Topps Tiles hits back after MS Galleon criticism

According to The Times, Piotr Lipko, managing director of the Austrian investor MS Galleon, wrote to Topps Tiles’ chairman Paul Forman last week claiming that management had shown a "complete failure" to adapt to the changing retail landscape, citing its comparatively small online business.

MS Galleon - which holds a 29.9% in Topps Tiles - also criticised the company’s acquisition of CTD Tiles, describing it as "unequivocally irrational" and "highly detrimental" to the group’s interests.

The Times said Lipko told Forman he had "grown frustrated" by his continued lack of engagement.

But Topps Tiles put out a statement on Monday defending its strategy and acquisition of CTD.

The company said it has invested "significantly" in expanding its digital operations over the last five years and that the business is "truly" omni-channel, with 18% of group revenues coming from online. It also said investment in the digital offer for trade customers was driving further growth.

Forman said: "We engage with all our larger shareholders on a regular basis and listen closely to their views. Our strategy was reviewed in April and presented to shareholders in May, with further updates given last week.

"Further expansion of our digital capabilities is at the heart of many of these growth initiatives. Our latest results show that we continue to take market share, consistently outperforming the wider tile market despite very challenging trading conditions. We believe this demonstrates the effectiveness of our strategy, which has the full support of the board."

Dan Coatsworth, investment analyst at AJ Bell, said: "Topps Tiles may have delivered a defence of its strategy in the face of brickbats from its largest shareholder MS Galleon but with the share price close to decade lows there are cracks in the facade of the company’s argument.

"Among the criticisms was that Topps had failed to develop a larger e-commerce operation - it points to 18% of its revenue being online but that is a relatively modest proportion.

"The deal to acquire rival outfit CTD from administration may have felt like an opportunistic move but it also drew fire from MS Galleon for a lack of due diligence and suggestions that Topps overpaid. It is also now mired in a probe by the competition authorities.

"Topps refutes these criticisms of the deal and the acquisition could ultimately prove to be a successful one. However, it could take time to demonstrate its merits.

"MS Galleon previously tried to oust chair Darren Shapland in 2022, and while he survived the vote, he stood down the following year.

"The current management argue they are taking share in a difficult market. However, doing less badly than the competition is not the most compelling argument to make, even if it is a valid one."