Topps Tiles reports falling sales
Tile and flooring retailer Topps Tiles said its like-for-like revenues edged down 0.2% in the six months to the end of March, reflecting weaker levels of consumer confidence in the period.
Although group revenue increased 0.9% to £87.4 million, adjusted profit before tax dropped to £4.7 million from £5.6 million a year ago.
Following growth in revenues of 1.6% on a like-for-like basis in the first quarter, the group said that weakened consumer confidence in the second quarter led to a 2.1% decline in like-for-like revenue. This resulted in like-for-like revenue decreasing by 0.2% across the period as a whole. Like-for- like sales over the eight weeks to 25 May fell by 2.6%.
In light of the difficult trading environment, Topps said it had implemented a range of self-help measures to improve its customer proposition. This included a focus on customer service, strong ranges and multi-channel convenience. In addition, a series of cost saving and efficiency measures are expected to reduce operating costs by around £2 million over the second half of the financial year.
Topps Tiles chief executive Matthew Williams said: "In response to the weaker market conditions we saw across the second quarter, we are implementing a programme of self-help initiatives and significant cost reduction measures and are pleased with the progress made to date.
"However, we are also mindful of the current trading environment which has deteriorated slightly over the last eight weeks. At this early point in the second half, assessing the likely impact on the full year outcome is difficult, but we continue to be cautious on the like for like sales outlook for the remainder of the current year."
During the six-month period, Topps traded from an average of 322 UK stores compared to 319 a year ago.
Operating costs were £46.5 million, compared to £45.1 million in the same period last year. On an adjusted basis, operating costs were £45.8 million, versus £44.6 million a year ago. Topps said the main drivers of the increased costs were inflation and a small rise in the number of stores trading which, when combined, increased the retailer’s cost base by £1.2 million.
Williams added: "While recent indications of an improvement in the UK housing market give encouragement for the future, it is too early to judge the sustainability of this trend and given the historic relationship between housing transactions and home improvement spend, any impact on trading conditions can be expected to lag a recovery. That said, Topps remains well placed to respond to any sustained increase in housing market volumes. Against this backdrop, we will continue to focus on taking further market share as we consolidate our position as the UK's number one tile retailer."
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