Topps Tiles shares rise as sales grow, margin to improve later in year

Topps Tiles PLC on Wednesday reported a strong acceleration in sales in its third quarter and said it expects margins to improve, despite ongoing cost pressures.

The Leicestershire-based tile retailer said group-adjusted sales, excluding its CTD brand, rose 10% year-over-year in the 13 weeks to June 28, up from 4.1% growth in the first half. Year-to-date, adjusted sales are 6.1% higher.

Shares in the company were up 9.1% to 37.20 pence in London on Wednesday morning.

Growth was broad-based, with the Topps Tiles brand, Parkside, and online units, including Pro Tiler Tools and Tile Warehouse, all improving their performance. Like-for-like sales at Topps Tiles rose 7.3% in the quarter and are up 4.4% so far this financial year.

Trade sales continued to outpace homeowner sales, though the company noted signs of recovery among individual consumers. The number of active trade customers rose 12% annually to 150,000. Group online sales accounted for nearly 22% of adjusted sales in the quarter, up from just under 20% in the first half.

Topps Tiles said it expects its adjusted gross margin in the second half to be ‘slightly higher’ than in the first half. However, the firm flagged around £4 million in added annualised costs from April, stemming from changes to UK National Insurance rates and the National Living Wage.

‘Given the strong growth in sales, improved gross margins and cost management actions, the group expects operating costs in the second half to grow at a lower rate than gross profits,’ the company said.

Meanwhile, Topps said it remains on track for its CTD brand, excluded from adjusted metrics, to at least break even by the fourth quarter following regulatory clearance to integrate the business.

Looking ahead, Topps said it continues to make strategic progress under its ‘Mission 365’ plan, including enhancements to its trade website, a new digital customer platform, and expansion into new categories.

‘The continued progress made in all aspects of the Mission 365 plan give the Group confidence in its ability to deliver meaningful growth in sales and profits, this year and into the medium term,’ it added.

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