REG - Topps Tiles - First Half Trading Update

Topps TilesAnnouncement

05/04/2023 07:15

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RNS Number : 3876V  Topps Tiles PLC  05 April 2023

5 April 2023

Topps Tiles Plc

 

First Half Trading Update

 

 

Topps Tiles Plc ("Topps Group", or the "Group"), the UK's leading tile
specialist, announces a trading update for the 26-week period ended 1 April
2023.

 

Group

 

The Topps Group has developed and diversified over recent years and now
operates across three distinct business areas: Topps Tiles is the clear market
leader in the UK, serving trade customers and homeowners in the domestic
market through an omni-channel model incorporating specialist product
expertise and world-class customer service; our high-growth Online Pure Play
businesses (Pro Tiler Tools and Tile Warehouse) are specifically focused on
the digital space; and our Parkside brand focuses on B2B sales in the
commercial market.

 

Having reported record years for revenue in both 2021 and 2022, the Group
delivered a record period in the first half, with revenues of £130.5
million(1), £11.3 million or 9.5% higher than the prior year.  Approximately
£9.0m(1) of revenue growth related to the acquisition of Pro Tiler Tools and
the launch of Tile Warehouse in 2022.

 

Omnichannel - Topps Tiles

 

Following a strong first quarter, Topps Tiles continued to deliver good sales
growth in Q2, with like-for-like sales(2) being 3.5% higher year on year, from
one fewer trading day in the quarter.  Like-for-like sales over the first
half were up 4.3%, and Topps Tiles delivered first half revenue of £115.8
million(1), a record for the business as a standalone brand.  Sales per store
in the first half were 30% higher than in the pre-pandemic period of FY19,
including the benefit of transferring sales from closed stores as we
successfully rationalised our store estate, as well as underlying sales
growth.

 

Customer satisfaction scores improved further during the first half, against
the world class levels reported last year, and the business increased its mix
of sales to trade customers to 59% (H1 FY22: 58%).  Trade customers are key
as they provide high levels of repeat custom and an important link to
homeowners, through recommendation and direct sales.

 

Whilst gross profit has been rising in recent years following strong sales
growth, gross margin percentage has trended down as a result of cost
inflation, the growing trade customer mix, product mix and strategic decisions
to invest in our customer value proposition.  In the first half, gross
margins in Topps Tiles were lower year on year, however margins improved over
the course of the period as we passed through cost price rises, and as supply
chain pressures have started to moderate or reverse.  As a result of these
factors, we expect to see gross margins increase sequentially in the second
half.

 

Online Pure Play - Pro Tiler Tools and Tile Warehouse

 

The growth of our Online Pure Play businesses, led by Pro Tiler Tools, has
been very strong.  In the first half of this year, Online Pure Play delivered
revenues of £10.1 million(1) (H1 FY22: Group consolidated revenue of £1.1
million). Pro Tiler Tools continued its exceptional growth in the first half
and Tile Warehouse delivered modest sales but is also an important source of
future growth in the medium term.

 

Commercial - Parkside

 

Parkside's revenue in the first half was £4.6 million(1), down 9.3% year on
year, reflecting project delays and lower business confidence as a result of
the wider market sentiment.  We are implementing various business improvement
programmes, including a new CRM system which will support further growth in
the business as the commercial market begins to recover from the pandemic
period.

 

Summary

 

The Group's strong revenue performance in the first half reflects the strength
of our brands, the execution of our strategy and encouraging domestic market
conditions.  Our continued growth gives us confidence that we will deliver
our market share goal of '1 in 5 by 2025'(3) ahead of schedule.

 

The business remains strongly cash generative, with the balance sheet, cash
flows and profitability remaining in line with our expectations.

 

As announced in the 2022 full year results, we expect Group profitability in
the current financial year to be weighted towards the second half.  The
expected weighting reflects: a significant year on year increase in our gas
expense with the majority of the increase experienced in the first half due to
higher energy usage over the winter; a normalised holiday pay accrual, with a
debit in the first half of c £0.7 million and a credit in the second half of
c. £0.7 million; growth of the newer businesses over the course of the year;
and a further easing in cost of goods inflation as the year progresses, which
has already been seen towards the end of the first half.

 

Rob Parker, CEO, said: "Our performance across the first half has been good,
with a record period for Group revenues, supported by like-for-like sales
growth in Topps Tiles of 4.3% and an excellent post-acquisition performance
from Pro Tiler Tools.

 

"The economic outlook remains uncertain but early signs of easing supply chain
pressures, allied to the Group's strong balance sheet, world class customer
service, specialist expertise and growth strategy give us confidence in our
ability to drive value for all stakeholders over the medium term."

 

 

(1) All revenue numbers are stated before accounting adjustments including
revenue recognition and customer returns provisions which will be included in
the Interim Results.  Group revenue includes £10.1 million of sales from Pro
Tiler Tools and Tile Warehouse in FY23 compared to £1.1 million of sales
recognised in in the Group's consolidated accounts for H1 FY22.

(2) Topps Tiles like-for-like sales is defined as online sales and sales from
Topps Tiles stores that have been trading for more than 52 weeks.

(3) Refers to Topps' goal of accounting for £1 in every £5 spent on tiles
and associated products in the UK by 2025, thereby increasing its market share
to 20% from approximately 17% in 2019.  In the 52 weeks ended 1 October 2022
the Group's market share increased to 19.0% (2021: 17.6%)

 

For further information please contact:

 

 Topps Tiles Plc
 Rob Parker, CEO         0116 282 8000

 Stephen Hopson, CFO
 Citigate Dewe Rogerson
 Kevin Smith             020 7638 9571

 Ellen Wilton

 

Notes to Editors

 

Topps Tiles Plc is the UK's largest specialist supplier of tiles and
associated products, targeting the UK domestic refurbishment and commercial
markets and serving homeowners, trade customers, architects, designers and
contractors from 304 nationwide Topps Tiles stores, three commercial showrooms
and six websites:www.toppstiles.co.uk (http://www.toppstiles.co.uk) ,
www.parkside.co.uk (http://www.parkside.co.uk) , www.protilertools.co.uk
(http://www.protilertools.co.uk) , www.northantstools.co.uk
(http://www.northantstools.co.uk) , www.premiumtiletrim.co.uk
(http://www.premiumtiletrim.co.uk) and www.tilewarehouse.co.uk
(http://www.tilewarehouse.co.uk) .

 

Since opening its first store in 1963, Topps has maintained a simple operating
philosophy ‐ inspiring customers with unrivalled product choice and
providing exceptional levels of customer service.  For further information on
the Group, please visit http://www.toppstilesplc.com/
(http://www.toppstilesplc.com/)

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