Interim results for the 26 weeks to 30th March from Topps Tiles shows resilient trading performance against a challenging consumer backdrop; consolidating market leadership position; and good progress in growing commercial operations.
First half like-for-like sales grew by 0.2%, while an adjusted gross margin of 61.4% (2018: 60.5%) shows continued benefits of scale and sourcing. Adjusted profit before tax of £8.0 million (2018: £7.2 million ) reflects higher gross profit and a reduced cost base.
The Parkside commercial business generated a £1.0 million trading loss (2018: £0.4 million trading loss). This has been excluded from adjusted numbers while Topps Tiles invests in growth.
After adjustment, profit before tax stood at £5.2 million (2018: £6.4 million ), while net debt was reduced by £7.1 million year-on-year to £18.0 million.
Topps Tiles stresses buying scale and expertise across both retail and commercial businesses. Twenty new ranges were launched during this trading period, including an outdoor porcelain tile range. Today 90% of Topps Tiles’ range is either own brand or exclusive to the Group in the UK.
The strategy of Out Specialising the Specialists remains Topps’ key focus in the retail tile market. A new Tile Talk customer feedback system has been launched. This recorded an overall satisfaction score of 86%; which Topps claims puts the business in the top five of all UK retailers;
Trade continues to be an important route to market for Topps, which now has around 99,000 active members on its Trade Rewards+ loyalty programme, up from 70,000 in 2018.
Investment in stores continues, with 180 having received mini refits, including Design Advice areas, in the last 18 months.
Entry into commercial market has approximately doubled the size of the Group's addressable UK market while maintaining the specialism in tiles. Topps’ strategy is to disrupt the commercial tile market and create a new market leader over the medium term.
Commercial sales over the first half have grown by around 300%. The company says that development of its commercial infrastructure is on track; and highlights the opening of its flagship design studio (pictured above) in Clerkenwell, in March.
This was followed by the acquisition of Strata Tiles in April 2019; which has been billed as a key transaction that will provide further commercial market penetration.
Commenting on the results, Matthew Williams, Chief Executive, said: "The Group has delivered a resilient first half performance as we continue to consolidate our position as the UK's leading tile specialist. Against a consumer backdrop which remains challenging, our trading performance was robust, underpinned by further gains in market share.”
"Our commercial tile business continues to grow rapidly, with first half sales more than tripling year-on-year. Expansion of the commercial division was accelerated by the acquisition of Strata Tiles in April. Strata is highly complementary to our existing Parkside commercial business and, together, the two brands provide the Group with a strong base for further expansion into this large and attractive market segment.”
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