested business and market leading position, leave Topps well-placed for further market share gains in the year ahead."

Canaccord said: “The valuation metrics remain attractive, the business is well run, cash generative and has an excellent track record of taking profitable market share. Nevertheless, a flat earnings trajectory for FY17E is not likely to be compelling in the short term.” The brokerage trimmed its price target on buy-listed Topps to 99p from 105p.

At 0936 GMT, the shares were down 1.5% to 84.75p.